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Who Controls the Forex Market and Affects Global Currencies?

It does not matter if you consider Forex trading as a side income or a full-time earning opportunity. The Forex market comes as one of the most-traded financial sectors. Millions of individual and retail investors join it without even knowing who controls it.


In this article, we will review some of the most influential and dominating pillars that affect the FX market in different ways. Understanding them means understanding how the market moves. This will help you predict potential price changes and apply your Forex strategies accordingly.

Who Runs the Forex Market?

It is a good question many beginners ignore for some reason. In general, we have 4 major forces or networks that run the market and control the way prices and trends are defined. These global networks include banks from the biggest Fo9rex cities: New York, Sydney, Tokyo, and London.

Generally owned by firms and commercial institutions, these banks are not the only actors in the global currency trading arena. Some other pillars can play key roles.

Major Pillars to Control the FX Market

As you know, currency pairs are among the most-traded instruments. However, there is no single force to control the process. Instead, four different market participants appear to be the main pillars that control the segment. They include:

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  1. Central banks and governmental institutions.
  2. Investment managers and major hedge funds.
  3. Multinational corporations and global enterprises.
  4. Individual and retail investors also known as operators.

Now, let’s have a closer look at how each of the pillars above can affect your Forex trading in one or another way.

Central banks and the government actually complete the same tasks. They can intervene with the market to control the currency price or fix it when needed. Their main mission is also to manage international trading by grasping internal exchange stocks and taking care of baseline economic functions. Central banks adopt interest rates and handle the currency price rise and drop. This is what makes their impact on the Forex market significant.

Hedge funds and investment managers usually buy and sell a huge volume of currencies via pension funds, endowments, and other types of foundations. It helps them make speculative trades.

Multinational corporations are deeply involved in importing and exporting transactions with currencies, including foreign ones. It makes it possible for them to pay for different services and goods. If something goes wrong, enterprises will have to hedge against currency risks to ensure extra safety for other assets and types of investments.

Individual traders represent the lowest amount of market participants. They buy and sell currency pairs using different Forex strategies that rely on technical indicators, price patterns, support and resistance lines, etc.

The Role of the Forex Market on the Global Arena

The importance of the FX market is hard to overestimate. For many decades, it has been shaping business. It expresses the result of collaboration between foreign companies, individuals, and institutions across the globe.

Main Determinants of the Currency Value

Demand and supply are the main determinants of currency value. At the same time, it is not the only factor that can influence the asset price. Other factors include:

  • Money printing;
  • The price for foreign services and goods;
  • The current health and state of the economy;
  • Country’s national debt and political conditions.

For instance, money pr9initnjg has always been one of the riskiest ways to handle the economy. The more money is printed; the more value a currency is going to lose. Oppositely, when a small amount of money is printed, that value will inevitably go up.

Also, the state of the economy can play a vital role. During the recession and decline, the nation experienced a high unemployment rate, low consumer spending, and no potential for business expansion and economic growth.

Political affairs and other factors may also play a key role. Of course, that will depend on the degree of political involvement, the level of corruption, and common illegal economic practices taking place.

Major Forex Trading Practices

Each trader chooses a style to trade depending on his or her individual preferences. However, all Forex strategies call for clear trading goals and transparent methodologies to achieve them. In simpler words, you need to know what you want to get from the Forex market and how you plan to do it. Trading currencies without a clear goal will be a tough challenge.

Some basic steps involve:

  1. Choosing a trusted and reliable online Forex broker.
  2. Keeping a consistent trading technique and fine-tuning some details if needed.
  3. Performing regular analysis and keeping records of each trade to define the strategy’s weak and strong spots.
  4. Making intelligent and well-thought decisions depending on the market conditions.

The Bottom Line

The only way to become a successful Forex trader is to understand all of the market's intricacies and processes that can change it in one or another way.

With so many market players and forces that can influence the currency price, learning can be a challenging routine. However, this is what all professionals are supposed to do and this is how they differ from beginners.

Today, we have access to endless sources of information and Forex education channels to learn as much about the market as possible. Do not ignore these simple ways of bringing your Forex strategies to the next level.

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.