The History Forex Trading

Since not all of us are financial intellectuals, therefore this article will give you an insight of what forex is all about.
Foremost, what's forex? It is actually an abbreviation of the term "foreign exchange market". Other abbreviations you can take note of are FX and currency market. The foreign exchange market is a global decentralized off-exchange financial market for the trading of currencies. A good paradigm is to just think of currencies as an object in which one can sell or buy. When one currency strengthens, the other will weaken. The forex functions around the clock 24 hours with the exception of weekends.Why was the forex set up? Well actually it is to aid worldwide trade and investment. However, if we flip back through the pages of history, it came about during the era of Babylonians. At first, the Barter System was used but the limitations of this system were considered a burden to many. So, the Babylonians strive to establish a more generally accepted mediums of exchange like money. As we progress through history, we would know that before the First World War; Central Banks sustained their currencies with convertibility to gold.

However, this system was not valid as gold reserve will deplete some day. Moreover, wealthy people invested all their money in gold with hopes that one day it could be converted to money. The History Forex Trading has caused many people to rush for gold. Thus, the era now is known as the "Gold Rush.So at the end of World War II, the Bretton Woods agreement initiated by the USA was reached in 1944. The Bretton Woods agreement reinstated The Gold Standard Policy which fixes the USD at $35.00 per ounce of gold. However, the Bretton Woods agreement collapsed in the early 1970's as President Nixon suspended the gold convertibility in August 1971.Today, the modern foreign exchange market switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system. The foreign exchange market is unique because it has a trading volume resulting in market liquidity, geographical dispersion, various factors that affect exchange rates and the use of leverage to enhance profit margins with respect to account size.