Businesses and dealers utilize forex for two main reasons: speculation and hedging. The former is used by traders to profit from currency price swings, while the latter is utilized to lock in prices for manufacturing and sales in foreign markets.

The purpose of forex trading is to profit from the fluctuations in currency exchange rates by buying and selling different currencies in the global foreign exchange market. As the largest and most liquid financial market in the world, forex trading enables individuals, businesses, banks, and governments to exchange currencies for various reasons. Traders aim to capitalise on exchange rate movements caused by economic, political, or geopolitical factors. Additionally, forex trading facilitates international trade and investments by allowing businesses to convert currencies for cross-border transactions. Central banks also participate in stabilising or adjusting their national currency values. While some traders engage in forex for speculation and short-term gains, others use it for hedging against currency risks. Overall, forex trading plays a vital role in global finance by ensuring liquidity, enabling commerce, and providing profit opportunities.