The Forex Leading Players

Central Banks and Governments

In order to indemnify economic permanency, money resources ought to be regulated by Central Banks. The FX market is affected by the applied strategies of governments and Central Banks.

Banks

Banks are the main supporters of most FX turnover. Openly billions of dollars could be traded daily by huge banks. They can make a deal with their customers to take a risk for them on the FX market or clients can do it themselves. 

Hedge Funds

The enormous liquidity of the FX market makes it a desirable place to trade. Hedge Funds have gradually assigned percentages of their portfolios to speculate on the FX market. Hedge Funds can benefit from a much higher degree of leverage usually found in the equity markets. 

Corporate Businesses

The backbone of FX market is worldwide trade. Several firms have to import or export goods to different countries all around the world. Payment for these goods and services’ might be made and received in different currencies. In order to facilitate trade, numerous billions of dollars are exchanged everyday. A company's balance sheet can be intensely affected by the timing of those transactions

The Man In The Street

The man is the street plays a part in today’s FX world as well. Each time he travels on vacation, he has to buy that country’s currency and again change it back into his own currency once he returns. He is in fact trading currencies unknowingly. Every time he purchases goods and services whilst overseas his credit card company has to convert those sales back into his base currency in order to charge him.

Speculators and Investors

Euro will appreciate against the US Dollar and take what is called a long position in Euro. If the Euro does in fact gain ground against the US Dollar they will have made a profit.

Speculators and investors should be differentiated here; taking into that an investor has a much longer time horizon in which he expects his investment to yield a profit. Putting aside the difference between investors and speculators they will both approach the FX market to exploit the movement in currency pairs. They both have their reason for believing that a particular currency will perform better or worse as the case may be and will buy or sell accordingly. They may decide that the Euro will appreciate against the US Dollar and take what is called a long position in Euro. If the Euro does in fact gain ground against the US Dollar they will have made a profit.