In view of the scattered spot foreign exchange market, it is the world's largest bank that determines the foreign exchange rate. These large banks "set" the buying/selling spreads that we like or hate according to the supply and demand of money.

These large banks are collectively referred to as the interbank foreign exchange market. These banks provide large-scale foreign exchange transactions for their customers and themselves every day. Some super banks include UBS, Barclays Bank, Deutsche Bank and Citibank. You can say that the interbank market is a foreign exchange trading market.

2. Large commercial companies

The purpose of the company entering the foreign exchange market is to carry out business. Therefore, before Apple can import electronic equipment from Japan, it must first convert US dollars into Japanese yen. Because the scale of foreign exchange transactions of large commercial companies is much smaller than that of the inter-bank market, such market participants usually conduct foreign exchange transactions with commercial banks.

Mergers and acquisitions between large companies will also cause fluctuations in the exchange rate in the foreign exchange market. In international cross-border mergers and acquisitions, large-scale currency exchange will be involved, which may cause exchange rate fluctuations.

3. Government and Central Bank

Governments and central banks around the world, such as the European Central Bank, the Bank of England and the Federal Reserve, also regularly participate in the foreign exchange market. Like enterprises, government agencies at the national level also participate in the foreign exchange market for the purpose of settling international trade and managing their foreign exchange reserves and other businesses.

At the same time, when the central bank adjusts interest rates to fight inflation, this behavior of the central bank will also lead to fluctuations in the exchange rate of the foreign exchange market. The central bank can influence the value of money through interest rates. When the central bank intervenes in the foreign exchange market, the foreign exchange market will even fluctuate greatly, either directly or indirectly. Sometimes, the central bank thinks that its currency price is overvalued or undervalued, and they will sell/buy in the foreign exchange market to change the exchange rate trend.

4. Speculators

This is probably the voice of speculators. The foreign exchange transactions of speculators account for 90% of the total foreign exchange transactions. These speculators are of different types and sizes.

Retail foreign exchange broker

Since there is no entry threshold, anyone can sign a contract with a foreign exchange broker and open a foreign exchange account for foreign exchange transactions. There are basically two forms of brokers:

1, a market maker, which means that these institutions can set their own foreign exchange trading prices;

2. Electronic communication network platform. ECN adopts the best buying and selling price provided by interbank market institutions.

Market maker

Market makers are the cornerstone of the foreign exchange trading market. Retail market makers mainly repackage large contracts obtained from foreign exchange wholesalers into smaller contracts for sale, thus injecting liquidity into the market. If there is no retail market maker, it will be difficult for individuals such as Zhang San or Li Si to conduct foreign exchange transactions.

Electronic communication network

Electronic communication network (ECN) is another name of foreign exchange trading platform, which can automatically match orders at the price specified by customers. These stipulated prices come from different market makers, banks and other traders who use ECN. No matter when an order takes effect, you can find the best price on ECN platform.