Main Participants In Fx 


The fx market is comprises of different participants and each participant has an important role to play. It is important for fx beginners to know the major participants in fx market and their roles. Let’s find out the major participants in fx online and their roles in the fx market.

Given below are the major participants in online fx market:

Commercial banks – Banks have a major role to play in the fx market. Most of the exchange transactions are done via commercial banks. These banks employ traders to trade its proprietary accounts so as to make income. Moreover, the banks also purchase or sell currencies on behalf of clients for commercial or trading purposes.

Central banks – Central banks are also one of the main participants in fx trading that plays an essential role in several ways. They take part in the fx market to control over such factors like supply of the money, inflation level as well as interest rates. They can stabilize the market through the use of their foreign exchange reserves. In other words they help to stabilize the fx market.

Commercial companies – Commercial companies are also another group of participants in fx market that has some role to play in the forex market. They usually trade small amounts in comparison to the volume of trade of banks as well as speculators. Their trades usually have short-term effects and small impact on the currency market. But as far as long-term is concerned, their trade flows affects the currency exchange rates.

Investment management firms – This also includes in one of the main fx trading participants. Their primary role is to deal with foreign securities. They are responsible for managing large accounts on behalf of their clients which include pension funds, endowments and other entities. However, the deals conducted are not regarded to be speculative but a profitable one.

Hedgers or hedge funds – The other primary participants in fx trading also include hedgers or hedgers funds. These participants are mainly businesses or other organizations that take part in international trade. But they charges performance fees. Also only a few investors or traders are able to take part in hedge funds. Their main strategy for taking part in fx market is to minimize the exposure to certain unwanted business risk. This enables them to gain profits from its investment activities. These often enter into futures, derivative or swap contracts.

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