The development of Forex at a rapid pace contributes to the emergence of all new traders. The main participants of the Forex trading market are central and commercial banks, investments funds and companies, currency exchanges, brokerage and dealing companies, as well as traders.
The main participants of Forex
The first and, perhaps, the main participants are the central and commercial banks. They account for the lion’s share of all currency transactions in the interbank market. Being Forex regulators, central banks manage gold and foreign exchange reserves and conduct currency interventions. Thus, the Central Bank and the Treasury influence demand by raising or lowering the supply of national and foreign monetary units.
Investment funds and companies belong to the second group of participants. Placement of funds in securities of corporations and governments of different countries is their main activity. International corporations, in turn, invest these funds in production abroad. For normal financial activity, a constant exchange of one type of currency for another is necessary.
The third group includes currency exchanges, brokerage and dealing companies. Currency exchanges do not participate in exchange transactions as separate representatives of the market but form its structure. Although in some countries, there are organizations that perform currency exchange for legal entities. In this case, the state itself is actively influencing the exchange rate.
Traders, or individuals, represent the fourth, the most numerous group of participants. The development of the internet, the correct forecasting of the dynamics of exchange rate changes, the optimal choice of trading strategy, and numerous AvaTrade reviews allow them to receive a good profit on the exchange rate difference.