The forex market is a food chain. The higher you go, the bigger the orders.
The players
- Central banks set interest rates and sometimes buy or sell their own currency to steady it. When they speak, everyone listens.
- Big banks (the interbank market) trade enormous amounts with each other and quote prices to everyone else.
- Hedge funds and asset managers speculate and protect international portfolios.
- Corporations convert revenue and hedge future payments. A car maker selling in Europe needs to turn euros back into yen.
- Retail brokers connect people like you to all of the above.
- Retail traders: you, me and millions of others.
Wick says
We're small fish, but small fish can swim fast. Banks need days to move a giant position. You can get in and out in one click.
Why this matters to you
Big players leave footprints: they defend levels, react to central bank news and move around big data releases. Much of what you'll learn in this school is how to read those footprints on a chart.
Key takeaways
- Central banks and big banks sit at the top of the forex food chain.
- Corporations and funds trade for business and investment reasons.
- Retail traders access the market through brokers and can move fast.