Who is in the Forex market?
"Hedgers" are businesses, corporations, institutions, etc. whose main purpose is to protect their own transactions in the international market. Hedge investing acts as a stop-loss on international sales or purchases. A Hedging purchase in the Forex market would, in effect, set the exchange rate of a prospective deal at a given rate before the actual purchase of real goods was finalized. Its purpose is to protect the hedger against personally or corporately unfavoreable fluctuations in the involved currencies.
Hedgers pay close attention to the Forex market to protect their position as a stop loss. If the market, (exchange rate) moves in a favorable direction for the transaction, the hedger will probably re-enter the Forex market to optimize profits.
The other ninety-five percent of the Forex market are classed as "speculators" or "speculative trades." These trades are made in the absence of underlying goods transfers. Their purpose, simply stated, is “to make money in a volatile market.” It serves the interest of these trades/traders that the market be "volatile." That the values of currencies fluctuate constantly is in the interest of speculative traders. While a specific trading range is not necessarily important to speculators, predictability is. Even predictability is not needed be either long range or extremely accurate beyond direction of valuation of one currency against another.