Did you know that $7.5 trillion changes hands in the forex market daily? Yet, despite this huge size, one question haunts every investor: who controls the forex market? The truth is, no single entity holds the steering. Instead, it’s like a high-stakes chess game where central banks, multinational corporations, and shadowy institutional traders clash to sway currency values.

The central banks wield unmatched power, using tools like quantitative easing to manipulate exchange rates. Meanwhile, hedge funds and algorithmic traders exploit microsecond advantages, controlling nearly 70% of daily forex volume. But even they can’t escape the ripple effects of geopolitical shocks or economic data. Subsequently, control doesn’t rest with any single entity but shifts among several influential participants who each exert temporary but significant influence on currency valuations.

Generally, the key to knowing who is in charge could mean the difference between profit and loss. Today, people keep asking: does anyone truly control this decentralized market? Well, this is where our article comes in! In this post, we will walk you through the top players in the forex market. This will help you to properly position yourself within market cycles rather than becoming a victim of random volatility. Hence, read on to learn about the real movers of the forex market.  

Who Controls the Forex Market?

Below we have highlighted the list of people who controls the Forex Market;

#1. Commercial Banks

When analyzing who controls the forex market, commercial banks sit at the forefront. These institutions facilitate over 50% of daily forex transactions. They serve as the primary dealers in the interbank market, where they trade currencies with each other based on the current bid and ask prices. Banks like JPMorgan Chase, Citibank, and Deutsche Bank dominate interbank trading, setting bid-ask spreads and influencing liquidity. Their sheer transaction volume allows them to sway currency valuations, especially during peak trading hours.  

Additionally, commercial banks provide essential currency exchange services for multinational corporations, institutional investors, and retail clients. Similarly, commercial banks often collaborate with central banks. Hence, they execute monetary policies, such as currency interventions, on behalf of governments. For instance, during economic crises, they may buy or sell currencies to stabilize exchange rates. This symbiotic relationship with central banks strengthens their position as main actors in determining who controls the forex market.

#2. Hedge Funds

Hedge funds are another critical player among those who control the forex market, wielding billions in assets to exploit currency mispricings. Typically, firms like Bridgewater Associates and Renaissance Technologies deploy algorithmic trading strategies, capitalizing on microseconds-long arbitrage opportunities. Their speculative trades, often leveraged up to 20:1, inject volatility and liquidity, reshaping price trends within minutes. Hence, they employ quantitative models, fundamental analysis, and technical strategies to identify potential market inefficiencies. 

Moreover, hedge funds frequently engage in carry trades, borrowing low-yield currencies to invest in high-yield ones. These strategies, while risky, create sustained demand for specific currencies, indirectly steering their long-term valuation. Their influence is magnified during market upheavals, as rapid position opening can exacerbate currency swings. Consequently, their aggressive trading style contributes to market volatility, a key factor in understanding who controls forex market momentum.

#3. Retail Traders

Retail traders are the smaller players among those who controls forex market. These traders, though smaller individually, collectively contribute to the market. Generally, retail traders access the market through retail brokers and electronic trading platforms, executing trades based on personal analysis, sentiment, or automated systems. According to recent industry surveys, there are over 9.6 million active retail forex traders globally, resulting from the growth and evolution of the digital age. These advancements have leveled the playing field, providing individual traders with institutional-grade tools for market analysis and execution. 

For example, social trading platforms have amplified retail influence by enabling traders to pool their knowledge and capital through copy-trading mechanisms. In certain currency pairs, particularly those with lower liquidity, coordinated retail activity can generate noticeable price movements. Nevertheless, retail traders typically occupy a position lower in the hierarchy of who controls forex market price formation, as they can be dwarfed by institutional players. However, their herd behavior during trends like buying USD during a Fed rate hike can amplify price movements.  

#4. Electronic Liquidity Providers (ELPs)

Electronic Liquidity Providers have alter the ecosystem of who controls forex market access and execution in recent decades. These specialized firms like XTX Markets, Citadel Securities, and Jump Trading use advanced technology and algorithms to offer real-time bid/ask quotes, ensuring 24/5 market liquidity. By processing vast datasets—from interest rates to news headlines, they adjust prices instantaneously, narrowing spreads and enhancing efficiency. In 2023, ELPs accounted for approximately 70% of spot forex volume, altering the market’s microstructure and challenging traditional intermediaries’ dominance.

Unlike conventional market makers, ELPs operate with minimal overnight exposure, rapidly adjusting their positions throughout the trading day. Similarly, their presence has benefited the market during periods of stress. This is because their algorithmic approaches often continue providing liquidity when human traders might retreat. However, their reliance on algorithms poses risks. Flash crashes, like the 2019 GBP “glitch,” highlight how ELP-driven markets can spiral without human oversight. Still, their role in maintaining liquidity ensures they remain central to who controls the forex market.  

#5. Sovereign Wealth Funds (SWFs)

Sovereign Wealth Funds (SWFs) is among the big players who controls the forex market through strategic, long-term investments. Their trades, often in billions, can shift exchange rates for months, especially in commodity-linked currencies like CAD or AUD. The largest SWFs command enormous resources, with Norway’s Government Pension Fund Global managing over $1.4 trillion. China Investment Corporation also oversees assets exceeding $1.2 trillion. These position them as formidable players in currency markets.

Furthermore, SWFs collaborate with central banks during currency crises. For example, during the 2008 financial crisis, SWFs from Asia and the Middle East helped stabilize Western financial institutions through capital injections, indirectly supporting associated currencies. Such interventions, though infrequent, showcase their capacity to override market forces temporarily. Meanwhile, SWFs operate discreetly, avoiding public disclosures that could tip their strategies. This allows them to accumulate positions unnoticed, making them silent yet potent players who controls the forex market.  

#6. Prime Brokers

When talking about those who controls forex market, prime brokers like Goldman Sachs and Morgan Stanley are on the list. They offer margin accounts, enabling clients to amplify trades up to 100:1, magnifying both profits and market impact. Thus, they extend credit to their clients, allowing them to establish positions that exceed their actual capital through leverage. Additionally, prime brokers provide essential services that enable hedge funds, asset managers, and other professional traders to execute large transactions efficiently. Their credit multiplication effect amplifies the trading capacity of institutional players. 

#7. Retail Brokers

Retail brokers is one of the market makers that provide trading platforms, market data, educational resources, and execution services. They enable millions of retail participants to engage with the currency markets. Typically, major retail brokers involve IG Group, OANDA, and Plus500. They process millions of transactions daily, aggregating retail order flow before routing it to liquidity providers in the broader market.

Furthermore, retail brokers provide access to currency trading through user-friendly mobile applications, reduced minimum deposit requirements, and competitive pricing models. According to industry reports, the global retail forex trading segment experienced a 300% growth in new accounts during the pandemic-driven market volatility of 2020-2021. Their role extends beyond mere execution to include risk management practices that significantly impact how retail orders influence the broader market. Thus, brokers serve as both gatekeepers and influencers in who controls forex market.  

#8. Proprietary Trading Firms

Proprietary trading firms influence the forex market prices through their focused and often high-volume trading activities. 

Unlike hedge funds that manage external client capital, these firms trade exclusively with their own funds, allowing for greater flexibility and risk-taking. Some of these firms include Jump Trading, DRW, Jane Street and Tower Research. They deploy sophisticated quantitative models to identify short-term market inefficiencies across currency pairs. 

Similarly, they focus on short-term strategies, like arbitrage and scalping, injects liquidity and narrows spreads. In addition, prop firms share liquidity data with partner banks. For example, a 2022 partnership between Citadel Securities and Bloomberg improved EUR/GBP liquidity by 15%. Such collaborations blur lines between market makers and traders, expanding their collective influence.  

#9. Commercial Companies

Commercial companies are significant participants influencing who controls forex market flows through their international business operations and risk management activities. Typically, multinational corporations like Apple, Toyota, and ExxonMobil generate substantial currency transactions. They engage in cross-border trade, requiring constant currency conversions to pay suppliers, repatriate profits, or hedge against exchange rate risks.

Collectively, commercial companies drive nearly 15-20% of daily forex volumes, particularly in major pairs like USD/JPY and EUR/USD. Additionally, these firms use sophisticated hedging strategies to mitigate currency volatility. By entering forward contracts or options, they lock in exchange rates for future transactions, creating predictable demand that stabilizes markets.

#10. Governments and Central Banks

Governments and central banks are arguably the most authoritative answer to who controls the forex market. Institutions like the U.S. Federal Reserve, European Central Bank, and Bank of Japan shape exchange rates through monetary policies. Thus, these institutions establish the rules governing currency trading, and intervene directly in markets when deemed necessary for economic stability. 

Furthermore, central banks maintain substantial foreign exchange reservese collectively, exceeding $12 trillion globally. This can be deployed to influence currency values when market movements threaten economic objectives. For instance, the Bank of Japan has conducted numerous interventions to moderate yen appreciation, with single operations sometimes exceeding $50 billion in value.

Frequently Asked Questions About Who Controls the Forex Market 

How do banks trade forex?

Banks trade forex through interbank markets, electronic platforms, and over-the-counter (OTC) transactions. They engage in spot trades, forwards, futures, swaps, and options. Likewise, banks act as market makers, providing liquidity by quoting bid/ask prices, and trading for clients or their own accounts to profit from currency fluctuations. They use advanced tools, algorithms, and market-making roles.

Which country controls the forex market?

No single country controls the forex market as it a decentralized market. It operates globally through banks, brokers, institutions, and exchanges across the globe. This allows for continuous trading 24/7.

Which country has the most forex?

China holds the largest foreign exchange reserves of over $3 trillion, followed by Japan and Switzerland.  

Can forex be controlled?

No direct control exists, but central banks like the Federal Reserve, ECB influence currencies via monetary policy, interest rates, or interventions.  

Can forex make you a millionaire? 

Yes, getting rich through forex trading is possible but it’s highly risky. Hence, success requires skill, discipline, risk, and management. You should treat forex with patience and not with a gambling mentality.

Who controls the forex market?

No single entity controls the forex market. The foreign exchange market is decentralized and no organization controls it, as the FX market is too big for one particular participant to control. However, key players include central banks, commercial banks, hedge funds, corporations, and retail traders. 

Conclusion

The forex market’s decentralized nature means that no single entity completely controls its movements. Rather, a diverse group of participants collectively shape currency valuations through their varied activities and objectives. Each of them is instrumental in influencing the market according to their capital resources, and strategic position. Similarly, the dynamic nature of the market creates both challenges and opportunities for market participants at all levels. This makes the forex market one of the most complex financial ecosystems in the global economy.

References 

wikipedia.org – Foreign exchange market  

investopedia.com – Where Is the Central Location of the Forex Market? 

babypips.com – Forex market players