FXCM Insights

Who Trades Forex?

Forex traders and investors are a diverse group, coming from a broad spectrum of backgrounds, ages and disciplines. From the individual who is brand-new to the market, to the most seasoned currency trader, engaging in forex is one of the most common methods of participating in the world’s financial markets.

Considering the low entry barriers, seemingly all one needs to begin trading forex is a computer, internet connection and brokerage account. While each person enters the marketplace with a unique set of goals and objectives, forex traders are typically divided into two major categories: institutional and retail.

Institutional Forex Participants

The largest players in the forex market are institutions, or institutional traders, and investors. Institutional money accounts for the majority of forex trading, estimated to be approximately 94.5% of the market volume.1)Retrieved 26 http://www.abcmoney.co.uk/2017/06/20/forex-trading-industry-statistics-2017/ While the term “institutional” is often used as a catch-all for larger market participants, there is a difference between “institutions” and “institutional investors”:

The behaviour of institutional participants within the forex sector often dictates the market state. By far, the volumes created by the trading operations of institutions and institutional investors are capable of enhancing periodic volatilities and driving markets directionally.

Retail Forex Participants

The second classification of forex market participants is known as “retail.” In contrast to institutional money, retail traders and investors trade for their own private account, risking their own capital.

While the forex volume generated by retail traders is nowhere near that of institutional participants, they are present in large numbers. For example, leading forex brokerage service FXCM provides market access to 130,000 separate customer accounts, totaling US$3.5 trillion in retail trading volume for 2016.

Retail participants come in all shapes and sizes, but typically trade on forex in two fashions:

Forex: The Key Players

While each forex trader or investor is either institutional or retail by designation, there are several key players that influence liquidity, volatility and overall market state.

The following are members of the forex community that can have an extensive influence on the entirety of the international currency market:

Whether one is a small retail trader attempting to sustain profit in the marketplace, or a large institution looking to hedge out systemic risk, it is a good idea to be aware of the important characters in the forex market. Through understanding the players and the motivations behind their market positioning, potential opportunity may be identified, while mitigating undue risk.


As the world’s largest marketplace, averaging over £5 trillion in daily turnover,3)Retrieved 25 June 2017 http://www.bis.org/statistics/d11_1.pdf the forex market is a premier financial venue. Millions of individuals around the globe manage risk, speculate on exchange rate fluctuations and attempt to secure profit from actively engaging in forex.

No matter if one is trading retail or is part of an institutional framework, entering the forex market may potentially be a viable way of capitalising on opportunity within the marketplace. Having a considerate trading strategy, adequate risk capital and a working knowledge of the landscape could be helpful when entering the growing ranks of forex market participants.

Any opinions, news, research, analyses, prices, other information, or links to third-party sites are provided as general market commentary and do not constitute investment advice. FXCM will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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