The Forex market was developed in the early 1970’s when floating exchange rates began to develop. This market is the arena in which one countries currency is exchanged for that of another country, and where settlements for international business are made. It is often referred to as the cash or spot market.

The FOREX is a group of approximately 4500 currency trading institutions, including international banks, government central banks, investment companies, hedge funds and commercial companies. There are a number of segments to the market.

Payments for imports and exports and payment for Purchases and sales of assets that flow through the consumer segment of the market. Then there is the speculator segment of the market for companies that have large exposure to overseas economies to offset the risk of constantly changing exchange rates.

I suppose you could add tourism as a small segment of the consumer market.

Last there is the small speculator like you and I. Current estimates world wide put the number of small traders in excess of 5 million.

Government’s central banks also play a large role in the market. When government central banks buy or sell its own currency it is for the purpose of stabilizing its own currency.