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Forex currency trading guides for beginners - The Major Players

The main players in the forex market

As a beginner trader, it is essential that you know who the major players in the forex market are. Before the late 1990s, only the "big boys" could trade in the market. You were required to have a starting capital of several millions dollars to enter the forex trading game. This is because forex was initially created just for the banks and institutions. Then came along the internet and everything changed. Now you and I constitute and largge part of the forex trading market.

Find below the four major players in the forex game:

The Mega Banks

Because the forex spot trading market is decentralized, the biggest banks of the world control and determine the currency exchange rates. These big banks are known as the interbank market.They handle an mega amount of forex trades each day on behalf of their clients and themeselves. Examples of these banks are UBS, Barclays Capital, Deutsche Bank, Citigroup etc. You can safely conclude that the forex market is the interbank market.

Big Commercial Institutions

Large companies such as Microsoft, Google etc can also play a major role in the forex trading market. The volume of trade involving these large companies is much smaller than the interbank trades so these companies are usually clients of the big banks.

If Microsoft for example, wants to merge with another company in Asia, it must change US dollars into the local currency. These types of mergers and acquisitions can result in currency rate changes. So it is important for you as a trader to know about these acquisitions because the market usually reacts to them

Governments and Central Banks

Governemts and their central banks can also have a major impact on the currency rates. They are very heavily involved in foreign currency transactions to make international trade payments and managing foreign reserves.

Central banks have a major influence on the forex market. The market almost always reacts when the central bank of a "major currency" country adjusts interest rates (hopefully you know what the major currencies are by now). When a governement thinks thier currency is under-valued or over-valued, the central bank can greatly influence the currency's price by setting off huge buys or sells of their currency to re-align the exchange rate.

The Speculators

The final and perhaps biggest major players in the forex market are the speculators. This group of traders constitute about 90% of the volume of trade in the forex market. This is where you and I fall. The speculator usually goes in to make a lot of money and a lot of them don't becuase they don't know the basics. But don't worry, we are here to make sure you don't fall under those who don't make money.

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