Who Moves the Forex Market | Forex Market Players
Forex is the largest market in the world, with the tremendous daily trading volumes and millions of market participants.
In this educational article, we will discuss who moves that market and who are its 6 the most significant players.
1. Governments
Governments tend to set economic goals and influence the markets with their political decision. They define the course of their nations, issuing policies and imposing regulations.
2. Central banks
Central banks implement the decisions of the governments, applying multiple instruments:
Central banks control the emission of the money, shifting the supply and demand.
They control interest rates and define the credit policies.
Above is a top 10 of the biggest central banks by total assets.
Central banks control the international trade and sustain the exchange rates of the national currencies by interventions and handling the foreign currencies and gold reserves.
3. Commercial banks
Commercial banks handle the international transactions.
Over 70% of total Forex Market transactions directly refers to the actives of commercial banks.
In a pie chart above, you will find the biggest commercial banks by trading volume.
Commercial banks are also involved in speculation activities, benefiting from market fluctuations by relying on various strategies.
4. Corporations
Corporation is the business that operates in multiple countries.
With the constant capital flow between its branches and counterparts, corporations are permanently involved in a currency exchange.
Also, corporations usually hedge currency risks, storing their liquidity in particular currencies.
5. Investment funds
By investment funds, we imply the international or domestic professional money management companies. Dealing with hundreds of millions of investments, they quite often are operating on Forex market, buying foreign assets, speculating and hedging.
Below, you will find the list of largest world's hedge funds.
6. Retail traders
The main goal of retails traders and speculators is to make short terms profits from their transactions on the market.
Typically, the activities of traders constitute a relatively small portion of total trading volumes.
Knowing which forces move the forex market, you can better understand how it works. The spot prices that you see on the charts reflect the sentiment of all the above-mentioned participants.
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