Forex Trading
Forex trading, also known as foreign exchange trading or currency trading, is the buying and selling of currencies on the foreign exchange market. Forex trading is one of the most popular forms of trading available today and accounts for roughly USD $4 trillion in economic activity on a daily basis. Forex trading is conducted 24 hours a day, five days a week, and is heavily dependent on the strength of global economies and geopolitical events.
History of Forex Trading
The foreign exchange market has its roots in the Bretton Woods Agreement of 1944, which established the rules for commercial and financial relations among the world’s major industrial states. The agreement set out the rules for international economic cooperation and the creation of the International Monetary Fund (IMF). The Bretton Woods Agreement also established the gold standard, which set a fixed price for gold and allowed currencies to be pegged to the price of gold. This system remained in place until 1971 when the U.S. government suspended the convertibility of the U.S. dollar to gold.
The foreign exchange market was then established in 1971 when floating exchange rates began to materialize. This marked the beginning of a new era of currency trading and the birth of the modern foreign exchange market. Since then, the foreign exchange market has grown to become the largest financial market in the world, with an average daily trading volume of more than $5 trillion.
Table of Comparisons
| Currency Pair | Price | Spread |
|---|---|---|
| EUR/USD | 1.1750 | 0.0020 |
| USD/JPY | 109.50 | 0.30 |
| GBP/USD | 1.3200 | 0.0050 |
Summary
Forex trading is the buying and selling of currencies on the foreign exchange market. It is one of the most popular forms of trading available today and accounts for roughly USD $4 trillion in economic activity on a daily basis. The foreign exchange market has its roots in the Bretton Woods Agreement of 1944 and has grown to become the largest financial market in the world. For more information about forex trading, you can visit websites such as Investopedia, FXCM, and Forex.com.
See Also
- Currency Trading
- Foreign Exchange Market
- Currency Pair
- Bretton Woods Agreement
- International Monetary Fund
- Gold Standard
- Floating Exchange Rates
- Economic Activity
- Geopolitical Events
- Investopedia
