What is Forex? An introduction to Forex history and background along with Forex basics.

What is Forex? Forex history and background of Forex

Before you start learning about anything you must be familiar with the history and the background of that particular thing. As you want to learn Forex you must have the knowledge of what Forex actually is? How did it emerge? And how is it regulated and traded worldwide?

currency in earlier times

Forex simply means Foreign- Exchange. Forex, also known as Fx is the world’s largest market today. Forex is a very old concept of trading which continued for centuries with the
commercial activities. Before the existence of paper notes, the goods were exchanged with the other goods, this is how people trade in earlier time. This system of exchanging goods was known as Barter system. But there were limitations of this system which forced men to bring up some common base so that the valuation of goods could be done in terms of it. In many countries, feathers, teeth and metals served this purpose. Later on coins and currency notes came into existence, and the business of exchanging goods in terms of metal (gold) and currencies started. 

Before the World War 1, most of the central banks of were agreed to put gold as convertible to their currencies. But in 1931, removal of gold standard caused a serious problem as gold faced a great depression. And from 1931 to 1971 there came many up and downs in the forex market. In between in july 1944, After world war II came to an end, the Bretton Woods agreement was proposed which helped in protecting local national interests. This agreement resulted in fixed exchange rates. It fixed per ounce of gold at 35 $ and also fixed other currencies with US dollar on a permanent basis.

introduction of paper notes to exchange

But in 1970’s the Bretton Woods was collapsed as due to increasing pressure on US dollar due to heavy US budget and trade deficits, dollar was no longer the sole of international currency. For the last two decades, restrictions and the pressure on capital flow is removed in most of the countries which has left the market forces free to adjust their selves.

currency at present: online forex trading

Now the investors and financial institutions have got a new ground to play.The fx market was initially working under the central banks and governments bodies but later on the other financial bodies also became the part of it and then forex became the largest financial market of the World. Now there is no central body which controls forex

Above is the history of the forex but at present 2.9 trillion dollars is traded every day in forex market, which is a great opportunity to the individual investors and traders to connect to the unlimited source of wealth in order to earn millions and billions of dollars in minimal time. Now the technology has made it easy for you to trade forex online. I think my experience of two years would serve a purpose for you, so if you are ready to learn then next article is for you.