With a daily volume of $6.6 trillion, forex trading has become the largest financial market on the earth. Apart from the traditional stock market and bond market, forex trading comes with pleasant trading opportunities and novel attributes that surprise traders nowadays. And traders desperately adopt forex trading to earn the highest with minimum investments.
Traders are impressed with the volatility and time flexibility of the forex market, which attracts them towards this market. Here, in this article, we’ll learn about the forex trade and its participants.
So, let’s dive in!
Forex trade
Forex trade is the exchange of currency pairs by analyzing the price fluctuations. Forex trading is not a game for everyone. Hundreds of traders adopt forex trading and try hard but can’t get success. It requires basic skill, knowledge, discipline, experience, and consistency.
So, to become a successful forex trader, get proper knowledge about it and then take risk of your large investments to earn high profits.
Participants of forex trading
Who trades forex? There are many types of players behind the scenes of the forex market who trade it. Let’s have a look over all of them one by one.
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Commercial Banks and investment banks
These are the banks that usually act on their behalf or they offer services regarding the interest and needs of their clients. These banks facilitate forex transactions for their forex trader or execute speculative trade from their trading desk.
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Brokers
Brokers such as globex360, veracity market, and many others play the role of intermediaries in forex trading between financial institutions or maybe as a connection with private traders, in exchange for a commission.
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Central banks
Central banks such as the European Investment Bank (EIB), Bank for International Settlement (BIS), or any other play crucial roles as they represent their own country’s government. A Central Bank is responsible to enhance or stabilize the competitiveness of a certain country’s economy by fixing the price of the nation’s currency on the forex.
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Funds and investment entities
These funds and investment entities intervene in the forex market with analytical purposes or to acquire high profits.
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Non-financial companies
Non-financial entities or other companies are also involved in forex trading as they link to this market to achieve some investment or commercial objectives.
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Retail Investors
As compared to financial entities and companies, the volume of forex traders covered by retail investors is surprisingly low. However, it is not gaining more popularity. Retail investors base currency to trade with the combination of teaching analysis and fundamental analysis.
Bottom line
Long story short, it is the reason that forex trading has conquered the world within the past decade as it encourages everyone from the Central Bank to individual investors to actively analyze profits from price fluctuations. We have seen that forex trading is not a game for every player. Nevertheless, it has many types of players that are discussed above.
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