The Forex market is about trading between countries, the currencies of those countries and the timing of investing in certain currencies. The Forex market is about trading between countries, usually done through brokers or financial companies. Many people are involved in Forex trading, which is similar to stock market trading, but Forex trading is done on a much larger overall scale. Most trading does occur between banks, governments, and brokers, and a small number of transactions will occur in retail settings, where the average person involved in the transaction is known as a bystander. Financial markets and financial conditions make trading in the foreign exchange market go up and down on a daily basis. Between many of the largest countries, millions of transactions are made every day, and this will include some of the smaller countries as well.
From studies conducted over the years, the majority of transactions in the foreign exchange market are between banks, which is known as interbank trading. Banks account for about 50% of the transactions in the foreign exchange market. So if banks are using this method extensively to make money for their shareholders and to improve their own business, you know that the money must exist for the small investors that the fund managers use to increase the amount of interest paid to their accounts. Banks trade funds every day to increase the amount of money they hold. Overnight, banks will invest millions in the foreign exchange market and then the next day make that money available to the public in savings, checking accounts, etc.
Commercial companies were also trading more frequently in the foreign exchange market. Commercial companies such as Deutsche Bank, UBS, Citigroup, and others such as HSBC, Braclays, Merrill Lynch, JP Morgan Chase, and others such as Goldman Sachs, ABN AMRO, Morgan Stanley, etc. are actively trading in the foreign exchange market to increase the wealth of their stockholders. Many smaller companies may not participate in the foreign exchange market as extensively as some of the larger companies, but the option is still there.
Central banks are banks that play an international role in foreign markets. The money supply, money availability and interest rates are all controlled by the central bank. Central banks play a huge role in foreign exchange trading and they are located in Tokyo, New York and London. These are not the only central locations for foreign exchange trading, but they are among the largest central locations involved in this market strategy. Sometimes, banks, commercial investors and central banks will have huge losses which will be passed on to investors. Other times, investors and banks will have huge gains.