Who Trades in Forex?

It is not only important to understand the nature of the Forex market, but also to be aware of the key players and the types of trading activities they perform. This knowledge allows you to better position yourself strategically within this trading environment. So, who trades in the currency market?

1. Central Banks

It can be said that, aside from knowledge, money is the most powerful weapon. The supply of money is managed by the world’s central banks, all of which are part of a group known as the “G20.” These centralized institutions control a large portion of the Forex market through interest rate policies and inflation management, thereby weakening or strengthening the purchasing power of a currency. Every country in the world has a central bank that manages its national currency. Central banks are responsible for maintaining the economy and are the “big fish” in the financial ocean, determining exchange rates.

2. Businesses

A business importing materials from abroad must first convert its own currency into that of the country where the transaction will occur. The price and value of a country’s currency will impact the potential profits or losses of a large company. Businesses monitor exchange rates and analyze the time periods during which currency values change, as well as their overall trends in appreciation or depreciation relative to other currencies.

3. Smaller Banks

Major commercial and investment banks worldwide play a significant role in currency transactions within the Forex market. By trading as part of a service for clients who deposit or borrow money, they can generate substantial profits. For example, an individual savings account (ISA) can provide an annual yield for clients. Banks such as Deutsche Bank, JPMorgan, and Goldman Sachs control around 80% of the market, due to the capital and power they possess in Forex. This also means they can influence prices, driving exchange rate movements to earn profits. Many banks have their own trading platforms, which allow them to operate differently than standard retail traders. The larger the bank’s capital, the better the exchange rates it can offer.

4. Hedge Funds

Hedge funds are well-known for making millions every day, sometimes helping the wealthy become even richer! They trade both regulated and unregulated funds using high-risk but clever strategies to generate large profits for their clients. Major hedge fund transactions and private group operations can significantly impact market movements and sudden volatility. Hedge funds often hedge positions in specific markets, maintaining inverse correlations between assets to protect themselves against sudden instability. Leading investment firms and hedge funds provide opportunities for ready investors and can often yield 3–5% per month for clients. Investor George Soros is famous for earning $1.1 billion in less than 30 days during the GBP collapse, earning him the nickname “the man who broke the Bank of England.”

5. Retail Traders

The introduction of electronic trading platforms from the 1980s onward allowed ordinary individuals to access the Forex market and pursue individual profits. However, trading blindly without proper training often leads to small accounts being swallowed by the “big sharks.” It is well-known that 90% of retail traders lose in the Forex market, which benefits brokers and other market participants. Nevertheless, through smart work, discipline, patience, and analytical interpretation of price action, there is always a chance to join the 10% of winners. Living a lifestyle of freedom, unique to no other business on the planet—who wouldn’t want to be part of this crew?