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from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.

exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.

Foreign exchange fixing[edit]

Commercial companies[edit]
An important part of the foreign exchange market comes
Central banks[edit]
National central banks play an important role in the foreign

About 70% to 90%[citation needed] of the foreign exchange transactions conducted are speculative. This means the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency. Since 1996, Hedge funds have gained a reputation for aggressive currency speculation. They control billions of dollars of equity and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor.

behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.

opportunity for speculative currency trading: brokers and dealers or market makers. Brokers serve as an agent of the customer in the broader FX market, by seeking the best price in the market for a retail order and dealing on behalf of the retail customer. They charge a commission or mark-up in addition to the price obtained in the market. Dealers or market makers, by contrast, typically act as principal in the transaction versus the retail customer, and quote a price they are willing to deal at.

segment of this market with the advent of retail foreign exchange platforms, both in size and importance. Currently, they participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated in the USA by the Commodity Futures Trading Commission and National Futures Association, have in the past been subjected to periodic foreign exchange fraud.[66][67] To deal with the issue, in 2010 the NFA required its members that deal in the Forex markets to register as such (I.e., Forex CTA instead of a CTA). Those NFA members that would traditionally be subject to minimum net capital requirements, FCMs and IBs, are subject to greater minimum net capital requirements if they deal in Forex. A number of the foreign exchange brokers operate from the UK under Financial Services Authority regulations where foreign exchange trading using margin is part of the wider over-the-counter derivatives trading industry that includes Contract for differences and financial spread betting.

Retail foreign exchange traders[edit]
Individual retail speculative traders constitute a growing

There are two main types of retail FX brokers offering the
Non-bank foreign exchange companies[edit]

Hedge funds as speculators[edit]
Investment management firms[edit]
Investment management firms (who typically manage large accounts on

Trading characteristics[edit]
Most traded currencies by value
Currency distribution of global foreign exchange market turnover[70][4]
Rank Currency ISO 4217 code
(Symbol) % daily share
(April 2013)

1
CAD ($)
2.0%
11
Sweden?Swedish krona
SEK (kr)
1.8%
12
Russia?Russian ruble
RUB (?)
1.6%
13
Hong Kong?Hong Kong dollar
HKD ($)
1.4%
14
Singapore?Singapore dollar
SGD ($)
1.4%
15
Turkey?Turkish lira
TRY (Turkish lira symbol 8x10px.png)
1.3%

lowed by the euro (33.4%), the yen (23.0%), and sterling (11.8%) (see table). Volume percentages for all individual currencies should add up to 200%, as each transaction involves two currencies.