Participants of the International Forex Market

Coming to trade on the Forex market, it is important for a novice trader to understand what he is dealing with. To do this, it is important to understand what the Forex market is, who are its participants and with whom the trader enters the competition, performing operations on the market.

Let’s start with the main – we’ll figure out what Forex is like.

Forex (foreign exchange) – the international currency market on which operations with currency are carried out – purchase, sale, exchange.

The main participants of the Forex market:

Central banks

Each country has its own central bank, whose task is to maintain such a course of the national currency, in which the national economy will feel comfortable and steadily develop. Therefore, the central bank is also called the regulator of monetary policy. For this, a number of tools are used, with the help of which the exchange rate is regulated. More on this you can read in the article “Central Banks. How to determine the fundamental trend in the market “. In addition, central banks lend to commercial banks at a percentage that is called the “discount rate” or “refinancing rate”. This percentage is essentially the value of money in the state. The central bank can enter the foreign exchange market and buy up currency, or vice versa, throw in currency in order to regulate the exchange rate. This is called intervention.

Commercial banks

These are banks that carry out transactions, fulfilling the orders of their clients (companies engaged in foreign trade operations, investors, tourists, etc.) for the purchase and sale of foreign currency. Commercial banks are the place where the current exchange rate is formed. and conduct speculative operations at their own expense. The daily volume of trade operations of banks is measured in billions of dollars.

Exporters and importers

These are companies that carry out foreign trade operations. Importers buy goods buy foreign currency, thereby increasing the demand for it. Exporters, in turn, sell the foreign currency gained from the sale of goods, thereby creating a proposal for it. Also exporters and importers place free currency funds on their accounts in commercial banks, attract loans and make deposits in different currencies.

Funds (investment, hedge funds)

Investment funds manage assets, including portfolios of securities, bonds denominated in various currencies. Carry out transactions for the purchase and sale of foreign currency.

Brokerage companies

These are intermediaries between private investors and the foreign exchange market, providing private investors and traders with an opportunity to enter the market for making deals. For mediation, take a commission from each transaction (spread).

Private investors and traders

Individuals who carry out speculative operations for the purchase and sale of foreign currency for the purpose of earning. They enter the foreign exchange market through brokerage companies.

Now, dear traders, you understand your place in the market. Why is it important? Because in the foreign exchange market, market pricing takes place through supply and demand. Given the fact that the turnover of the foreign exchange market per day is about 5-7 trillion dollars, it is important to understand that large players form the movements on it. Market participants with an account size of up to 1 million US dollars are considered small speculators. Realizing this it is important to determine where the big players push the price and stand with them in one direction. This will help to make profit, moving in one direction with the market.