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The Foreign Exchange market is composed of different participants and each participant has
an important role to play. The participants in the Forex market are as follows:

 

In the Forex market, banks have the principal role to play. They employ traders to trade its
proprietary accounts in order to create income and the banks also buy or sell currencies on
behalf of customers for commercial or trading purposes.

  

The Federal Reserve in the US or the European Central Bank and other national central banks
play a crucial role in the Forex market. Money supply, inflation and interest rates are often
controlled by governments' central banks.

   

Through brokers, retail traders get access to the Forex market. Retail brokers, while largely
controlled and regulated in the USA by the CFTC and NFA have in the past been subjected to
periodic foreign exchange scams so in 2009, these agencies began imposing stricter
requirements. Brokers come in two types: brokers and market makers.

  

Retail traders do not have direct access to the Forex market and gain access through brokers.
Trading is made possible through online trading platforms with real time currency rates,
volumes and etc.

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Hedge funds have gained a reputation for aggressive currency speculation since 1996. These
funds aim to make profit for investors and receive a percentage of the profits in return.

   



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Although it is impossible to know what every player in the foreign currency exchange market
is planning at any point, having an awareness of their existence and their potential can help a
forex trader make wiser, more profitable decisions.

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å Like other financial marketplaces, the foreign exchange market


provides the opportunity for investors to make money. Generally,
investors make money in the foreign exchange market from the
spread between the value of currencies. In financial markets, a spread
is the gap in value between two financial instruments. Spreads are
important because if timed right, currency speculators can make large
amounts of money from trading currency. For example, the New York
Bank of the Federal Reserve calculates that currency prices can
change by as much as 20 times in one minute. By this standard, there
are continual opportunties to profit from currency spreads during the
business day
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