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Tuesday, April 08, 2025

The Major Player In Foreign Exchange Market

Published on Minggu, 16 Februari 2014 19.41 // ,

Foreign exchange is simply the largest market today. Like any market, foreign exchange trading materialized to allow buyers and sellers of goods - particularly in foreign exchange, goods refer to currencies. Transactions and exchanging of assets can be done in foreign exchange currency trading. The foreign exchange market could be anywhere in the world accessible through phone or Internet. Physical markets come as financial exchange centers (e.g. Chicago Board of Trade).

Foreign exchange trading can be a very profitable game to be involved with. The bigger the amount in play, the greater the opportunity to gain more profit. But foreign exchange can be an expensive game just like other sports - there is equipment and training to think about. A potential foreign exchange trader needs capital and trading implementation.

Who are the main players in foreign exchange? There are at least six of them: commercial and investment banks, central banks, hedge funds, corporations, high net-worth individuals, and just simple individuals.
Commercial and investment banks are the natural players in foreign exchange for all other foreign exchange trading participants must deal with them. Foreign exchange currency trading began as an added service to deposits and loans offered by commercial banks. The profitability of foreign exchange trading is a perfect characteristic for banks to be involved.

Another player, the central bank is separated from commercial and investment banks because it is not after the profitability of foreign exchange currency trading. The main purpose of central banks is to provide adequate trading conditions. Central banks intervene in economic or financial imbalance in the foreign exchange market.

For corporations, another player in foreign exchange market, they were not interested in foreign exchange trading but the trend of companies going international and the tight competition among other companies made them think twice about not going into foreign exchange trading.

High net-worth individuals engage in foreign exchange through accessing commercial and investment banks. Individual players in foreign exchange are mostly tourists using their local currency to purchase foreign-made products and services (such hotel accommodation).

A relative new player in foreign exchange currency market is the hedge fund. Hedge fund is a partnership of high net-worth individuals that invest at least a million in foreign exchange trading.
Even with six major players, the potential of foreign exchange has not yet been consumed entirely. And so investment and commercial banks together with some trading companies have paved a way for individual investors to participate in foreign exchange currency trading. Also foreign exchange information is made available to most individuals through personal computers and Internet so as to attract more individual investors into foreign exchange.

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