In the ever changing business world you need to be forward thinking, if you want to have the potential to be successful. If you talk with successful Forex traders or investors in the Forex market, they will undoubtedly highlight their ability and knowledge of how to predict Forex market. This article has been prepared to help you apply your FX knowledge by predicting the changing nature of the foreign exchange market in the most appropriate way.
Hedge funds – Somewhere around 70 to 90% of all foreign exchange transactions are speculative in nature. This means, the person or institutions that bought or sold the currency has no plan of actually taking delivery of the currency; instead, the transaction was executed with sole intention of speculating on the price movement of that particular currency. Retail speculators (you and I) are small cheese compared to the big hedge funds that control and speculate with billions of dollars of equity each day in the currency markets.
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A growing portion of forex market participants is retail traders who invest through banks or brokers. The two primary types of brokers for retail traders are brokers and market makers. Brokers take a fee from customers for finding the best price and trading on behalf of them while market makers are the principal in a transaction against a retail trader.
According to the 2018 Greenwich Associates study, Citigroup and JPMorgan Chase & Co. were the two biggest banks in the forex market, combining for more than 30 percent of the global market share. UBS, Deutsche Bank, and Goldman Sachs made up the remaining places in the top five. According to CLS, a settlement and processing group, the average daily trading volume in January 2018 was $1.805 trillion.
Each currency pair can be thought of a single unit consisting of a “base currency” (the first currency) and a “counter (or quoted) currency” (the second currency) which can be bought or sold. It shows how much of the counter currency is needed to buy one unit of the base currency. So, in the EUR/USD currency pair EUR is the base currency and USD is the counter currency. If you expect the price of Euro to increase against the price of the U.S. dollar you can buy the EUR/USD currency pair. While buying a currency pair (going long) the base currency (EUR) is being bought, whereas the counter currency (USD) is being sold. Thus, you buy the EUR/USD currency pair at a lower price to later sell it at a higher price and as a result make a profit. If you expect the opposite situation, you can sell the currency pair (go short), meaning sell Euro and buy the U.S. dollar.
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Foreign Exchange trading, also known as Forex or FX trading, has gained enormous popularity in recent years among layman individuals due to the growth of online brokers and the technological development of online trading platforms. With high liquidity, non-stop opening hours 5 days a week, and great opportunities, it is no wonder that the forex market is the world’s most traded market with a daily trading volume of $5 trillion USD.

There are three primary forex markets — spot, forwards, and futures markets. The spot market is by far the most popular, and consists of the real asset that both the futures and forwards markets are based on. Forex market participants range from international banks to enterprises that deal in various countries who are looking to hedge risk on the exchange rates they use for dealing in multiple currencies.


The need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in the world. It dwarfs other markets in size, even the stock market, with an average traded value of around U.S. $2,000 billion per day. (The total volume changes all the time, but as of August 2012, the Bank for International Settlements (BIS) reported that the forex market traded in excess of U.S. $4.9 trillion per day.)
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