Who Are the Buyers and Sellers?

Every financial market contains participants with different objectives.

Some are investing for many years.

Some are trading short-term movements.

Others participate because their businesses require currencies or commodities.

Together, these participants create market activity.

Retail traders are individuals who access financial markets through brokers and trading platforms.

They may trade markets such as:

Their strategies and holding periods can vary considerably.

Institutional investors manage money on behalf of organisations or clients.

They may include:

Because these institutions can manage significant amounts of capital, their transactions may contribute substantially to market activity.

Banks play an important role in many financial markets, particularly foreign exchange and fixed income.

They may:

Companies often participate in financial markets for practical reasons rather than speculation.

An international company may need foreign currency to pay suppliers.

An airline may want to manage exposure to fuel prices.

A manufacturer may need commodities for production.

Central banks can have a major influence on financial markets through:

Governments also influence markets through taxation, spending, regulation and economic policy.

Every participant has different objectives.

A trader may want to profit from a short-term movement.

A corporation may be trying to reduce financial risk.

A pension fund may be investing for decades.

This variety of motivations helps create continuous buying and selling activity.