Page 6 - WHAT IS FOREX (2)_Neat

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In reality, these banks act as market makers-meaning they create
the market for buyers and sellers.When you place a trade through

your broker, that order often goes to a liquidity pool managed by

one of these large commercial banks.

That’s why they have a huge influence:

They see the flow of global money before anyone else does.
They know where the majority of stop losses are sitting, and how

much volume is building at certain price levels.

3. Investment Banks

Investment banks focus on large-scale investments and currency
management for corporations and high-net-worth clients.

They are not just trading for short-term profit; they move money

strategically for global projects, mergers, and investments.

For example, if a U.S. company wants to buy a European firm, the

investment bank will need to exchange large amounts of USD into
EUR-this creates massive movements in the EUR/USD pair.

These banks also use hedging strategies to protect their
investments from currency risk.If they expect the Dollar to

weaken, they might buy foreign currencies or gold to maintain

balance.