What percentage of changes in the FOREX market is accounted for by speculators?

The correct answer indicates that a significant majority of changes in the foreign exchange (FOREX) market are driven by speculators. Speculators are market participants who buy and sell currencies primarily to profit from short-term price movements. Their activities contribute to liquidity and volatility in the market, allowing for rapid price shifts based on expectations about future currency values.

Research and empirical data support the idea that speculators account for a substantial portion of trading volume within the FOREX market. The figure cited, suggesting that speculators are responsible for 95% of changes, underscores how influential their trading strategies and market sentiment can be on currency values. This level of speculator activity can heavily impact exchange rates, as speculative trading often reacts to news, economic indicators, and geopolitical events, leading to rapid price adjustments.

In contrast, factors such as trade flows and long-term investments, while important, contribute less to this dynamic environment than the movements driven by speculative trading. Thus, the selection of 95% aptly highlights the critical role that speculators play in determining the fluctuations observed within the FOREX market.