Why Is There a Need for the Forex Market?

Foreign exchange trading is gaining fame with people who want and need to trade currencies. Some people buy and sell currencies to gain profit from the rise and fall of market prices. It is a booming finance market that attracts those who want to take it up as a hobby, as a part time job, and a full time job. There are institutions and individuals, however, who trade foreign currencies not just to gain profit from its increase and decrease in value but because they truly need the other currency to pay for products, services, salaries, etc.


Large multinational firms need to exchange currencies to pay for products and services from business transactions in other countries. “There is always a demand for products, services, and even payroll money for the labor of various workers, making the foreign exchange market always needed” Quoted in a Seminar by Jams, an analyst from MTrading.in – a Forex broker from India.


Say you’re on a vacation in a foreign country, and you need to purchase some stuff. You have to buy the product in their currency. You have to exchange the currency you have for theirs. You buy their currency for the currency you already have.

You’re not the only person who needs to exchange their currency for another to purchase products or avail of services in a different country. People from all around the world also make up the foreign exchange market.

Retail traders are available everywhere, from airport kiosks to mall stalls. They help you get the currency you need, and they earn some money from the spread cost themselves.


A large number of trades in the forex market come from different banks. The interbank market is where various banks of differing sizes trade currencies with each other. They trade for themselves, as well as facilitate trades for their clients. Banks earn from the spread cost or the bid-ask price when they deal for their clients.

Foreign exchange trading, aside from being a popular way for people to enter the finance and trading markets, is also very important to many different individuals and institutions. The demand for constant foreign currency exchange makes it a strong-standing trading market that will continue to help people today and in the next years to come.


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