Who trades Forex?

Traditionally, forex trading was largely confined to well-capitalized financial institutions and corporations. While such large players still dominate the Forex market in terms of overall Forex transaction volumes, the recent rise of online retail forex trading has made the Forex market accessible to just about anyone with a computer, an Internet connection, and some funds to put at risk. There are many players in the forex market:

Banks

The greatest volume of currency is traded in the interbank market. This is where banks of all sizes trade currency with each other and through electronic networks. Big banks account for a large percentage of total currency volume trades. Banks facilitate forex transactions for clients and conduct speculative trades from their trading desks. When banks act as dealers for clients, the bid-ask spread represents the bank’s profit. Speculative currency trades are executed to profit from currency fluctuations.

Individual investors

The volume of trades made by retail investors is extremely low compared to that of banks and other financial institutions. But the forex trade is growing rapidly in popularity. Retail investors base currency trades on a combination of fundamentals and technical factors.

Bank forex customers

An important type of customer trades forex through the dealing desk of a major forex bank.

Currency Futures Traders

Smaller currency speculators traditionally traded currency futures using the major futures exchanges. Futures traders might stand and deal directly on the exchange floor to keep in touch with the ebb and flow of the market, or they might sit in an off-floor office, monitoring market movements.

Retail Forex Speculators

These days, the rise of online forex trading has opened up the retail forex market to virtually anyone with a computer and the willingness to risk their funds in forex trading.

Some such retail traders may just use a forex trading robot to trade their personal accounts for them. Others might use Forex trading signal subscription services or signal-generating programs to give them trade ideas. Still, others enjoy the fact that they can now develop their automated trade plan with the aid of an online forex trading platform capable of supporting automated trading.