Import & Export - Companies who Import or Export goods are buying them in one currency and selling them in another currency.

Speculation - The FX rate between two currencies varies so the traders can benefit by buying currency at one rate and selling it at more favourable rate. Speculation makes up by far the largest proportion of trading in the FX market.

Hedging - Hedging eliminates potential profits or losses. This involves executing an FX transaction which will exactly offset the profit or loss of the foreign asset caused by the changes in the FX market.