Lesson 8: Different players in the Forex market

It is common knowledge that the forex represents a trading volume of "over $ 4 trillion" per day, but who are the different players? What are their "shares" in this daily volume of 4000 billion dollars?

Ranking of different types of players in the forex market:

Commercial banks: 43% 
Institutional investors: 30% 
Multinational companies: 17% 
Central banks: 8% 
Individual investors (you and us): 2%

Now that we know the different players in Forex, we should be interested in their specificity, and the particularities of their interventions on Forex:

Commercial banks

Commercial banks may have several reasons to intervene on Forex. They may engage in speculation transactions on their own behalf or on behalf of their clients, or they may also participate in mergers and acquisitions transactions requiring the conversion of very high amounts (repurchase of companies, international takeover bids, etc.). Commercial banks are also very active in the analysis of the Forex market, and you can also find on PFX Premium the portfolio of their trading recommendations.

Institutional Investors

These are pension funds, hedge funds, or insurance companies. Some of them intervene on the forex by speculation, or for hedging against foreign exchange risk, in the case of insurance companies. Institutional investors represent an increasingly high proportion of Forex traders.

The central banks

The central banks therefore intervene relatively little on the forex. Indeed, it is quite rare for a central bank to buy foreign currency directly from the market. Some central banks do more than others, such as the SNB, which sometimes has only this option to defend the EUR / CHF floor of 1.20. But the limited intervention of the central banks does not prevent them from having a considerable influence on the forex market, since they are the directors of monetary policy, and sometimes more.

Learn all about central banks and their operation in our training center at fundamental analysis!

Independent independent traders

Finally, it is individual investors, like you and us, who represent the most restricted group of Forex investors. However, more and more individuals are interested in forex trading, and their number is growing, notably because of the many advantages that this market offers for individuals. Some individuals engage in "leisure" trading and earn additional income, while others manage to make it a professional activity.

What should be emphasized is that the fact that individuals represent the smallest group of speakers on Forex does not mean in any way that they are less well placed to succeed! The influential information on the forex is accessible to all at the same time.