Author – Richard Kapsch
The Bretton Woods Agreement was initiated in 1944 in an
effort to keep cash from draining out of war-ravaged Europe. Currency values
were pegged to the U.S. Dollar, which was then pegged to the price of gold.
The modern era of foreign exchange first emerged in 1971
with the collapse of the Bretton Woods Agreement. The U.S. Dollar was no longer
convertible into gold, signaling an increase in currency market volatility and
trading opportunities.
The collapse in 1973 of the subsequent Smithsonian and
European Joint Float agreements signaled the true beginning of the
free-floating currency exchange system that drives the markets today. Starting
in the 1980's, computer technology extended the reach of the exchange
marketplace.
Today, the values of the major world currencies are
independent of each other, with intervention available to the states only
through the central banking system.
Today forex is one of the most exciting, fast-paced markets
around. Until recently, trading in the forex market had been the domain of
large financial institutions, corporations, central banks, hedge funds and
extremely wealthy individuals. The emergence of the internet has changed all of
this, and now it is possible for average investors to buy and sell currencies
easily with the click of a mouse.
Daily currency fluctuations are usually very small. Most
currency pairs move less than one cent per day, representing a less than 1%
change in the value of the currency. This makes foreign exchange one of the
least volatile financial markets around. Therefore, many speculators rely on
the availability of enormous leverage to increase the value of potential
movements.
In the forex market, leverage can be as much as 500:1.
Higher leverage can be extremely risky, but because of round-the-clock trading
and deep liquidity, foreign exchange brokers have been able to make high
leverage an industry standard in order to make the movements meaningful for FX
traders.
Extreme liquidity and the availability of high leverage have
helped to spur the market's rapid growth and made it the ideal place for many
traders. Positions can be opened and closed within minutes or can be held for
months.
Currency prices are based on objective considerations of
supply and demand and cannot be manipulated easily by individual retail
traders. It is moved primarily by large banks, investment firms, and
multinational companies who buy and sell currencies for the purpose of hedging
their day to day business needs.
The forex market provides plenty of opportunity for
investors. However, in order to be successful, a currency trader has to
understand the basics behind currency movements.
The modern era of foreign exchange first emerged in 1971
with the collapse of the Bretton Woods Agreement. The U.S. Dollar was no longer
convertible into gold, signaling an increase in currency market volatility and
trading opportunities.
The collapse in 1973 of the subsequent Smithsonian and
European Joint Float agreements signaled the true beginning of the
free-floating currency exchange system that drives the markets today. Starting
in the 1980's, computer technology extended the reach of the exchange
marketplace.
Today, the values of the major world currencies are independent
of each other, with intervention available to the states only through the
central banking system.
Today forex is one of the most exciting, fast-paced markets
around. Until recently, trading in the forex market had been the domain of
large financial institutions, corporations, central banks, hedge funds and
extremely wealthy individuals. The emergence of the internet has changed all of
this, and now it is possible for average investors to buy and sell currencies
easily with the click of a mouse.
Daily currency fluctuations are usually very small. Most
currency pairs move less than one cent per day, representing a less than 1%
change in the value of the currency. This makes foreign exchange one of the
least volatile financial markets around. Therefore, many speculators rely on
the availability of enormous leverage to increase the value of potential
movements.
In the forex market, leverage can be as much as 500:1.
Higher leverage can be extremely risky, but because of round-the-clock trading
and deep liquidity, foreign exchange brokers have been able to make high
leverage an industry standard in order to make the movements meaningful for FX
traders.
Extreme liquidity and the availability of high leverage have
helped to spur the market's rapid growth and made it the ideal place for many
traders. Positions can be opened and closed within minutes or can be held for
months.
Currency prices are based on objective considerations of
supply and demand and cannot be manipulated easily by individual retail
traders. It is moved primarily by large banks, investment firms, and
multinational companies who buy and sell currencies for the purpose of hedging
their day to day business needs.
The forex market provides plenty of opportunity for
investors. However, in order to be successful, a currency trader has to
understand the basics behind currency movements.
Europe. Currency
values were pegged to the U.S. Dollar, which was then pegged to the price of
gold.
The modern era of foreign exchange first emerged in 1971
with the collapse of the Bretton Woods Agreement. The U.S. Dollar was no longer
convertible into gold, signaling an increase in currency market volatility and
trading opportunities.
The collapse in 1973 of the subsequent Smithsonian and
European Joint Float agreements signaled the true beginning of the
free-floating currency exchange system that drives the markets today. Starting
in the 1980's, computer technology extended the reach of the exchange
marketplace.
Today, the values of the major world currencies are independent
of each other, with intervention available to the states only through the
central banking system.
Today forex is one of the most exciting, fast-paced markets
around. Until recently, trading in the forex market had been the domain of
large financial institutions, corporations, central banks, hedge funds and
extremely wealthy individuals. The emergence of the internet has changed all of
this, and now it is possible for average investors to buy and sell currencies
easily with the click of a mouse.
Daily currency fluctuations are usually very small. Most
currency pairs move less than one cent per day, representing a less than 1%
change in the value of the currency. This makes foreign exchange one of the
least volatile financial markets around. Therefore, many speculators rely on
the availability of enormous leverage to increase the value of potential
movements.
In the forex market, leverage can be as much as 500:1.
Higher leverage can be extremely risky, but because of round-the-clock trading
and deep liquidity, foreign exchange brokers have been able to make high
leverage an industry standard in order to make the movements meaningful for FX
traders.
Extreme liquidity and the availability of high leverage have
helped to spur the market's rapid growth and made it the ideal place for many
traders. Positions can be opened and closed within minutes or can be held for
months.
Currency prices are based on objective considerations of
supply and demand and cannot be manipulated easily by individual retail traders.
It is moved primarily by large banks, investment firms, and multinational
companies who buy and sell currencies for the purpose of hedging their day to
day business needs.
The forex market provides plenty of opportunity for
investors. However, in order to be successful, a currency trader has to
understand the basics behind currency movements.
