If you want to become a professional in trading, you need to know who you work with. You must understand that in the market you are actually taking other people's money (a game with a zero amount) and if you want to earn money you must know who is ready to lose this money. To begin with, we will conduct several psychological tests that will help you understand the motivation of different bidders and understand why they are ready to give you their money.
Imagine that you can choose two options for the development of events:
Lose all that you have with a probability of 0.1%
Pay 0.2% and guaranteed to save your money.
From the point of view of mathematics, it’s profitable for you to take risks but from the standpoint of common sense, you will pay 0.2% of your property and will not take risks.
Another situation is that you are the head of the Central Bank of a large country and want to stimulate exporters and reduce imports. What are you going to do? Obviously you are trying to reduce the profitability of investing in your currency and reduce the refinancing rate.
You are the head of an international company, you have earned income in the USA and received dollars and you have to pay employees in Europe in Euro. The euro will be lower tomorrow. What will you do delay the salary of employees for a day and earn money or according to the contract, will make an exchange today and pay the salary? Obviously the second.
You are a tourist. And they decided to go abroad (suppose from England to Turkey). Will you wait for a more favorable exchange rate for the exchange of pounds for lira or do not even think about watching it and change it at the current one? Obviously the second.
These examples are more suitable for the Forex market, when trading on exchange platforms (it doesn’t matter commodity or cryptocurrency) you can earn on the expectation of an asset growth (a game with a non-zero amount). When trading cryptocurrencies, you are investing in a new market, a new method of payment, in order to then recoup your investment, through the subsequent sale of a previously acquired asset.
We have come to the point of market existence to unite those who do not want to take risks / wait / think about the course and those who are ready to work, take risks and think about the future course for profit.
The main participants in the foreign exchange market are:
Central banks (CB). Exercise control over the exchange rate. They are not interested in profit, for them the most important thing is the movement of the currency in a certain direction. Sometimes their goal is to lower the national currency and they can both intervene and change the refinancing rate.
Largest Central Banks:
US Federal Reserve System (Fed, Federal Reserve System, FED),
European Bank (ECB),
German Federal Bank - Deutsche Bundesbank
The Central Bank of Great Britain is the Bank of England.
Bank of Japan (Bank of Japan BOJ)
Commercial banks. Carry out currency transactions both by order of their clients and for their own purposes (speculative, hedging). Usually there is no self-interest, however, some banks have their own brokerage units.
Other Forex market participants hold accounts in Commercial banks and carry out the necessary operations.
About 70% of all operations among commercial banks are accounted for:
Deutsche Bank (Germany),
UBS (ex Union Bank of Switzerland, Switzerland),
Citigroup (USA), HSBC (Great Britain),
Barclays (UK),
JPMorgan Chase (USA),
Goldman Sachs (USA),
ABN AMRO (Netherlands).
International trading companies. Participants in international trade are interested in exchanging currencies of different states. Exporters need to sell foreign currency, importers need to buy. There is almost always no interest in earning money in the market the main thing for them is a clear and quick exchange of one currency for another.
Investment structures investing in the markets of various countries. If a company considers it more profitable to invest in a company in Europe (than in America) it will sell shares in America for dollars, convert dollars into euros and buy shares in the European market for them.
This is how Investment, Hedge, Pension, Insurance and other funds operate. They operate with gigantic amounts for example, the Norwegian Pension Fund operates with one trillion dollars, investing them in the markets of different countries.
International funds invest in various companies in different parts of the world and require a large amount of exchange when transferring to other countries. It is clear that they also seriously affect the stock market.
Currency exchanges are an element of the infrastructure of the foreign exchange market, the activity of which is to provide services for organizing and conducting tenders, during which participants enter into transactions with foreign currency. The currency exchange organizes the work of the basic elements of the currency market infrastructure: a trading system (counterparty search mechanism), a clearing and settlement system (transaction execution mechanism).
Brokers and individuals. Tourists are legal entities or individuals who act as an intermediary between sellers and buyers (insurance company and policyholder, shipowner and charterer) of securities, precious metals, currency and other services and goods
Traders are trader acting on his own initiative and seeking to profit directly from the trading process.