As you know the forex market is traded by different pairs of currencies. It is the largest trading platform in the world. You may also know that it can’t work automatically. There is someone behind it, who is responsible for all the trading activities.
If you are a trader and have been working in this field for many years, you must be curious to know about the secrets of this market.
The most asked question is: who controls the forex market?
The answer is not as simple as you think. Not a single person or a company is involved to run this market in a disciplined way. The major control of this trading market is in the hands of Commercial Companies, Central banks & Government Banks, Big trading companies, and Operators.
After getting deeply involved in forex trading, you must know all basic info related to these main factors. Only then you will be able to survive in this gigantic market of trading.
Originally, the forex market was run by large institutes. If you want to become familiar with these elements that perform the role of a ladder, You have to read this post with great interest.
Let’s dive into this article with a keen heart!
Who Controls The Forex Market
Each trader has a question in his mind while trading in the forex market: Who controls it?
It is a clever question. It is essential to know about the secrets of the market and aware of who controls your trades and how they do that.
Many of us don’t know it…Don’t worry!
I will tell you precisely…
Generally, the forex market is controlled by 4 global networks of banks from London, Tokyo, New York and Sydney. Because of the decentralized nature of forex, you can trade it anywhere 24/7.
These banks are further controlled by firms and commercial companies. These firms provide the services of liquidity for the trader. It is their main role in this market. The whole market depends upon these servers. It opens and closes according to these servers’ schedules.
The fast services of these companies provide traders a chart to represent Bid/ask quotes. There are many other companies operating these technical systems and their influence on the market to move.
Sometimes these machines manipulate the data of the market for their personal benefit.
4 Main Pillars That Control The Forex Market
If you are a forex trader, you must be familiar with the fact that it is the biggest trading market in the world. So, it is not possible to run this trading platform by a single person or company.
No doubt there are a number of elements that play a crucial role in the most famous trading market of forex. The most prominent pillars to control the forex market are Superbank, Central bank & Government, Trading companies, and Operators who control the whole system.
Here we are going to discuss 4 main factors that work as a pillar in this market.
Let’s have a look at them:
1. The Inter Bank
It is the main pillar in this market. The Super Bank is the largest bank in the world that manages the exchange rates. It has been performing this activity since the creation of the Forex trading market.
As you know all the traders may be fans or haters of the bid/spread. Generally, Super Banks make the bid for traders that depend upon the supply and demand for currencies.
Such banks are also known as the Interbank market. The Super Bank can take a large number of transactions that come from forex trading. It does this activity not only for its customer but also for itself.
2. Central Bank and Government
In Forex trading Government and Central Bank are deeply involved. They regularly participate in this market. The European Central Bank and The Bank Of England are the most prominent among them.
The government takes part in this trading platform to manage international trading payments, grasp their external exchange stocks, and do many other basic functions.
On the other hand, Central Banks leave a great impact on the forex market during the adaptation of interest rates. By doing so, they can control rising prices quotation of currency.
Central Banks Step in to this trading market directly or indirectly, to reorganize the rates of exchange. If they think their price level is very high or low, they start to sell or buy at large scales to set up their exchange rates.
3. Big Trading Companies
The main task of such companies behind controlling the forex market is to enhance their own business. They start with a smaller trading volume in comparison to Interbank.
Generally, such companies trade with commercial banks to get their transactions easily. Large trading firms are also capable of altering exchange rates for currencies.
At the international level, they can do many conferences of different currencies in which they can move prices accordingly.
4. The Operators
Operators are participants that take part in bank activity. They are mainly market maker brokers. Do you know about currency operations?
It is an act of buying or having foreign currency. The purpose of this activity is to sell that currency in the future at high rates to get a big profit.
On the other hand, there are many operators in the forex market who buy currencies to invest in a business or to pay services for imported products.
The slogan of speculators is that if you want to get success in this market, you have to take steps without having fear.
The operators perform the duty of a seller or buyer of currencies after observing the profit level. They keep their attention on the variation of prices.
They control this market as they involve in a trading volume of about 90%. You can see them in all shapes and sizes in the forex market.
Frequently Asked Questions
Who sets forex prices?
The prices in the forex market are mostly set by The Bank of England. But it doesn’t set the ponds exchange rate. These are set by supply and demand.
Do banks trade forex?
Commercial and investment banks can trade forex. They make forex transactions easy for the clients from their trading platforms. So, they make a profit from it.
Do big banks control forex?
Big banks handle the forex market because of their tremendous position. They can create liquidity and 80% volume of the entire forex market.
Now, we may conclude the post of who controls the forex market by saying that there is not a single factor that has a deep impact on it.
As we have already mentioned above, there are different players who rule over this trading market for many years.
Without them, the forex trading market can’t survive. Each element has its own place in the Forex market.
Hopefully, you completely become familiar with the main pillars of the forex market and also how they operate in this trading platform.
If you find this post informative, share it with your friends who are going to start trading forex.
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