Forex Trading Course - Part 1.5

Who Else is Trading in the Forex Markets

This is an important one, although it may not seem like it. Think of this lesson as a way of learning about your competition and the players who drive changes in price in the markets.

 

REMEMBER, trading forex is a zero-sum game! When you win, someone else loses. When you lose, someone else wins.

There are many different participants in the forex markets. Some of these are as follows:

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  • Big Banks - The big banks trade in huge volumes and speculate on the direction of price to make a profit as well as facilitating transactions for clients. Because they trade in such huge volumes, they can often drive price in the direction that they want it to go.

  • Central Banks - Various Central Banks of different countries will get involved in the markets to help keep their own country's economy stable. For example, the Bank of Japan (BoJ) used to aim to keep the Japanese Yen price low to protect Japanese exports. Central Banks regularly use tools such as interest rates to keep inflation close to their target.

  • Investment and Hedge Fund Managers - As you can probably guess, these are speculating on the direction of price with the intention of sustaining long-term growth. 

  • Multinational Corporations - This is an interesting one, although MNC's aren't speculating on price to make a profit, they are speculating on price to import and export goods at the best prices possible.

  • Retail Traders - Retail Traders are individuals who are trading their own money with the intention of making a profit.