The Real Forex Trading Market
It is the largest international financial market in the world to date, with an average daily turnover of around 12.5 trillion US dollars, far exceeding the daily trading volume of the global stock markets.
The Forex market is also the fairest market, with no market makers, 24-hour trading, and leveraged operations that bring infinite possibilities. Here, as long as you have superb skills and remarkable capabilities, you can earn the money you want.
Forex market traders range from central banks of various countries to the general public. Its flexible mechanism and low entry barrier have gradually become the most mainstream investment practice worldwide.
Since the Forex market is a global trading market with non-stop price movements 24 hours a day (on business days), it has formed several important international markets, such as London, New York, Tokyo, Hong Kong, Sydney, etc.
In such a vast market, do you know how it operates and who its participants are?
The Forex market can be divided into 5 main categories:
1. Top-tier market makers, 2. Liquidity Providers (LP), 3. Small to medium-sized banks, 4. Forex trading platforms, 5. Brokers/Retail traders
Let's look at the top tier of the Forex market: top-tier market makers
They are called "top-tier" because they truly are at the top; they can genuinely influence the market.
1. Top-Tier Market Makers
At the top of the Forex market are these top-tier market makers, whose continuous transactions among themselves are also called interbank trading.
These top-tier market makers can be divided into three main categories:
Central banks of different countries, major global banks/investment banks, and non-bank market-making institutions.
Central banks: such as the world’s top 6 central banks: the Federal Reserve, Bank of Canada, European Central Bank, Bank of England, Swiss National Bank, Bank of Japan...
Major banks/investment banks: such as JPMorgan Chase, UBS, Citibank, Deutsche Bank, Bank of America, Barclays, Morgan Stanley, BNP Paribas, Nomura, Goldman Sachs, HSBC, Royal Bank of Canada, Royal Bank of Scotland...
Top-tier market makers are the main force of the Forex market, with strong capital, numerous clients, mature systems, and advanced technology. The prices of foreign exchange transactions between these top-tier market makers form the market prices of currency pairs. They are the main source of Forex liquidity, have the right to quote, and their trading volume accounts for the vast majority of the entire market. These top-tier banks and institutions have global business, strong capital, and a plethora of top talent, often ahead of the market information. Their transactions usually involve hundreds of millions, billions, or sometimes even tens of billions...
Their transactions constitute the prices of currency pairs, and prices are relayed through the interbank quoting platform (LP) — thereby connecting the world.
2. Interbank Quoting Platforms
Also known as Liquidity Providers (LP), they act as a bridge between the top-tier market makers and banks or Forex brokers below them, providing buying and selling prices and a tradable platform.
2. Interbank Quoting Platforms
Liquidity Providers (LP)
Bloomberg, EBS electronic platform, FXall (Reuters), CURRENEX
HOTSPOT, CAPITAL, DUKASCOPY, LMAX
Among others, LP provides currency pair prices from top-tier market makers to small and medium-sized banks, financial institutions, hedge funds, and Forex trading platforms. The prices for our Forex transactions are given by LP. LP serves as a bridge between the Forex trading platforms and the top-tier market makers.
The most common liquidity providers include: Bloomberg, EBS electronic platform, FXall by Reuters, as well as Currenex, Hotspot, Saxo Bank, Dukascopy, and Lmax...
They play a crucial role in the Forex market, allowing small and medium-sized banks, institutional investors, and Forex trading platforms to access the real market, matchmaking, providing quotes, orders, dumping, and various clearing...
3. Small and medium-sized banks, financial institutions, and 4. Forex trading platforms
Since small and medium-sized banks and financial institutions' business does not fall within the scope of retail electronic Forex trading, this area will not be elaborated on, primarily focusing on---- 4. Retail Forex--Trading Platforms.
Forex trading platforms are part of the retail market, mainly serving retail traders, brokerage agencies, and professional trading teams.
Forex platforms are regulated, with globally authoritative platform regulation including the UK’s FCA (Financial Conduct Authority), the USA’s NFA (National Futures Association), and Australia’s ASIC (Australian Securities and Investment Commission), in addition to Japan's Financial Services Agency and Dubai’s DFSA...
In simple terms, it includes five points: top-tier market makers, liquidity providers (LP), Forex trading platforms, brokers (trading teams), and individual traders.
For reliable Forex platforms and more Forex knowledge, please contact CWG's account manager Ahai.
