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Investment banks

Here one speaks also of institutional dealers, which are composed of large financial institutions as well as banks. Through them, liquidity is made available to the foreign exchange market. These traders then trade among themselves on the interbank market. This is, as already mentioned, an electronic communication network, which is supported by predetermined credit lines between the participating banks and credit institutions. This interbank market basically consists of a network of institutional foreign exchange dealers who trade currencies among themselves in order to keep the entire banking system liquid. According to the Bank of International Settlements, this network of foreign exchange dealers accounts for approximately 40 percent of the daily turnover in the entire foreign exchange market.

Central banks

Central banks, such as the Federal Reserve (FED), the Bank of England or the European Central Bank (ECB), are responsible for the money supply, interest rates and the supervision of the banking systems in their territories. Due to the fact and in the context of their task to manage monetary stability and growth, they have a great influence on the foreign exchange market.

The companies

Companies are also among the major customers of institutional traders. Foreign exchange is indispensable for any international trade. In every international transaction in which services or products are sold to corporate clients or purchased from their suppliers

are required here for the sale or purchase of foreign currencies. Especially in today's age of globalization, foreign currencies are an indispensable part of every large company.

The institutional and retail traders

Traders are the most diverse group of market participants in the foreign exchange market. These market participants profit from the price fluctuations. Traders working for hedge funds are a very influential group of currency speculators and are also able to influence currency rates due to the size of the stakes they place in the foreign exchange market at regular intervals. This type of market participants is also a very knowledgeable and experienced clientele. Such hedge funds invest on behalf of pension funds, private individuals, companies and also to some extent governments. These professional traders use various techniques, including discretionary and algorithmic trading or a combination of both, as well as fully automated trading.

The retail traders are the private traders. These are small private investors who want to earn a reasonable income in Forex or foreign exchange trading. The problem here is that for this purpose, a sufficient and good education must be available to be able to survive especially in the foreign exchange market, because the smallest wrong decision triggers corresponding consequences and thus it can quickly come to losses.