Introduction to foreign exchange trading 10 - major players in the foreign exchange market
Now, you know the overall structure of. Next, we dig deeper to find out who are the people standing on the stairs? It's important to understand the nature of the spot and know who is the real player.
Until the late 1990s, only "big players" could participate in the game. The initial requirement is that you can only trade in foreign exchange if you have between $10 million and $15 million. Foreign exchange was originally used to satisfy the needs of bankers or large institutions, rather than our "minions.". However, with the rise of the Internet, online foreign exchange trading companies now have the ability to provide trading accounts for US retail investors.
Less nonsense, here are the main participants:
1. Super bank
Given the dispersion of the spot foreign exchange market, it is the world's largest banks that decide. Based on the supply and demand of money, these large banks "set" the bid / sell spread that we like or hate. (these big banks are what we usually call market makers)
These large banks are collectively referred to as interbank. These banks provide large-scale foreign exchange transactions for their customers and themselves every day. Some of the super banks include UBS, Barclays, Deutsche Bank and Citibank. You can say that the interbank market is a foreign exchange market.
2. Large commercial enterprises
The purpose of the company entering the foreign exchange market is to carry out business. As a result, apple must first convert U.S. dollars into Japanese yen to import electronic equipment from Japan. Because the scale of foreign exchange transactions of large commercial companies is much smaller than that of inter-bank market, this type of market participants usually conduct foreign exchange transactions with commercial banks.
Mergers and acquisitions between large companies can also cause exchange rate fluctuations. In international cross-border M & A, large-scale currency exchange will be involved, which may cause exchange rate fluctuations.
3. Governments and central banks
Governments and central banks, such as the European Central Bank, the Bank of England and the Federal Reserve, are also regularly involved. Like enterprises, government agencies at the national level are also involved in the settlement of international trade, the management of their foreign exchange reserves and other operations.
At the same time, when the central bank adjusts interest rates to fight inflation, the central bank's behavior will also lead to exchange rate fluctuations. The central bank can influence the value of money through interest rate means. When the central bank intervenes in the foreign exchange market, there will even be large fluctuations, which may be direct intervention or indirect intervention. Sometimes, the central bank thinks that the price of its currency is overvalued and undervalued, and they will sell / buy on the exchange rate to change the trend of the exchange rate.
4. Individual speculators
"To participate is to make money!"
This is probably the voice of speculators. The foreign exchange trading scale of speculators accounts for 90% of the total foreign exchange trading scale. These speculators have various types and different scales. Some speculators are full of money, while others are short of money. However, they are involved in the same purpose - to make money.