At center of the FX world sits the Interbank dealers. They sit in this vaulted position because the banks they work for control the majority of the cash in the world. Due to their superior position in controlling the supply of funds, the Interbank dealers make the market for FX trading. Interbank dealers will sell to customers who wish to buy a certain currency and buy from customers who wish to sell a certain currency.

Their job entails satisfying the customer with the best prices to sell and buy at, and also profiting from the risk that they incur from taking on the opposite side of the customer’s position.

 Corporations will go to Interbank dealers in order to finance their international capital flows. In order to have Philippine Pesos to pay its factory workers in the Philippines, an American company will convert the USD it earns from it’s customers in the United States into Pesos through the Interbank dealer.

Hedge funds, money managers, and other institutional speculators will trade the Forex in hopes of making a profit from guessing the correct direction of future FX rates. Speculators use in depth analysis of FX market flows, fundamental analysis of economic data, technical analysis of past rate movements, and human experience and intuition in order to gain an edge in profiting from movements in the Forex.

The individual speculator is the final cog in the wheel of the FX market. The individual speculator is generally trading his own money in hopes of making a profit in the FX market. He does not have the hundred of millions of dollars that is required to open a FX trading account at a bank. He however does not lack the knowledge and the technology that is required to trade currencies. The individual speculator utilizes the free trading platforms, charts, news feeds, and price feeds that FCM’s offer. The individual speculator also utilizes a myriad of analytical services to help him pick trades, manage his risk, and learn basics of trading..