Who participates in foreign exchange trading?
The foreign exchange market is about trading between countries, the currencies of those countries, and when to invest in certain currencies. The foreign exchange market is traded between counties, usually completed by a broker or financial company. Many people are involved in forex trading, which is similar to stock trading, but FX trading is done on a much larger global scale. A large portion of transactions take place between banks, governments, and brokers and a small number of transactions will take place in retail environments where the average person involved in trading is known as a bystander. The financial market and financial conditions cause trading in the forex market to go up and down daily. Millions of dollars are traded daily between many of the larger countries, which will also include a certain amount of trade in smaller countries.
According to studies over the years, most transactions in the foreign exchange market are between banks and it is called interbank. Banks account for about 50% of transactions in the foreign exchange market. So if banks use this method extensively to make money for shareholders and for their own business betterment, you know the money has to be there for the small investor, fund managers to use to increase the amount interest paid to the accounts. Banks exchange money daily to increase the amount of money they hold. Overnight, a bank will invest millions in the foreign exchange markets, and then the next day will make that money available to the public in their savings, checking accounts, etc.
Commercial companies
Commercial companies also trade more often on the foreign exchange markets. Commercial companies such as Deutsche Bank, UBS, Citigroup and others such as HSBC, Braclays, Merrill Lynch, JP Morgan Chase and others such as Goldman Sachs, ABN Amro, Morgan Stanley, etc. are actively trading forex. markets to increase the wealth of stockholders. Many small businesses may not be as involved in the forex markets as some larger companies, but the options are still there.
Central banks are banks that play an international role in foreign markets. Money supply, money availability and interest rates are controlled by central banks. Central banks play an important role in forex trading and are located in Tokyo, New York, and London. These are not the only central locations for forex trading, but they are among the most important involved in this market strategy. Sometimes banks, commercial investors and central banks will suffer significant losses, which will in turn be passed on to investors. Other times, investors and banks will have huge gains.
