The Traders on the Forex Market

When you trade in the forex market, you are not alone. The daily volume of the forex market is over $3 trillion, which means a trade of one million dollars doesn't even touch the tip of top traders. It's a really huge market. But who is trading there?

First there are banks, including central banks and commercial banks. Central banks have some control over the economy of a country, especially with the ability to change interest rates. Central banks also control money reserves of countries, including reserves of foreign currencies.

Commercial banks manage the trades between other traders. They also buy and sell currencies for their own speculation and profit attempts. Those commercial banks are also forex brokers for some institutions and private traders.

Importers and exporters also trade the forex market, mainly to convert foreign currencies to their local currencies and "lock" their profit with contracts that guarantee exchange rates when they do international business.

Finally, there are private speculators. These can be private people, hedge funds, or any person or organization that does not have to report every move in the forex market to the authorities. Those speculators try to buy and sell currency pairs in order to make a profit. They usually have no intention to use foreign currencies for anything else.

Hope you learned something today.
Yours,
Nadav

nadavs