There was a time that only ‘kink kong’ financiers could trade in the forex market. But everything changed when people gained access to the internet. Before the 1990s, you needed at least ten million dollars before you were allowed into the market. Today, you can even trade for a big chump while you deposit only a small portion of the required money.
The major Forex traders today include:
1. The Super Banks
‘Super’ isn’t an exaggeration. Any bank with the capacity to have a piece of the 1.5trillion dollar daily market exchange is ‘super.’ These banks determine the exchange rates of each currency—literally, the demand and supply relationships guided by many factors help them determine the prices of each currency, and they trade for innumerable institutions and themselves. These banks are called flow monsters.
2. Large Corporations
Many American companies hire labor from Asia, and they have to pay their skilled and unskilled laborers. They cannot pay them in dollars, no! They have to buy the Chinese or Japanese currency with their dollar to pay for whatever services or products they use in Asia.
3. Governments of Different Nations
Central banks of different countries also participate in the foreign exchange market for various reasons including, foreign exchange reserves and international trade payments. Governments also influence foreign exchange rates whenever they decide—through policies, change interest rates, or if their actions lead to inflation.
Speculators—most likely your category, form the bulk of the forex market. Speculators buy a currency against another, hoping that a change in the exchange rate will favor them. Speculators can win big—and also lose big. They can also have small winnings. As a speculator, you are in for the big bucks. Although some people think it is a gamble, it is not. It is calculated risk done in a market that must be mastered.