Undertanding the Forex Players - Know Your Place in the Structure
The largest Forex players all belong to an elite inner circle of trading institutions. These "big guns" work with razor thin price spreads and typically deal billions of dollars each day. These top level players are responsible for more than 50% of the daily market activity.
Here is a list of the top 10 players:
Deutsche Bank
UBS
Citigroup
HSBC
Barclays
Merrill Lynch
JP Morgan / Chase
Goldman Sachs
ABN AMRO
Morgan Stanley
These largest players handle the majority of both the commercial and speculative trading that occurs daily.
Outside of this group, you will find smaller investment banks, multi-national corporations, large hedge funds, and some of the retail Forex market makers. Many of these players conduct trading of their own accounts, rather than on behalf of customers. Their goal is to make money from money.
Central banks (country's national banks) are also major Forex players. They attempt to control inflation, usually through their interest rate policy, but sometimes they will use their huge financial reserves to try to stabilize the currency prices of their country.
Investment firms and hedge funds manage billions of dollars and usually have the ability to borrow billions more. They are aggressive currency speculators, and combined have the resources to overpower even large central banks. These are the large spec accounts the news feeds talk about.
Us little guys (and gals), the retail Forex players, are responsible for between $25 - $50 billion each day. While this may sound impressive, it represents about only 2% of the market.
The important information here, is you need to understand that as retail traders we are not market movers. To make money trading Forex, we need to watch for the movements of the major players and then join their parade and attempt to profit from it.
One thing that helps put us on the playing field, is the fact that we have access to the same market-moving information the big Forex players use. If we can anticipate how they are likely to respond, we have a much improved chance of profiting from price moves. These "big guns" place much of their importance on fundamental indicators and we need to clearly understand the impact of this on our trading.
