Forex Trading Lesson 2 The Market Makers

Submitted by: Dorothy A. Moore

One thing you need to know about the Forex market is that within that inner circle of elite traders are people and institutions that have the power to change the direction and flow of the market. These are the people who have access to unlimited funds and they will use them as they see fit, usually to keep their best interests and the markets interests at heart.

One of them are governments, who see the Forex market as one of the ways that they can leverage on their stores of currency to make more money and stabilise the economy. You see, governments have a stake in the Forex market just as much and even more than the average trader, because their currency is the one that is represented within the trading environment, so they have to protect it as well as use as much of it as they can to strengthen their own. For one thing, governments trade two ways.

One, they will use normal trading as a way to earn money, with a vast amount of resources to make profits and pips that retail traders can only think of. And they also trade in another way, to protect the value of their currency and avoid one from dominating the other. Inflation is a big problem when it comes to the world economy and governments and they will use the Forex market as a way to protect themselves from this process. So governments, with their huge access to currency will more often than not pump millions of dollars into the Forex market to actually try to influence a price movements and their only other competitor and their balance maker is the large central banks.

These massive superstructure banks are actually there both to invest their money in the Forex market and to ensure that those with access to large amounts of money will not use it to move the market too much towards one direction. They have a vested interest within the Forex market and the overall health of investing as well. The Forex market will only continue if there are investors there who are interested in making money, so when you consider that the retail investor is more often than not helpless in the eyes and the hands of the market movers, balance and checks like governments and large central banks are there to make sure that things go the right way every time.

These are some of the market movers that are on the Forex market, although there are smaller scale movers like hedge fund authorities and even smaller banks who have a hand in the market. All in all, because of the free range and fluidity of the market, competition is always fair and there is almost no bias at all times. Even central banks and governments have no power against the surge of a single market movement by the millions of investors all over the world if that should happen, and as Forex trading goes, it is a market rules by checks and balances.

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