Key Forex Trading Players Reviewed
We have already said that the Forex market is simple to understand. It 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 vast 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 in 2008, the central bank lowers interest rates to help the economy get back on track. Its impact on the supply and demand for the currency is tremendous. More on this can be found on our Fundamental Forex Trading Strategies page. Benchmark Interest Rates Examples of interest rates in the major markets (accurate as of 3/2020):
| Interest Rate | Country |
| U.S.A | 0.25% |
| Eurozone | -0.50% |
| UK | 0.10% |
| Switzerland | -0.75% |
| Japan | -0.10% |
| Australia | 0.25% |
| Canada | 0.25% |
| Brazil | 3.75% |
| New Zealand | 0.25% |
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 the market’s supply and demand. Examples include Citigroup, Barclays, JP Morgan, UBS, Equity Bank, KCB Bank, 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 options contracts to exchange their currency for Euros at the current exchange rate in the future. This affects the current and future rates. 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 offer trading platforms to small/medium traders worldwide. 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 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.