The Different Types of Forex Traders

Who can trade the Forex market? The money market, or investors (traders) are the three main types-hedgers, speculators and arbitrageurs. All investors to contribute to the significant liquidity in the money market.Classification is based on their commercial direction or purpose of hedge changing exchange rates, a quick profit from price differences, or simply choose the expected rise and fall of money makers.

1. Hedger Hedgers, investors are aiming to reduce the risk of changing money, based on what their main revenue and profitability depend. Hedger reason for not making a big profit, but to maintain the status of the former. Hedges also helps investors and companies (especially export-oriented) lock their income, as a stream of a variety of positions in the derivatives market.
Often it as an insurance against the possibility of loss due to exchange rate changes. Loss can not be completely avoided, but hedging can reduce the amount of damage. Perfect hedge is rare, but investors can reduce or minimize risk in case of market
goes against them.

For example - X YZ "Ltd. is headquartered in the U.S. and a subsidiary in Japan. If the Japanese yen weakened, it is either income or profit reduction in the Japanese market segment. To win this situation, you can avoid asked his position XYZ made a short position in yen. If the yen weakens, they will earn by the short position, which can be used for business losses.

2. Speculators Speculators the vast number of loans or other private entrepreneurs, such an item, which wants to profit from the changes before the price-making. Speculators usually ends up getting a level of risk, hoping for a big profit.
Example - speculators can short the dollar, in the hope that by reducing the number of U. S.GDP, the dollar may weaken. If the dollar really falls, it will cover their positions, in profit.

3. Arbitrageurs - investors that arbitrageurs are traded in two different markets, grants or contracts to simultaneously take advantage of pricing inefficiencies. Failure is very sensitive to the price of time, which means that, because of the difference occurs, should be used by many
or soon will be lost. Usually, arbitration is very low risk strategy, trading is made possible only when available.

Example - Exchange EUR / USD = 0,6522, (New York) EUR / USD =, 6524 (London) with $ 10,000 can buy € 6522 in New York and another $ 1000 may be in short London 6524. With the help of dealers can earn 4 seeds, without risk.