What are the Forex Market Players?

There are various participating entities taking part in forex trading. The main players or the main market participants in currency exchange are Central Banks, largest investment firms or commercial bank, hedge funds, mutual funds and retail forex brokers etc.

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Participants in Foreign Exchange Market:

Participants in Foreign exchange market can be categorized into five major groups, viz.; commercial banks, Foreign exchange brokers, Central bank, MNCs and Individuals and Small businesses.

• Central Banks:
  • Central banks are extremely important players in the forex market. Open market operations and interest rate policies of central banks influence currency rates to a very large extent.
  • Central banks are responsible for forex fixing. This is the exchange rate regime by which a currency will trade in the open market.
  • Floating, fixed and pegged are the types of exchange rate regimes. Any action taken by a central bank in the forex market is done to stabilize or increase the competitiveness of that nation’s economy.

• Small Business or Investors:
  • Small businesses also use foreign exchange market to facilitate execution of commercial or investment transactions.
  • The foreign needs of these players are usually small and account for only a fraction of all foreign exchange transactions. Even then they are very important participants in the market. Some of these participants use the market to hedge foreign exchange risk.
  • Hedgers: There are many businesses which end up creating an asset or a liability priced in foreign currency in the regular course of their business. For instance, importers and exporters engaged in foreign trade may have open positions in several foreign currencies. They may therefore be impacted if there is a fluctuation in the value of foreign currency. As a result, to protect themselves against these losses, hedgers take opposite positions in the market. Therefore if there is an unfavorable movement in their original position, it is offset by an opposite movement in their hedged positions. Their profits and losses and therefore nullified and they get stability in the operations of their business.

• Commercial Banks: 
  • The major participants in the foreign exchange market are the large Commercial banks who provide the core of market. As many as 100 to 200 banks across the globe actively “make the market” in the foreign exchange.
  • These banks serve their retail clients, the bank customers, in conducting foreign commerce or making international investment in financial assets that require foreign exchange.
  • These banks operate in the foreign exchange market at two levels. At the retail level, they deal with their customers-corporations, exporters and so forth.
  • At the wholesale level, banks maintain an inert bank market in foreign exchange either directly or through specialized foreign exchange brokers.

• Foreign Exchange Brokers:
  • Foreign exchange brokers also operate in the international currency market. They act as agents who facilitate trading between dealers.
  • Unlike the banks, brokers serve merely as matchmakers and do not put their own money at risk.
  • They actively and constantly monitor exchange rates offered by the major international banks through computerized systems such as Reuters and are able to find quickly an opposite party for a client without revealing the identity of either party until a transaction has been agreed upon. This is why inter-bank traders use a broker primarily to disseminate as quickly as possible a currency quote to many other dealers.

• MNC:
  • MNCs are the major non-bank participants in the forward market as they exchange cash flows associated with their multinational operations.
  • MNCs often contract to either pay or receive fixed amounts in foreign currencies at future dates, so they are exposed to foreign currency risk.
  • This is why they often hedge these future cash flows through the inter-bank forward exchange market.

• Retailers:
  • The retail market designates transactions made by smaller speculators and investors.
  • Speculators are a class of traders that have no genuine requirement for foreign currency. They only buy and sell these currencies with the hope of making a profit from it.
  • The number of speculators increases a lot when the market sentiment is high and everyone seems to be making money in the Forex markets.
  • Speculators usually do not maintain open positions in any currency for a very long time. Their positions are transient and are only meant to make a short term profit.
  • These transactions are executed through forex brokers who act as a mediator between the retail market and the interbank market. Individual traders or investors trade forex on their own capital in order to profit from speculation on future exchange rates. They mainly operate through forex platforms that offer tight spreads, immediate execution and highly leveraged margin accounts.

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Forex Insight 13-FEB-2020

EURUSD

EURUSD keeps dropping down across the board after recent economic data highlights ongoing weakness in the block’s economy.

Euro now hitting noted support levels with little in the way of a recovery seen. The next ECB in March can now considered ‘live’ with market expectations starting to build that the central bank may well loosen monetary policy further, or at least give increased guidance, to help prime the block’s struggling economy. This creeping realization is continuing to be priced into the Euro.

EUR/USD has fallen by 100 pips this month – high to low – and broke through the October 1 support level at 1.0879.

USDJPY

USDJPY is the forex ticker that shows the value of the US Dollar against the Japanese Yen. It tells traders how many Yen are needed to buy a US Dollar.

The Dollar-Yen is one of the most traded forex pairs – second only to EUR/USD – and is a benchmark for Asian economic health and even the global economy. 

USDJPY is showing bullish trend at 109.707

GBPUSD

GBP/USD is gaiing high towards the 1.30 level last seen on February 5 and, if it breaches that mark, will likely continue to advance towards that day’s 1.3070 high.

UK Prime Minister Boris Johnson is expected to reshuffle his senior ministers this session but the massacre previously forecast is now seen as unlikely.

The key cabinet ministers – the Chancellor of the Exchequer, the Home Secretary and the Foreign Secretary – are all predicted to remain in place.

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What’s a good way to remember the difference between a bull and bear market?

Bear and bull market concept is really very important to understand in trading world.

Trading has a language of its own, and if you are starting out long or short, bullish and bearish are trading terms you will hear frequently. Bullish and Bearish are simply terms used to characterize trends in the currency, commodity or stock markets.

The terms bullish and bearish are often used to describe the conditions in the market or the sentiment of investors. They are very important terms and are used in nearly all types of trading, from currencies to stocks. Traders can take advantage of both bullish and bearish markets if they have sufficient knowledge of the market conditions that are associated with these cycles. When traders understand the meaning of bearish and bullish and are able to identify the cycles, they will know how to profit off of any market condition.

What is the difference between Bullish and Bearish Market?

Bearish and Bullish are simply terms used to characterize trends in the currency, commodity or stock markets. If prices tend to be moving upward, it is a bull market. If prices are moving downward, it is a bear market. Of course, this doesn’t have to refer to the market overall.

BULL MARKET

A bull market is a financial market of a group of securities in which prices are rising or are expected to rise. The term “bull market” is most often used to refer to the stock market/Forex Market can be applied to anything that is traded, such as bonds, currencies and commodities.

Point To Remember about Bull Market:

Bull markets are characterized by optimism, investor confidence and expectations that strong results should continue, usually for months or years.

• Bull markets generally take place when the economy is strengthening or when it is already strong.
• It happens in line with strong gross domestic product (GDP), and a drop in unemployment and will often coincide with a rise in corporate profits.
• The overall demand for stocks will be positive, along with the overall tone of the market. In addition, there will be a general increase in the amount of IPO activity during bull markets.
• Investors who want to benefit from a bull market should buy early in order to take advantage of rising prices and sell them when they’ve reached their peak.
• Although it is hard to determine when the bottom and peak will take place, most losses will be minimal and are usually temporary.

• In times of a bull market, security prices, once again, in certain sectors or as a whole, are increasing and/or expecting to increase and also show signs of increasing at a more rapid rate than the historic average. If a market or the market is bullish, investors gain confidence that the prices of securities will continue to rise over an extended period of time and will invest. Bull markets often occur at times of economic recovery or economic boom and the psychology of investors plays an intricate role in the market. In order for a market or the market to be classified as a true bull market, technical analysts need to state that there is a rise in the value of the market of at least 20 percent.

BEAR MARKET

A bear market is a condition in which securities prices fall and widespread pessimism causes the stock market’s downward spiral to be self-sustaining. Investors anticipate losses as pessimism and selling increases.

The term “bear market” is the opposite of a “bull market,” or a market in which prices for securities are rising or will expect to rise. It is named for the way in which a bear attacks its prey — swiping its paws downward. This is why markets with falling stock prices are called bear markets. Just like the bear market, the bull market is named after the way in which the bull attacks by thrusting its horns up into the air.

Point To Remember about Bear Market:

The causes of a bear market often vary, but in general, a weak or slowing or sluggish economy will bring with it a bear market. The signs of a weak or slowing economy are typically low employment, low disposable income and a drop in business profits.

• In times of a bear market, security prices are decreasing and/or expecting to decrease and also show signs of decreasing at a more rapid rate than the historic average.
• In order for a market to be considered bare, opposite of a bull market, prices fall by 20 percent or more.
• During times of decline, investor psychology turns to fear and pessimism and traders lose confidence in the market.
• Bear markets slow the market down entirely by becoming the driving force behind unemployment and inflation.

One of the key benefits of forex trading is the opportunity it offers traders in both bull and bear markets. This is because forex trading is always done in pairs, when one currency is weakening the other is strengthening thereby allowing you to take advantage of rising and falling markets. Bull and bear markets are important to pay attention to as they can determine currency market trends. By being aware of market trends, can help you to make the best decisions of how to manage risk and gain a better understanding of when it is best to enter and exit your trades.

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HOW TO SURVIVE IN YOUR FIRST YEAR AS A TRADER

Forex trading as well as all other trading requires deep knowledge about the market. One must have some strategies and techniques for accurate trading. Equidious Research is a good platform with a great team of analysts who can guide you which signal to invest in and when. This is the most important and key step of Trading, i.e, WHAT and WHEN.

As a beginner, the first year of trading plays some crucial roles in traders style. Following are the Do’s and Don’ts, a trader must keep in mind in order to survive in the most volatile market.

Do’s and Don’ts in 1st year of trading- P.C.: Equidious Research

Expectations
Don’ts:Expecting to double the account within first year of trading. Then get discouraged easily.
Dos: When Starting out, ONLY have to focus on NOT LOSING all your money so that you can keep trading and learning.

Right Focus
Don’ts:Endlessly Testing different indicators and strategies.Making changes after each loss.
Dos: Pick ONE approach and trading style. Learn as much as you can.Avoid system hopping and get-rich-quick schemes.

FIND A MENTOR

Don’ts: Believe in fake promises of free signal providers and follow them blindly. Many scammers promises for big return and ruin your money or even blow your account.

Do’s: Follow the best signal provider which works more on Risk Analysis, Money Management and expert analysis. Try Equidious Research for best forex and comex signals.

LEARN YOUR CRAFT

Don’ts: Blindly Using Indicators without questioning what your tools are &why things do the way you do them.

Do’s: Learn and understand each tool according to trading strategies and trading style.

One can try expert’s help as they have good knowledge about Signal. Try Equidious Research for the best, accurate and profitable Forex and Comex signals services to receive. Our Research analyst performs great fundamental and technical analysis which surely help you to book good profits.

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Do you have “FOMO Traders” Characters?

FOMO is Fear of Missing Out type of traders, which influences our daily trading habits and decision making capability in Forex Trading.

There are following causes which leads FOMO Traders:

High Expectations

FOMO Traders thanks that one needs to double the account by next month and you are missing out if you do not make a lot of money as soon as possible. This leads to higher risk and large position sizes. One wrong trade and you will regret of choosing wrong position sizing and trade.

Over Confidence

When you come from a winning streak and feel invincible and then take random trades or too large positions because you think we can “feel” what the market is going to do.

Lack of Confidence

After a few losing trades, many traders will try to play catch up and then enter random trades just to get into the market and hopefully somehow generate a profit.

No Rules

When you do not have a system or rules, to begin with, then FOMO is your default mode, always jumping in and out of the market, not really knowing what you are doing.

Lack of Long Term Perspective

When you do not understand that there will be hundreds and thousands of new trades waiting for you. Many amateurs put way too muchimportancet on one trade alone and want to force this trade to win whatever it takes.

Impatience

When you do not want to wait for the setup and just want to get into a trade because you fear that the price might run away.

Wrong Mindset or Too Emotional

Every Forex trader wants to improve their forex trading success. Successful trading is difficult and building the correct attitudes and beliefs is the way to develop the habits and skills necessary for profitable trading. Without a profitable and successful trading mindset, you will be swimming upstream against your emotions/fears, thoughts, and unconscious habits which undermine your success.

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For the Best Forex Signal| Accurate Stock Signal| Profitable Comex Signals, Try Equidious Research Services. We have a team of best and well experienced Research Analysts.

Trading is an art of making handsome amount.

Enjoy Trading!