You might have heard of the Foreign Exchange Market and how it has helped revolutionize the concept of investing. But did you know how it came to be? Looking back into the beginnings of this trade can give you a clearer perspective before engaging into it.
The following is a rough summary of the history of this trade meant for those who are preparing themselves to enter forex trading.
The financial market gave birth to the idea that gold should be the world's most fundamental monetary system. So what happens is that countries fixed the value of their corresponding currencies to be equal to an ounce of gold, and the fluctuating price of gold among a pair of currencies became the onset of currency exchange.
The beginnings of currency exchange dipped when, during World War I, the two major European powers did not have enough hold to trade during that time due to their military projects, so the gold standard caved in.
It resumed to progress again but once more went down during the second World War, especially since most of the countries did not want to take part in such a trade. Nevertheless gold still remained as the most fundamental means of financial value.
It was not until 1944 when the Bretton Woods System was put into operation and paved way to the arrangement of set exchange rates that caused the U.S. dollar to replace the gold standard as the most fundamental reserve currency. In other words, the only currency that can substitute for gold would be the U.S. dollar.
The Bretton Woods System ended in 1971 when the United States affirmed that it has put an end to exchanging gold for US dollars that were kept in foreign reserves. In 1976, due to the end of the Bretton Woods System, floating foreign exchange rates more acceptable worldwide. It was here when Forex started to take momentum. It was in the mid 1990s when it started to broadly trade electronically.
Currently, Forex is the largest financial trading market in the world and its average daily trading volume is 2.3 trillion dollars.
The following is a rough summary of the history of this trade meant for those who are preparing themselves to enter forex trading.
The financial market gave birth to the idea that gold should be the world's most fundamental monetary system. So what happens is that countries fixed the value of their corresponding currencies to be equal to an ounce of gold, and the fluctuating price of gold among a pair of currencies became the onset of currency exchange.
The beginnings of currency exchange dipped when, during World War I, the two major European powers did not have enough hold to trade during that time due to their military projects, so the gold standard caved in.
It resumed to progress again but once more went down during the second World War, especially since most of the countries did not want to take part in such a trade. Nevertheless gold still remained as the most fundamental means of financial value.
It was not until 1944 when the Bretton Woods System was put into operation and paved way to the arrangement of set exchange rates that caused the U.S. dollar to replace the gold standard as the most fundamental reserve currency. In other words, the only currency that can substitute for gold would be the U.S. dollar.
The Bretton Woods System ended in 1971 when the United States affirmed that it has put an end to exchanging gold for US dollars that were kept in foreign reserves. In 1976, due to the end of the Bretton Woods System, floating foreign exchange rates more acceptable worldwide. It was here when Forex started to take momentum. It was in the mid 1990s when it started to broadly trade electronically.
Currently, Forex is the largest financial trading market in the world and its average daily trading volume is 2.3 trillion dollars.
