Forex Basic Trading In Forex Market

Even though everyone can do forex business, but not everyone is equal. There are several classes of Forex market participants. Intrigued us including which one? Please click and learn the forex market hierarchy well.
One thing that is often called about forex trading is that it is done 'over the counter'. What does it mean? That means, forex is different from stocks traded on the exchange. Forex trading can happen without going through the exchange. If so, where can prices appear in forex trading? Forex transactions take place in a super large network where various actors buy and sell currencies continuously between each other.

When we talk about 'forex market', that is not a building like Tanah Abang or Klewer market. The forex market is more like an international network of central banks, big banks, veteran investors, brokers, retail traders, and so on. Here's their profile:

1. The Central Banks
The largest forex players are the central banks. Every country has its own central bank, and central banks will always act to safeguard the interests of the country. The central bank is responsible for printing money, withdrawing money, or buying and selling its foreign currency inventory. Therefore, the actions of the central bank could have an enormous impact.

Indonesia also has a central bank, namely Bank Indonesia. But, the influence of Bank Indonesia is not great because the Rupiah count is rarely used. The major influences are central banks such as the Federal Reserve (the Fed, the central bank of the United States), the Bank of England (BoE, the central bank of the UK), the European Central Bank (ECB, the central bank of the European Union), the Swiss National Bank (SNB, central bank Switzerland), the Bank of Japan (BoJ, the central bank of Japan), the Reserve Bank of Australia, the Reserve Bank of New Zealand (RBNZ, the central bank of New Zealand), the People's Bank of China (PBOC, the central bank of China ), And Bank of Canada (BoC, Canada's central bank). All central banks come into play in the forex market, but central banks are typical because their currencies include major currencies and have large stocks of funds.

2. Big Super Banks
The big super banks also known as 'Forex Dealers' include Deutsche Bank, UBS, Citigroup, Barclays Capital, RBS, Goldman Sachs, HSBC, Bank of America, JP Morgan, Credit Suisse and Morgan Stanley. They collectively form an interbank network. The price formed in the interbank will then be downgraded to the broker provided trading platform, where we can trade forex.

3. Commercial Commercial Bank
The next group is the 'ordinary' commercial banks, including banks that may be located next to our offices. They can buy and sell forex for their own needs or on client orders. Clients here can be large and individual companies. For example when Apple will pay the factory that makes the iPhone in China, then they have to swap its Dollar with Yuan. Then if Apple wants to buy components from Japan, then they have to swap their Dollar first with Yen.

4. Hedge Funds, Commercial Companies, and Brokers
Hedge Funds, Commercial Companies, and Brokers can participate in the market with the help of banks. They trade forex usually for investment, because it takes foreign money to buy-sell with companies in other countries, or for speculation. In turn, the broker also helps the retail traders to trade forex.

5. Speculator
Speculators who generally are retail traders, pursue the main forex trading to win transactions. This speculator includes 90% of forex traders in the market, but the trading volume is much smaller than the big players above.

Why small trading volume? Because the capital is mostly small as well. Sometimes speculators go to the Forex market with a bag full of money, but more often with just a pinch. The equation of all these speculators is they come to reap huge profits. We can all be part of this circle.