Who trades on Forex? Six participant groups and their roles

The global currency market turns over around 7.5 trillion dollars a day — the headline number from the Bank for International Settlements triennial survey of 2022. That flow does not come from a homogeneous mass of speculators. Behind it stand six clearly different groups, each at a different scale and with a different objective: central banks, tier-1 dealer banks, hedge funds, corporations, retail brokers — and at the very bottom, the retail trader, who accounts for at most five to ten percent of daily volume. The rest is a game for very large balance sheets.

Central banks — guardians of monetary value, not speculators

A central bank has no speculative mandate. Its activity on the FX market comes from three sources: maintaining stability of its own currency, managing reserves, and intervening when the exchange rate begins to harm the real economy. Global FX reserves stood at roughly twelve trillion dollars in 2024 according to the IMF, the biggest pools held by China, Japan and Switzerland. The Polish National Bank (NBP) holds around two hundred billion dollars — placing Poland in the global top twenty by reserve scale.

Intervention practice depends on the mandate. The Bank of Japan reacts to a weakening yen most often — in 2022 and 2024 it sold hundreds of billions of dollars of reserves when USD/JPY broke 150, then 160. The Swiss National Bank is etched into every trader's memory for its 15 January 2015 decision to remove the EUR/CHF floor at 1.2000: within minutes the rate fell about thirty percent, many retail clients lost everything and some ended owing the broker. The ECB and the Fed intervene rarely, acting mainly through the interest rate channel. For the retail trader the takeaway is simple: the Fed, ECB and BoJ calendar is the hard skeleton of every trading week. I map the rest in the piece on central banks in the FX market.

Tier-1 dealer banks — the bloodstream of the interbank

On the institutional side that prices the market every day, a dozen-or-so commercial banks dominate. The 2024 Euromoney FX Survey shows the top five dealers together handle more than forty percent of global spot, forward and swap volume. JPMorgan leads with around 11.6 percent, UBS is second with 9.5 percent (after the 2023 Credit Suisse acquisition), Citi third with 8.8 percent, Deutsche Bank fourth with 7.1 percent and Goldman Sachs fifth with 5.4 percent. With HSBC, Bank of America, Barclays, BNP Paribas and Morgan Stanley, the top ten accounts for roughly two thirds of inter-dealer turnover.

Those numbers do not change abruptly, because a tier-1 dealer bank rests on three pillars no one else can replicate: a balance sheet in trillions of dollars, a round-the-clock network of FX desks in London, New York, Tokyo and Singapore, and quoting technology that streams prices to hundreds of clients at once. This hierarchy is clearly visible from the Polish market's vantage point — a domestic bank usually buys liquidity from one or two tier-1 dealers, and that flow ends up inside the aggregate the BIS reports. The full mechanics belong to the piece on the interbank market; here it is enough that this is the layer from which the price flows down to the trader's platform milliseconds later.

"The central role of FX comes from the fact that even small flows can produce large price moves, and behind them stands a dealer network that every financial regulator has to understand." — Hyun Song Shin, Chief Economist of the BIS, 2022

Hedge funds and investment banks — capital looking for opportunity

The third layer brings active speculative capital to the market. Macro funds in the style of Ray Dalio's Bridgewater Associates (over 150 billion dollars under management) build currency positions on macroeconomic analysis, monetary policy and capital flows. Jim Simons' Renaissance Technologies is a different species — a quantitative fund whose Medallion programme achieved returns reported in Gregory Zuckerman's biography of Simons as above thirty percent annually net of fees. George Soros is permanently in the market's memory for the September 1992 short of the pound that earned him over a billion pounds when the UK left the European Exchange Rate Mechanism. Goldman Sachs' proprietary desk and Brevan Howard are active too.

From a retail perspective this layer sets the tone: if a dozen large macro funds build a short position in the yen, USD/JPY will systematically drift toward a weaker yen. It is also a model of risk discipline — at that scale there is no room for the leverage accidents routine among beginners. Who plays in this league, and how, is the subject of the piece on hedge funds in forex.

Corporations — the real economy that must trade currency

The fourth group never speculates (at least not officially). Every multinational is exposed to currency risk and must hedge it. Apple reports in dollars but sells iPhones in euros, yen, pounds and yuan — its annual reports disclose currency sensitivity of several tens of billions of dollars a year. Toyota produces in Japan and sells worldwide, and its yen hedging can affect a quarterly result as much as commodity prices do. A Polish refiner like Orlen is exposed to USD on Middle Eastern crude; a furniture exporter from Wielkopolska hedges EUR to protect the margin a year ahead.

The CFO sets the FX policy, the relationship bank executes the forwards, swaps and options, and on the other side sits a tier-1 dealer. Corporate flow is stabilising — it follows a monthly and quarterly cycle linked to invoicing and dividends, which is why some traders watch the month-end flow when pension funds and corporations rebalance exposures.

Retail brokers — the bridge between retail and interbank

The fifth layer is the one the retail client meets every day: the brokers, who run on one of two settlement models. In the A-book model the broker passes orders directly to the interbank or an ECN and earns on commission and a spread mark-up — broadly the case for IC Markets Raw Spread or Saxo Bank Pro tiers. In the B-book model the broker nets client positions internally and hedges only the net exposure, earning on the bid-ask spread and, statistically, on client losses — popular on European retail accounts such as XTB or Plus500 Standard.

The European retail brokerage industry operates under strict supervision: ESMA has required all retail FX and CFD brokers since 2018 to display the percentage of clients who lose money, typically between seventy and eighty percent — hard regulator-driven numbers, not marketing. A separate class of full-service US brokers such as Charles Schwab or Interactive Brokers gives access to US equities, options and futures rather than CFDs. To compare accounts in practice, start from the 2026 broker selection checklist.

Retail clients — the last layer and the smallest share

The sixth and final group is retail, the individual who opens an MT5 platform after work. According to BIS data and the Euromoney surveys, the retail share of global turnover sits between five and ten percent — the lower bound from the conservative BIS framing, the upper bound from research that also counts CFDs and currency derivatives. The active retail base is estimated at ten to fifteen million clients globally; in Poland the regulator (KNF) reports around one hundred and fifty thousand CFD and FX accounts.

The profile of the typical retail client — drawing on my twenty-year practice at MyBank.pl, which I have run since 2004, and on FX analysis since 2007 — looks like this: age between twenty-five and forty, starting capital from a few thousand to a few tens of thousands of zloty, twenty to fifty trades a month, most orders on EUR/USD and USD/PLN. After twelve months over seventy percent sit on a negative result; after three years perhaps ten to fifteen percent are still on the screen. What improved the odds was not technology but regulation: since ESMA capped leverage at 1:30 in 2018 and made negative-balance protection mandatory, the catastrophic blow-ups that wipe out the deposit are less frequent.

What now — three actions for the retail trader

The conclusion is simple and merciless: as a retail client you do not compete with the rest of the market — you compete with yourself and with statistics, while the bigger players set the backdrop. From my practice running MyBank.pl since 2004 and analysing the FX market since 2007, I draw three recommendations. First, keep the macro calendar in the same window as the chart — Fed, ECB and BoJ decisions move the whole market at once, and a client without a position-management plan loses fastest. Second, leverage is not a virtue — the 2018 ESMA cap of 1:30 is still enough to destroy an account without strict position sizing discipline. Third, do not try to outrun tier-1 dealers or macro funds; your edge is patience, the journal and a simple system, not speed. The broader role of each group is continued at the market participants section.