Page 8 - WHAT IS FOREX (2)_Neat

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That’s the level of power hedge funds can have.

Many hedge funds also trade with institutional-level Smart Money

Concepts (SMC)-meaning they look for liquidity, accumulation,
and manipulation zones, just like banks.

5. Corporations (Multinational Companies)

Corporations participate in the Forex market not to speculate, but

to support their business operations.Whenever a company buys
or sells products in another country, it needs to exchange

currencies.

Example:

A car manufacturer in Japan sells vehicles in the U.S. and gets
paid in U.S. Dollars.To bring the money back home, they must

convert USD into JPY.If the Dollar strengthens, they earn more

profit; if it weakens, they earn less.

To manage this risk, corporations use a process called

hedging-they lock in exchange rates in advance using Forex
contracts.Although these trades are not speculative, the large

volume of corporate transactions affects daily price liquidity.
For instance, when Apple, Toyota, or Shell move billions in

currency for trade settlements, the market feels it.