What You May Not Know About The Global Forex Market?

The Global Forex Market is a nonstop cash market where currencies of many nations can be and are traded each and everyday, typically by the use of brokers. Foreign currencies are continually bought and sold across the global forex markets. The value of each investor/trader investments can move up or down based on currency movements. The Global Forex Market conditions may change at any time in response to global or local events that occur in real-time.

The real attractions of short-term currency trading to provide investors are:

24-hour trading availability, 5 days a week with nonstop access (24/7) to global Forex dealers.

An enormous liquid market, making it easy to trade most currencies.

Volatile markets offering profit opportunities.

The ability to profit in rising as well as falling markets.

Leveraged trading with low margin requirements.

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... Get the Full Story at Forex Trading System Information