The main players who trade Forex are:
Central Banks and Governments. In order to control the country’s money supply to insure financial stability for their countries, Central banks and Government could implement policies that would affect the Forex market.
Banks.Banks can buy and speculate Forex market on behalf of their customers. In fact, Banks contribute the large part of Forex turnover, and can literally trade billions of dollars daily.
Hedge Funds.As the Forex market is extremely liquid, it becomes the desired instrument for Hedge Funds to trade. In fact, Hedge Funds have increasingly allocated portions of their portfolios to speculate on the Forex market.
Corporate Businesses.The Forex market mainstay is that of international trade. Many companies have to import or exports goods to different countries all around the world. Payment for these goods and services may be made and received in different currencies. Many billions of dollars are exchanged daily to facilitate trade.
Man in the Street.You and me also play a part in today's Forex world. Every time you go on holiday overseas, you normally need to purchase that country's currency and again change it back into your own currency once you return. Unwittingly, you are in fact trading currencies. You may also purchase goods and services while overseas and your credit card company has to convert those sales back into your home based currency in order to charge you.
Speculators and Investors.All other than the above are either speculator or investors. Note that an investor has a much longer time horizon in which he expects his investment to yield a profit, whereas speculators will try to make a profit in a shorter period of time.