Foreign Exchange Market Participants

According to various studies, currently more than 50% of transactions in the foreign exchange market are made exclusively between banks. Also, about 30% of transactions are carried out between a bank and another type of financial company, while the rest of the transactions between an intermediary and a non-financial entity (non-financial companies, private investors and others).

Here are the main players and players in the Forex currency market:

Commercial banks

The interbank market today makes up a high percentage of the speculative transactions in this financial market. In fact, a large financial bank can get to negotiate even billions of dollars daily in the Forex market. Part of this trading volume is done on behalf of its customers, however another part is made by the bank to obtain direct gains with the fluctuations of the price of one currency against another.

Until relatively recently, the various foreign exchange traders actively engaged in this type of trading in the market, facilitated trading parties to enforce their orders in exchange for commissions or limited fees such as its services. However, today a large part of the operations are carried out through more efficient electronic systems such as:

  • Chicago Stock Exchange.
  • TradeBook.
  • Bloomberg.
  • EBS.

Central Banks

Central banks such as the Fed or the ECB sometimes operate in foreign exchange markets in order to control money supply and demand, interest rates on their currency and even inflation. These banks regularly impose currency exchange rates and often use their international reserves as a resource to stabilize the market when it threatens to get out of control. For these reasons, the expectation and even rumor that a major central bank will intervene in the market can significantly alter the value of a currency. Despite this, central banks do not always achieve their targets because the market is too large and can be imposed on any bank.

Business companies

Firms that do not belong directly to the financial sector that operate both with clients and with international suppliers also intervene in the Forex market. However, in this case the impact of these companies in the short term is small compared to other participants. Despite this, the commercial flows originated by these companies constitute an important factor that can affect the behavior of a currency in the long term. Likewise, the direct operations of some multinationals can significantly affect the currencies of countries with small economies.

Other companies related to the Forex market

In addition to direct participants in the Forex market, we have other companies that offer various services that relate directly or indirectly to this financial market. For example, there are companies dedicated to the management of accounts, among which can be included investment funds, which are basically dedicated to raising the capital of a certain number of investors in order to operate in the Forex with strong capital , Which is managed by expert investors of the company.

Finally, we have companies that offer education services to investors so that they can participate successfully in the market and companies that develop computer applications such as those that design and distribute automated trading systems. These systems are programs created to carry out buy and sell operations in the market according to various parameters with which they were programmed as mathematical calculations or, technical indicators designed from mathematical formulas, which help to read the movement of the Market prices for certain periods. In addition to these companies, there are others dedicated to Forex autotrading , Forex signals , development of platforms to invest in the market, etc.

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