How to be a TRADER part 6: Meet the Players

How to be a TRADER Part 6 – Meet the Players!

We now know about “The Ladder”, but whaty about the people ON that ladddr? WHo are they?
Lets get stuck in!

Lets be clear, Forex was initialy inteded to be used by the big guys, you know the ones – those who had 10 milklion $ plus to play with. It was that way at least until the late 90’s.
But that was before the internet became a standard tool for the masses, which opened up the platform for Brokers to offer trading accounts to us little people too.

Here are the Market Players:

1) Super Banks

The largest banks int he world are those who determine the exchange rates, based on supply and demand. This collective of superbanks is known as the interbank market.
Some of these banks include Citi, JP Morgan, Barclays, UBS, HSBC etc.

2) Large Commercial companies

Did you know that companies actually take part in the FX markets to actually conduct business.

EXAMPLE: When Apple purchase electronic electronic parts for their products from Japan, they pay in Japanese Yen… so to do that, they have to change their USD to JPY in order to pay.
Typically they will deal with commercial banks for such transactions.

Also – how about company aquisitions ? If a British company buys an American company, then they will need to swap their pounds for dollars in order to make the payment.
If its a multibillion dollar/pound company, then these transactions can have quite the effect on currency flow and therefore the prices.

3) Governments and Central Banks

Governemnets and Central Banks such as the Federal Reserve, Bank of Engalnd, Bank of Canada etc are also constatly involved in the FX Market too.
There are international trade payments to think about as well as their FX reserves, and at the same time they adjust their exchange rates to control inflation, and this has a direct effect on currency value.

4) The Speculators

“The Speculators” account for around 90% of the market trading volume, and they come in various forms.
Simply put, these are the people looking to make money by trading lots of it – This is the catagory we fall in to.

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