Forex market is the largest financial market with millions of traders do the foreign exchange trading everyday. Forex trading is the exchange of one currency for another. The main currencies used in Forex trading are US dollar, Yen, and Euro. Other popular currencies are the British pound, Australian dollar, Swiss franc, Canadian dollar, and Swedish krona. For about five days per week around the clock all over the world, those currencies are traded by investors through Forex platform. Even though Forex is available for everyone, there are several traders who dominate the market. Here are the main players in Forex market.
There are hundreds or banks whether big or small participating in Forex market. Their goal is to offset their own forex risks and that of their clients and increase wealth of their stock holders. Banks facilitate foreign exchange trading for their clients. Moreover, they also conduct speculative trades form their own trading desks. Each bank always has a trading desk in charge for order execution, market making, and risk management. In addition, it can also be to make profits of fluctuate currency.
2. Central Banks
The role of central banks in the forex market is not to make profit but to facilitate government monetary policies. Central banks interventions are believed to have relation to domestic authorized monetary which can impact the exchange rate fluctuation. Central banks are also responsible for forex fixing through exchange rate regime. Floating, fixed and pegged are the types of exchange rate regimes used by the central banks to influence currency rate in a large extent.
3. Investment Managers & Hedge Funds
Investment managers and hedge funds are the second biggest trader after the banks. They trade for large account such as pension and endowment. Investment managers and hedge fund also make speculative forex trade as well.
4. Bussiness & Corporations
Business and corporations naturally receive or make payment for goods and services by using forex. They require buying or selling foreign currency in their commercial or capital transactions which called as commercial traders. On the other hand, non-commercial traders are the one who considered speculators such as large institutional investors and others that trading in the forex market for the sake of capital gains.
5. Individual Investors
Individual trader has the least amount of capitalization among other main player in forex market like banks or financial institutions. They trade currency based the fundamentals and technical factors. The goal of individual trader is only to gain profit.