Participants in the forex market -

Once you have become a trader - forex investor, it is essential to learn who is involved in the forex market. "Knowing we know a hundred battles and a hundred wins".

Participants in the forex market include:


Central banks of countries always need foreign exchange reserves to ensure the effective implementation of monetary policies.

Central banks can directly participate in the foreign exchange market by buying and selling foreign currencies to change the supply and demand of foreign currencies, leading to changes in the exchange rates of currencies. Or indirect intervention by raising or lowering the basic interest rate.


Commercial banks trade forex with two main purposes.

First, to serve the foreign currency needs of customers. Most of these customers are businesses that have traded goods with foreign countries. This activity is carried out through branches of banks in localities. This is not a contractual difference transaction and it is not a speculative activity.

Monday, commercial banks themselves are also involved in investing currencies in the forex market to make a profit.

To balance foreign currency, commercial banks and central banks transact with each other via platforms such as Reuters, EBS, etc. in the upper part as the above model.


Forex brokers provide the platform for clients to open forex accounts. In the world today there are hundreds of such official forex brokers. Forex brokers are not involved in trading, they are only intermediaries that provide forex services to clients and enjoy customer trading fees (Spread and Commission).

The trading platforms that all Forex Broker are using to provide retail customers today are indispensable for MT4 and MT5 software.

Forex Broker connects with banks to provide quotes to customers. On the other hand, they pushed customers' trading orders into the international forex electronic system.

It is the combination of Forex Brokers with banks that has created the ability to split large orders from the interbank floor so that many people can participate in the forex market, not just trading between banks. line. This activity has boosted the liquidity of the forex market. Therefore, the seller can always find the buyer at certain prices and vice versa.


Market Makers look like a Forex Broker. They also set up trading platforms with retail customers, but in fact they did not have direct connection with banks. The orders are not connected and transferred to the international market. Their profits partly come from customer transaction fees, most of the rest comes from customers' losses.

The rationale for this approach of Market Maker is that they believe that most retail customers will suffer a loss. So they deal directly with guests' orders, and obviously they conflict with customers. They can use tricks to deplete your account. Market Makers are not regulated by any laws, they create the market, so it is called Market Maker.

SMALL speculators and traders trading Forex for a profit.

Previously forex trading was only for banks called interbank transactions. But since 2000, with the rapid development of the internet and trading software, all organizations and individuals can connect and trade directly with foreign exchange investors around the world. .

Speculators can be one foreign exchange investment fund, or an individual like you and me opening an account at a forex platform to trade on our own.

Speculative activities are performed in the form of contracts for differences (CFD) as mentioned above. Currently, about 90% of trading activities in the forex market are speculative.


All 4 groups above directly participate in the global internet network forex trading. There is also a group of other objects that participate in the forex market, but not in the internet trading system. They are retail customers who buy and sell money through branches of commercial banks or gold shops. rather than opening trading accounts through Forex Brokers.

Their purpose is to serve commercial needs (buying foreign goods or traveling, or exchanging money to pay salaries for international staff in USD ...). This could be import-export businesses, multinational companies and individuals.

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Author: Pham Khuong

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