The Interbank Forex Market

The interbank Forex market is an important part of the process of foreign exchange trading. The major banks play a big part in the market in general. Learn what role the banks play in the process and how it affects you.

Bank Trading

Bank trading makes up a large part of the Forex market in general. The major banks trade with each other and with their customers on a daily basis. Some of the large banks that take part in this market are Barclays, Deutsche Bank and Citi Group, among others.

interbank forex

These are the major players in the Forex market. Of the trillions of dollars that are exchanged each day, they make up the vast majority.

They not only trade with each other, they also work with their customers. For example, when a major corporation needs to buy something from another country, it must exchange its dollars for the other currency first. To do this, it works with its major bank. The bank exchanges the dollars and keeps a percentage on the transaction.

Banks also trade with each other to protect positions and to speculate. The major banks all have credit relationships with each other. Because of these relationships, they can place orders at the prices being quoted by the other banks.

How it Affects You

Even though you are not technically trading with a bank when you get involved in the Forex market, you are affected by them. The banks trade such large volumes that they impact which direction the market is moving. They are also the ones that set the available Forex spread. While you might think that you have the best Forex broker out there and the spreads are always great, the banks can impact the spread that your broker offers.

How Prices Are Determined

The banks are the ones who ultimately set the prices in the market. Each bank typically has a market maker that is in charge of coming up with the prices. To determine these prices, the market maker looks at several factors such as the amount of volume in the market and how much volatility is present. Their views on where the currency is headed can also impact the price they are willing to give.


When trading in the market, you always need to think about how the banks impact you. Even though you cannot call up a major bank and place an order, you are affected by them. You work with a retail broker that helps you get involved, but the major movement in the market takes place when the banks make a move.

Return From Interbank Forex to Forex Market

Return From Interbank Forex to Forex Trading

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