Structure and Players of The Forex Market!!

Structure and Players of The Forex Market!!

''Amateurs think about how much money they can make. Professionals think about how much money they could lose''. If you can be professional, trade is for you. Otherwise, stay away from trading, specifically from Forex.

Foreign Exchange or Forex trading stands for exchanging currency not physically but virtually. Ups and downs are like uninvited guest workers here. If you can stay calm only, then you should start Forex Trading. If you don't, then brainstorm for anything else.


An amazing fact about Forex Trading is this market is open 24/7 globally. That provides you the opportunity to tread as per your wish. It doesn't matter from where and when you start your trading. You can choose your time slot to trade. But as you know, all trading hours aren't the same in the Forex market. So pick your hour according to your strategy.

It goes without saying that Forex is the world's largest trading platform. Here almost $6.6 trillion is traded in a day. So, you can understand how big this market is and how many players participate here.

If you are new or even thinking about forex trading, you have to learn some basic protocols about forex such as forex market structure, market players, time to trade, trading process, etc. In this blog, I will try to disclose some of them.

Forex Market Structure

Trading is always going with ups and downs. If you want a great experience in trading, you should have proper knowledge of the trading market and its structure, without knowing that you have to face awful situations. 

Here I'm disclosing the Forex market structure with a comparison method to well-known trading, ''Stock Market''.

The stock market works with the seller and buyer in a chain, Master of the universe (one price & controls the spread). This market is a centralized and monopolistic market. Naturally, market control is handled by the specialist. The prices are changed for specialist benefits and he is also forced to maintain clients' demand.

Forex market Structure offers many options for the traders, which makes it more competitive for the brokers because of too many choices. The most interesting fact in the forex market structure is it has no fixed workplace, and you can trade from anywhere in the world.

This market is decentralized, so some people assumed it as chaos. But the Forex Market isn't disorganized! They follow a hierarchy.

The Interbank market is at the top of the hierarchy. This market is composed of the largest banks in the world, and they trade directly with each other or through third-party brokers. 

EBS Market & Reuters Matching always competes with each other. 

All the banks of the interbank market can see the offering rates, but not every bank can trade at those prices. The rates are determined by the trading partners' existing CREDIT connection.

Here I can assure you that Forex Market is far better than Stock Market.

Now it’s time to disclose the players of the forex market.

Players of Forex Trading

The forex market doesn't depend on one place. It has so many players of different kinds. Here we introduce some leading institutions and traders of the forex markets:

Commercial and Investment Banks

A large number of currencies are traded on the interbank market protocol. This market is based on electronic networks. All banks can trade here with each other, no matter how the banks' size is. 

Large banks deal with the massive currency, and small banks participate for a short amount of custom. They provide facilities for the Forex trader by making transactions easy and conducting speculative trade.

Banks act like dealers between The Forex traders. Here bid-ask spread is used for the bank's profits. For gaining profit speculative, the currency traded and fluctuation brings variety.

Central Banks

Central banks represent their national government. They are significant players in the forex trading market. Central banks' norms influence the value of the forex market.

The central banks fix up the price of their native currency. This selected currency exchange rate regimes the Forex trading market. There are floating, fixed, and pegged types of rules for the exchange rates. They take these steps in the forex market for stabilizing that nation's economy.

For market volatility, central banks use all these strategies. Their doing is like a long-term indicator for the forex trader. It's a good initiative for all traders.

enlightenedHot Topic: Best 3 Effective Facts That A Forex Trader Must Know!!


Investment Managers & Hedge Funds

They are the second prominent player in the Forex market. Large accounts like pension funds, foundations, endowments, etc., currencies are handled by Investment managers, and they participate in Forex trade for maintenance.
They invest in the forex market according to their strategy and maintain speculative forex trade.

Multinational Corporations

By importing and exporting any goods and services, multinational corporations took part in Forex trading. They trade forex to decrease the risk combined in currency transactions.

Prime Brokers

Many banks use a prime brokerage to operate their trading. Non-bank prime brokers also actively support the Individual traders who have required capital to trade and other institutional members in the market.

Retail Brokers

Retail brokers give access to the retail trades in the forex market. They help STP (Straight-Through-Processing) brokers and ECN to create a market. As market creators, retail brokers behave as dealers, not as brokers with their clients.

These are the prime forex market players, but there are more players in the Forex market, which made this market huge. They follow different trading styles to manage their trade.

To conclude, I said to all of you that- ''In investing what is comfortable is rarely profitable''- So think before your doing and never argue with your trading system because lousy workman quarrels with his tools.

Here I have to stop and Wish all of you have a happy, profitable, safe, and secure trading experience.