The Forex market has a broad range of participants that play an important role and all of them have different motives. Here are some of the major participants:
Central Banks – Government agencies that control their national currencies in order to maintain a healthy economy. They are responsible for employment situation, interest rates, trade balance, and gross domestic product (GDP). These are impacts that affect the foreign exchange market. There are more than 3,500 banks that participate in the forex market.
Hedge Funds – Investment funds administered by professional investment firms that collects capital from investors, accredited or institutional, and invests in assets. Hedge funds are an alternate route of investing that targets aggressive returns using a variety of strategies to generate profit for their investors.
Financial Institutions – Companies that deal with financial and monetary transactions such as loans, deposits, investments, loans and currency exchange. Financial Institutions engage in a broad range of business operations for individual and commercial clients such as commercial banks, investment banks, insurance companies and brokerage firms.
Foreign Exchange Brokers – Brokerage firms that provide a platform for traders to buy and sell foreign currencies. Foreign Exchange Brokers mostly service retail investors and leverage their money so they can trade larger amounts than what is deposited in their account.
Retail Traders – Individual investors who buys and sells securities or exchange traded funds through brokerage firms or other types of investment accounts. Retail traders typically invest for their own personal accounts and often trade with small amounts as compared to institutional investors such as mutual funds.