Who Trades Currencies? Meet the Player

The forex (FX) market is regularly referred to as the largest financial market in the world based on trading volumes. But this massive market was unknown and unavailable to most individual traders and investors until the start of this decade.

That leaves a lot of people in the dark when it comes to exactly what the currency market is: how it’s organized, who’s trading it, and why. We will take a look at how the FX market is structured and who the major players are. Along the way, I clue you in to how they go about their business and what it means for the market overall.

If you believe that information is the lifeblood of financial market trading, which I certainly do, I think you’ll appreciate this guide to the movers and shakers of the currency market. When you have a better understanding of who‘s active in the FX market, you’ll be able to make better sense of what you see and hear in the market. 

The Interbank Market Is “The Market"

When people talk about the “currency market,” they’ re referring to the interbank market, whether they realize it or not. The interbank market is where the really big money changes hands. Minimum trade sizes are one million of the base currency, such as € 1 million of EUR/USD or $1 million of USD/JPY. 

Much larger trades of between $10 million and $100 million are routine and can go through the market in a matter of seconds. Even larger trades and orders are a regular feature of the market.

For the individual trading FX online, the prices you see on your trading platform are based on the prices being traded in the interbank market.

The sheer size of the interbank market is what helps make it such a great trading market, because investors of every size are able to act in the market, usually without significantly affecting prices. It's one market where we would say size really doesn’t matter. Daily trading volumes are enormous by any measure, dwarfing global stock trading volumes many times over.