Hi guys,
I have a question about liquidity providers in the cash forex market.
Have read that major banks provide liquidity to the cash forex market. But I read a point in the forum a few days ago which got attention. It was -
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why would big banks trade forex in any ECN or other retail market place ? They would rather be dealing directly with one another no ? They dont need to go to some retail network. They are big entities with special arrangements to make forex transactions.
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This led me to think another point - will the big banks be in the business of just doing forex transactions just to make money from it directly ? Will they not be actually exchanging currency as part of a facilitation of Business transactions between companies in different countries ? Example: Huawei sending money to Intel for the processors or something like that. That would be the only scenario (business transactions) where banks would exchange forex. Do they do transactions just for speculation or any other reason on the retail forex market ?
So is it right to say that even though the forex market is trillions of dollars - the retail market just for the sake of trading forex and no other valued purpose is much smaller than that ?
Please let me know your opinion on this
Thank you