How Global Forex Market: Came To Existence

The Global forex market is a twenty four hours currencies trading system where all currencies can be traded each and everyday. By registering with a brokers. You can buy or sell in global forex market. The value of each investor can move up or down based on currency movements. It is the event that change the conditions of global forex market in the real time.

These are the things that attract investors

The market are traded 24/7 and 5 days a week.

Anenormous market, make it an easy trade

Unstable market provides big profit opportunities.

The wisdom to profit in rising as well as falling markets

You can trade leveraged with low margin

Many options for zero commission trading.

Let's look at the history of the global forex market

The Bretton-Woods agreement, established in 1944, set national currencies against the US dollar, and set the dollar at a rate of USD $35 per ounce of pure gold. In 1967, a Chicago bank refused to make a loan in pound sterling to a college, professor by the name of Milton Friedman, because he had intended to use the funds to short the British currency. The bank's refusal to grant the loan was due to the Bretton-Woods Agreement.

Bretton-Woods was aimed at create global monetary stability by preventing money from taking flight across countries, thus eliminating speculation in the foreign currencies. Between 1876 and World War I, the gold exchange standard had ruled over the global economic system. Under the gold standard, currencies experienced an era of stability because they were supported by the price of gold.

However, the gold standard had a weakness in that lend to create boom-bust cycle economics. As the economy strengthened, it would import a great deal of gold, running down the gold reserves needed to support its currency. As a result, the money supply would drop, causing interest rates to escalate and economic activity would slow to the point of recession.

Eventually, prices of commodities would hit rock bottom, thus becoming very attractive to other nations, who would then hurry into a buying frenzy. In turn, this would add a large amount of gold to the economy until it increased its money supply, driving down interest rates and restoring economic stability. Such boom-bust cycles were know to be very common throughout that era of the gold standard, until World War II, in order to stabilize and regulate the Global Forex Market.

Participating countries agreed to to maintain the value of their currency within a narrow margin against the dollar and an equivalent rate of gold. The dollar gained a premium position as a reference currency, reflecting the shift in global economic dominance from Europe to the USA.

Countries were prohibited from devaluing their currencies by less that 10%. Post-war construction during the 1950s, however, required great volumes of Forex trading as masses of capital were needed. This had a destabilizing effect on the exchange rates established in Bretton-Woods.

In 1971, the agreement was scrapped when the US dollar stopped being exchangeable for gold. By 1973, the forces of supply and demand were in control of the currencies of major metropolitan nations, and the currency now moved more freely across borders. Prices were floated daily, with volumes, speed and price volatility all rising throughout the 1970s. New financial instruments, market deregulations and trade liberalizations emerged, further causing the growth of the Global Forex Markets.

The expose of computer technology began in 1980s and it is fast by extending the market continuum for cross-border capital movements through asian, Europe and American. Global forex market transactions grow from $70 billion a day in the 1980s to more than $3 trillion a day now.