April 15

Who Are The Main Participants In the Foreign Exchange Market?


If you’re going to be playing a game, it’s well worth knowing who else is playing and what rules they are following.

As with life, there are levels when it comes to the trading hierarchy. The higher up the ladder, the fewer rules you have, and you get the more favourable conditions.

Profitable Trading

If you wish to succeed as a trader, you must release the urge to worry about what others have or don’t have compared to you and just play within your game rules.

Don’t blame others if you don’t get the results you want. I’m giving you information to understand better the game, not the opportunity to blame the broker or the market makers for your results.

It’s not an “unfair” advantage that other participants have; they just play the game by different rules. As retail traders, we are technically at the bottom of the pack.

That gives us some advantages if you know how to exploit it (which I teach in sprint 3 in my course).

Top Dogs

At the top of the pile are the major banks, also known as the market makers. Called the interbank market, these guys trade directly with each other. Often on opposite sides of an expensive restaurant table. Whoever is looking for the favour is the one paying the bills.

Because they take all the orders, it also means they know where your stops are because your stop is just an order in the opposite direction. In reality, they aren’t looking for our stops because, as retail traders, we’re just small fry.

Next, we have extensive commercial companies that take part in the Forex market for business purposes. For instance, a Toyota reseller in America must first exchange U.S. dollars for Japanese yen to purchase some cars.

Because their volume is relatively small in the grand scheme of things, they will typically deal with smaller commercial banks for their transactions. They do have to make deals with the market makers, however.

Otherwise, how would Toyota know when to schedule a release of a new model in America and be sure that the yen was weaker than the dollar? Remember that Toyota needs the yen to be weak to encourage the Americans to buy their product.

These are closely followed by the governments and central banks, such as the ECB, the European Central Bank, the Bank of England, and the Federal Reserve.

Just like companies, national governments participate in the forex market for their operations, international trade payments, and handling their foreign exchange reserves.

From time to time, they affect the Forex market by adjusting their interest rates by:

  • Speaking in public at a news conference.
  • Media appearances.
  • News announcements.
  • Or if they believe their currency is priced too high or too low, they will buy or sell their currency to shift it back to a price they believe to be a fair reflection of their countries economy.

The Rest

This leads us nicely to the speculators. These are the boys and girls who buy and hold currency in the hopes of selling it at a later date for a much higher price.

They make up 90% of all trading volume. Here is where the proprietary traders sit in the game. They are highly paid for their services because they make extraordinary profits for their backers.

Suppose you want to become one of these guys; you don’t need to learn how to trade because you will fall short. You need to know how to become a proprietary trader, precisely what I teach in my course.

The test you need to pass to become a proprietary trader is just doable by learning how to do trading, which is what 99% of training courses teach out there. You need to know how to BE a trader every day.

What you should do right now!

If you are struggling to successfully extract consistent payments from the markets, then I do suggest that you take a look at my “Do It Yourself” Trading Course.

In this course I will personally coach you the necessary technical and psychological skills needed to be a successful Prop Forex Trader and create the life of your dreams, whatever they might be.

Callum McLean

I believe that everyone has the right to be financially free. I founded "Wealth 4 All", an organization that guides people from all walks of life to achieve that goal, either by teaching them how to trade or through passive investments. Connect with me to get started today.

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