There are two major groups in the Foreign Exchange trade. Companies as well as governments make up almost 5 to 10 percent of the daily transactions in the Foreign Exchange trading. They either sell or buy services and products from or in foreign countries and, as such, they must convert any profits that they make in foreign currencies into their own domestic currencies as they go about the business. Basically, this can be said to be a hedging activity.
On the other hand, the remaining 90 to 95 percent includes investors who are trading to make profits or for speculation. In most cases, large banks that trade 10,000,000 million currency units, or even more, make up a large percentage of speculators. Today, exporters and importers, multinational corporations, international portfolio managers, day traders, speculators, hedge funds and long-term holders all make use of the FOREX market in not only paying for services and goods but also in transacting any financial assets. Speculators typically make profits by simply guying one pair of currency while selling another simultaneously. Those hedging, on the other hand, trade in order to protect their margin on any international sale in case of any adverse fluctuations of currencies.