THE MAIN 'PLAYERS' IN THE FOREX MARKET

The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.Large commercial and investment banks are the 'price makers'. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.Commercial banks deal with customers on one hand, and with the Interbank or other banks, on the other hand. They profit by utilizing the bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. They also make profits from speculating about whether the exchange rate will rise or fall.Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy's currency.

Trading Forex Successfully is Easier Than You Think:

We all know the statistics. 95% of the people that try to trade forex, fail. Is trading forex successfully really that difficult? Well, it is if you are doing what 95% of failed traders do. The majority of the people that start in forex usually do so because they see some kind of trading system that is drenched with indicators like stochastics, RSI, and any number of the countless lagging indicators that the trading software uses. The question remains how do you know what the market is doing if you are busy looking at the indicators?Indicators serve the sole purpose of taking the price action of a currency, stock, derivative, etc.... and putting it through some kind of magical formula so it can be interpreted into something else. Instead of using an interpreter to read the market, traders should actually be the interpreter. If you watch many of the traders that trade for themselves on the New York Stock Exchange, you'll notice that many of them aren't very worried about where the stochastic is before they make a trade. They don't do that because all they really care about is where the price is.Being able to trade using solely price action is an important step in trading forex successfully. If a currency goes up or down 100 pips within an 1hr. A trader should be able to understand why that happened and most importantly be able to take advantage of it. When properly trained, a person looking at a naked (no indicators) chart should be able to see the market in all its glory. All the information is right in front of them. The human mind is an infinitely better indicator than any moving average or RSI.Make sure to check out my squidoo lens on how I learned to start trading forex successfully.

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