Who trades foreign exchange?
The market players in Forex trading may be loosely categorized into four primary groups:
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1. Commercial and Investment Banks:
Banks play a significant role in Forex trading. They engage in currency trading to improve global trade, manage their exposure to foreign exchange risk, and provide market liquidity.
Financial institutions now deal in foreign exchange on behalf of their clients, who include affluent individuals and corporations.
2. Companies:
For a number of reasons, companies that operate globally use the Forex market to exchange currencies.
A global corporation would, for instance, need to employ hedging strategies or convert the revenue from its foreign subsidiaries into its own currency in order to lower the currency risks associated wit...