Jayden Until the late 1990s, only the “big boys” could play the game. The initial requirement was that a person could only start trading if they had about $10 million to $50 million. Forex was initially for bankers and large institutions and was not for us “little guys”. However, thanks to the rise of the internet, online forex brokers are now able to offer trading accounts to “retail” traders like us.
The Forex market is a global market, where trading takes place 24 hours a day. So, who are the players in such a huge market? Please see below.
Participants in the forex trading market mainly include central banks, commercial banks, non-bank financial institutions, brokerage firms, proprietary traders and large multinational corporations. They trade frequently and in huge amounts, with each transaction worth millions of dollars and even more than tens of millions of dollars. Participants in forex trading can be divided into investors and speculators according to the purpose of their transactions.
From the main body of forex trading, the forex trading market is mainly composed of the following participants.
(1) Forex trading banks: forex trading banks are designated or authorized by the central bank or monetary authority of each country to operate forex trading business banks. A Forex trading bank is usually a commercial bank, that can be specialized in forex trading of the national bank, and also can be engaged in the forex trading business of the national bank or in the country of forex bank branches. Forex trading banks are the most important participants in the forex trading market, its forex trading constitutes the main part of the forex trading market activities.
(2) Forex trading dealers: Forex trading dealers refer to trading companies or individuals who buy and sell forex trading bills. Forex trading dealers use their own funds to buy and sell forex trading bills, to obtain the purchase and sale price difference. Most forex trading dealers are trust companies, banks and other part-time institutions, there are also companies and individuals who specialize in this kind of business.
(3) Forex trading brokers: forex trading brokers are intermediaries who facilitate forex trading. It is between the forex trading bank, and the forex trading market between other participants, on behalf of the forex trading business. They do not buy and sell forex trading, but only connect forex trading buyers and sellers, to facilitate the trading, and receive commissions from it. Forex trading brokers must be approved by the central bank of the country in order to operate.
(4) The central bank: the central bank is also the main participant in the exchange market, but its participation in the forex trading market, the main purpose is to maintain exchange rate stability and reasonable regulation of the number of international reserves.
Through direct participation in the forex trading market, adjusting the supply and demand of forex trading market funds, so that the exchange rate is maintained at a certain level or restricted to a certain level. Central banks usually set up forex trading equalization funds.
When the market demand for forex trading is too much, the exchange rate rises, sells forex currency, recovers the local currency; when the market is too much supply, the exchange rate falls, buys forex currency, buys the local currency. Therefore, in a sense, the central bank is not only a participant in the forex trading market but also the actual manipulator of the forex trading market.
(5) forex trading speculators: forex trading speculators are not the actual needs of international payments and receipts, but the use of a variety of financial instruments, in the exchange rate changes to pay a certain margin for pre-buying and pre-sale, to earn the exchange rate difference.
(6) Forex trading actual supplier and actual demanders: forex trading market in the actual supplier and actual demanders of forex trading, who use the forex trading market to complete international trade or investment transactions of individuals or companies. They include importers, exporters, international investors, multinational corporations and tourists, etc.
