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Who controls the forex market?

This is the question I guess every trader have in mind. In this article let us discussed on the structure of the Forex market, with a look at who the different players in the market are and how the motives of each affect us as individual traders.

While the 10 largest banks which make up the forex Interbank market account for over 75% of the over $3 Trillion in daily trading volume, there is actually a level of participants with even more clout in the market. While generally no where near as active as the banks just mentioned, the Central Banks of countries also participate in the forex market, and as they have such deep pockets, have huge clout when they decide to enter the market.

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While some interventions have limited affect on exchange rates others, as you can see from the chart in the video of a past Bank of Japan intervention, can have a dramatic affect on the market. Because of this often times a central bank can do what is termed a verbal intervention, where simply the talk of intervention is enough to have the desired affect on the market.

The video clearly discussed why Central banks joined the Forex market. To conclude, Central banks joined the forex market to protect their own currency from falling down. That’s it. May this article help those new to forex market.

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