The history of Forex market is marked by two particular events which put a deep stamp on its formation and development. Currency exchange has always been and still remains important for conducting business and foreign trade.
How it takes place and how the foreign exchange market actually works interests many people. And in order to exactly understand the essence and functions of the market, we should firstly reveal how it is formed and what it stands for.
Gold Standard System was formed in The main idea behind it was that governments guaranteed that a currency would be backed by gold. All the major economic countries defined an amount of currency to an ounce of gold as the value of their currencies in terms of gold and the ratios for these amounts became the exchange rates for these currencies.
This marked the first standardized means of currency exchange in history. However, World War I caused a breakdown of the gold standard system as countries sought to pursue economic policies which would not be constrained by the fixed exchange rate system of the Gold Standard. In July more than representatives from the Allied nations brought forward the importance of a monetary system which would fill the gap left behind the gold standard.
They arranged a meeting at Bretton Woods, New Hampshire, to set up a system that would be called the Bretton Woods system of international monetary management. The US dollar became the main reserve currency and the only currency that was backed by gold.
However, in the U. In August the U. It has no centralized marketplace where transactions are conducted. Rather, Forex trading is carried out electronically over-the-counter OTC , meaning that all trading transactions are performed via computer by traders and other market participants over the world. The foreign exchange market is the largest financial market in the world where the average daily turnover is continuously growing.
This kind of market scale means that the market liquidity, the amount of buying and selling volume occurring at a particular time, is extremely high. The trade that takes place in Foreign exchange market involves simultaneously the buying of one currency and the selling of another. This is because the value of one currency is relative to the other currency and is determined by their comparison.
It shows how much of the counter currency is needed to buy one unit of the base currency. If you expect the price of Euro to increase against the price of the U. While buying a currency pair going long the base currency EUR is being bought, whereas the counter currency USD is being sold.
If you expect the opposite situation, you can sell the currency pair go short , meaning sell Euro and buy the U. However, the risk is always there. If you buy Euro against the U. So, besides the benefit that you can make from trading, you should always consider the risk involved in it. As you could see the foreign exchange market is not so complex to understand and not so dangerous to enter. You can become one of its participants in a few minutes and start earning money more than easily. How to learn Forex trading and specifically how to use the online trading platform are thoroughly presented on our website.
You can read our educational materials and trading e-books which will help you understand the essence of Forex trading, discover its benefits, learn how to trade effectively and how to manage your risk. The foreign exchange market is extremely active all day long with price quotes constantly changing.
It is the only market that truly operates 24 hours a day and five days a week. Currencies are traded in the largest stock exchanges and marketplaces all over the world: This means that across almost every time zone the market is active - when the market closes in the U.
The time flexibility is very convenient for traders who have a busy working schedule. They do not need to worry about market opening and closing hours and are free to arrange their trade anytime they want. Foreign exchange market is composed of different participants, also called Forex market players , who trade on the market for quite various reasons.
This means that participating in Forex market transactions does not take place simply for speculative purpose. The company has steadily been working since serving its customers in 18 languages of 60 countries over the world, in full accordance with international standards of brokerage services.
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