Key Forex Trading Players Reviewed

We have already said that the Forex market is simple to understand. It really is no problem to get oriented. A large number of major players make up this market. It is a decentralized market, not controlled by any single source. Yet there is order. Here are the key players influencing the Forex market:

Central banks: Each operates for its own country, according to the needs of the respective economy and government. Central banks play a major role in the Forex market, determining national interest rates, levels of inflation and more. Naturally, Central banks influence exchange rates. If the exchange rate is too high or too low, the central bank starts buying or selling very large quantities of currency in exchange for other currencies. Their influence on economies and currencies is critical. In times of crisis, for instance, the global crisis of 2008, the central bank lowers interest rates to help the economy get back on track. The impact it has on the supply and demand for the currency is tremendous.

More on this can be found in our Fundamental Forex Trading Strategies page.

Benchmark Interest Rates

Examples of interest rates in the major markets (accurate as at 3/2020):

Commercial banks: The biggest and most significant group in this category is the commercial banks. These banks set the tone in the Forex market. The amounts of capital switching hands inside the banking system (called Interbank) are astronomical! They set the exchange rates for market’s supply and demand. Examples include Citigroup, Barclays, JP Morgan, UBS, Deutsche Bank and BofA.

Commercial companies:  All large companies trade Forex and exchange currencies according to their evolving needs. Usually, their activity is based on their business environment. Let’s take Samsung: when starting a business partnership with new electronic suppliers from Germany, Samsung will consider holding more Euros in its inventory. Now, assume there are other corporations and large firms that tighten their collaboration with German suppliers (or other European suppliers) – the demand for the euro will rise, strengthening it. These companies buy option contracts to exchange their currency for Euros at the current exchange rate in the future. This affects the current and future rate. Experienced traders who track these changes can make a fortune using this data!

Hedge funds: These trade currencies keep their clients’ investments profitable through skillful leveraging. We call it “letting your money work smart”. Their clients are companies with wide inventories of capital.

Retail Forex brokers: All the Forex trading companies that offer trading platforms to the small/medium traders around the world. They are called brokerages. There are hundreds of regulated forex brokers, offering the possibility to trade with almost any amount of capital, anywhere on the globe (as long as you have an Internet connection), without having to use the services of the banks.

Retail Traders: Private investors, like you, can trade forex in an attempt to generate another source of income. Taking advantage of the fact that they can trade forex anytime, even during or after work, and from anywhere.