Forex Market Operators
In a usual market organization, there are people who work in the market or take part in it such as salespersons, loaders, customers and sometimes a host of other players in the supply chain. In the Forex market, the major operators are different: they are usually large beings with substantial buying or selling power and they fall into the following categories.
• Banks
The main members in the Forex market are banks. It may seem like Central Banks and international companies effect the market more considerably but that isn’t so. If you gather the foreign exchange dealings of all the banks together you would see that it is they who produce most of the currency processes in the market, both on behalf of their customers and for themselves.
Furthermore, just about all of the market members as well as you, us and Bill Gates keep their savings in, exchange their currency with and borrow from banks. Banks are like big pots of stew where lots of ingredients all cook together in one place. All the customer dealings happen there and at the end we get general supply and demand. If demand rises – the brew gets hotter, if it drops – the brew cools! When a bank is not able to provide services to its customers it try to find help from other banks or tries to take risks on its own account. Once again, it reminds us that the Forex market is not an exchange but a market of interbank dealings really (as in the end all the activity is just a diversity of banking).
• Central banks
Central Banks support the exchange rates of their relevant national currency. They flat their currency swings and help steady their economies. They are responsible for the national reserves of other currencies and of the nation’s gold. They control the refinancing rates and help create conditions for the expansion of the national market.
Fed: The most prominent institutions from the viewpoint of Forex are the US Federal Reserve.
ECB: the European Central Bank
BOE: the Bank of England and ‘Old Lady’
BOJ: the Bank of Japan
As we can see, the impacts stretch globally and include North America, Europe and Asia. Central Banks are mainly responsible for smoothing exchange rates. To help demonstrate using a metaphor, they are like the conductor of an orchestra making sure not to allow the rhythm of the ‘market’ to accelerate too much, or to go too slowly or to play out of tune. In other words, Central Banks are responsible for large and long-term changes in the market and for the deficiency sharp spikes in exchange rates.
• Large International investment firms
Exporters and Importers buy their goods from foreign countries, so creating a demand for the foreign currency of the country they are importing from. Exporters, on the other hand, sell popular foreign countries goods, for instance, oil, so creating external demand for their national currency. Though, some exporters will also accept a market operator of the Forex market.
In a usual market structure, there are people who work in the market or take part in it such as salespeople, loaders, customers and sometimes a host of other players in the supply chain. In the Forex market, the major participants are different: they are usually large entities with substantial obtaining or selling power and they fall into the following categories. 12 major foreign currency (usually US dollars or euros) so increasing the demand for these currencies, and in simple terms, increasing their amount. On the other hand, both exporters and importers create further demand for their national currency when they need it to pay salaries or taxes. Moreover, they borrow money from banks, including foreign currency, they invest deposits, and they buy securities, possibly precious metals and so on.
• Individuals
Everyday people help the Forex market. People in all around the world change currencies, deposit money to banks, receive a salary, pay taxes, and ….
The meanings of these transactions are individual’s affects in the interbank currency markets. Since the beginning of the 1990s, we have been able to participate in trading Forex via brokers. It does not matter that private individuals do such small transactions, their number makes them an important part of the market.
Being a “big pot of stew” the Forex market contain of participants of various sizes from different countries. Traditional national currency markets can be chosen in the category of general market participants. In general, the same things occur in those exchanges as in the Forex market but in lower volume. Besides that, not only currencies are traded on those exchanges but also some linked tools like options, futures contracts, etc.
There are very many “modern” companies and extensive investment funds with offices all over the world. These do international deals, work with their own set of financial securities and buy and sell the securities of different countries so directly affect the Forex market.
• Banks
The main members in the Forex market are banks. It may seem like Central Banks and international companies effect the market more considerably but that isn’t so. If you gather the foreign exchange dealings of all the banks together you would see that it is they who produce most of the currency processes in the market, both on behalf of their customers and for themselves.
Furthermore, just about all of the market members as well as you, us and Bill Gates keep their savings in, exchange their currency with and borrow from banks. Banks are like big pots of stew where lots of ingredients all cook together in one place. All the customer dealings happen there and at the end we get general supply and demand. If demand rises – the brew gets hotter, if it drops – the brew cools! When a bank is not able to provide services to its customers it try to find help from other banks or tries to take risks on its own account. Once again, it reminds us that the Forex market is not an exchange but a market of interbank dealings really (as in the end all the activity is just a diversity of banking).
• Central banks
Central Banks support the exchange rates of their relevant national currency. They flat their currency swings and help steady their economies. They are responsible for the national reserves of other currencies and of the nation’s gold. They control the refinancing rates and help create conditions for the expansion of the national market.
Fed: The most prominent institutions from the viewpoint of Forex are the US Federal Reserve.
ECB: the European Central Bank
BOE: the Bank of England and ‘Old Lady’
BOJ: the Bank of Japan
As we can see, the impacts stretch globally and include North America, Europe and Asia. Central Banks are mainly responsible for smoothing exchange rates. To help demonstrate using a metaphor, they are like the conductor of an orchestra making sure not to allow the rhythm of the ‘market’ to accelerate too much, or to go too slowly or to play out of tune. In other words, Central Banks are responsible for large and long-term changes in the market and for the deficiency sharp spikes in exchange rates.
• Large International investment firms
Exporters and Importers buy their goods from foreign countries, so creating a demand for the foreign currency of the country they are importing from. Exporters, on the other hand, sell popular foreign countries goods, for instance, oil, so creating external demand for their national currency. Though, some exporters will also accept a market operator of the Forex market.
In a usual market structure, there are people who work in the market or take part in it such as salespeople, loaders, customers and sometimes a host of other players in the supply chain. In the Forex market, the major participants are different: they are usually large entities with substantial obtaining or selling power and they fall into the following categories. 12 major foreign currency (usually US dollars or euros) so increasing the demand for these currencies, and in simple terms, increasing their amount. On the other hand, both exporters and importers create further demand for their national currency when they need it to pay salaries or taxes. Moreover, they borrow money from banks, including foreign currency, they invest deposits, and they buy securities, possibly precious metals and so on.
• Individuals
Everyday people help the Forex market. People in all around the world change currencies, deposit money to banks, receive a salary, pay taxes, and ….
The meanings of these transactions are individual’s affects in the interbank currency markets. Since the beginning of the 1990s, we have been able to participate in trading Forex via brokers. It does not matter that private individuals do such small transactions, their number makes them an important part of the market.
Being a “big pot of stew” the Forex market contain of participants of various sizes from different countries. Traditional national currency markets can be chosen in the category of general market participants. In general, the same things occur in those exchanges as in the Forex market but in lower volume. Besides that, not only currencies are traded on those exchanges but also some linked tools like options, futures contracts, etc.
There are very many “modern” companies and extensive investment funds with offices all over the world. These do international deals, work with their own set of financial securities and buy and sell the securities of different countries so directly affect the Forex market.