Forex and Forex Market History
Forex and Forex Market History
What is Forex: (Foreign Exchange)
Foreign Exchange means the exchange of foreign currency
Forex is a decentralized foreign exchange market in which all countries' currencies are traded on a floating exchange rate basis. The Forex market is the largest market in the world with a daily trading volume of more than $ 5.4 trillion, which is the single currency market. This daily volume is so large that it makes a huge difference by comparing all the active markets of the world on a daily basis.
To put it simply, when you travel to the US and convert your currency into US currency, you have actually made a forex trade. When you convert your currency to another country, this exchange and the exchange rate based on supply and demand determine how much you will have to pay out of your base money to get $ 100. Currency rates vary at any given moment, and for example the value of a pound against the US dollar is 1.30 so you can get 130 US dollars by paying 100 British pounds.Due to instant currency changes, tomorrow the pound equals the pound against the US dollar at 1.29 tomorrow and you will receive $ 129 against the 100 pound you pay, which doesn't make much difference to you but if you see Widen it a bit and look at the big companies and factories that have very high turnover. You'll see very little fluctuation in your mind, which translates into heavy money for these companies and factories.
The largest trading banks in the Forex market based on the percentage of participation are:
1 - CT Bank of America with 12.9% stake
2 - JP Morgan Bank of America with 8.8% stake
3 - Bank of Switzerland with a participation of 8.8%
4 - Deutsche Bank Germany with 7.9% stake
5 - Bank of America Bank 6.4%
The main Forex trading centers are London - New York - Tokyo - Zurich - Frankfurt - Hong Kong - Singapore - Paris - Sydney with New York - London - Tokyo and Sydney being the most important. Forex trading is fully automated through 24-hour worldwide supercomputers. The Forex market does not have a head office and runs 24 hours a day, 5 days a week through OTC trading centers in major cities around the world.
Forex Market History:Most Forex experts consider Babylonian times, but their major formation relates to several major global events, including the events of the Burton Forest and the gold standard and the occurrence of world wars.
Commodity Exchanges Commodities used by Mesopotamian tribes to meet their needs were a form of early Forex trading, and over time this practice evolved and people traded their goods for salt and salt played the role of a single currency or currency. It has transpired that these exchanges with countries were generally by sea and large ships.
Then, in the sixth century BC, with the creation of gold coins, salt gradually replaced the coins due to the bulk and difficulty of transport, and the exchanges took on a new form, creating a gold standard year after year. 1800 between countries.
The gold standard was a law that allowed countries to print and distribute paper money as much as their gold. This law was in force until World War I and all countries adhered to the principles of agreement and standards, but in World War I European countries that desperately needed money and funds began printing and abolishing more money by repealing and suspending it. Gold was once again favored in 1900 and re-enacted by countries around the world that allowed countries to convert their gold into whatever country they needed. Another development that created the Forex market was the Burton Woods Conference and Convention, which became known as the Burton Woods Conference.
The conference was attended by the US, UK and France. The purpose of the conference was to create a world order after World War I and World War II, in which the United States had suffered less damage than countries such as Britain and France in avoiding war, increasing the popularity and appreciation of the US dollar.
Another factor in the rise and popularity of the US dollar was the discovery of German gold warehouses and caves that Hitler had collected from the victory and looting of various countries, which became a tool to strengthen the US dollar against other world currencies.
This huge volume of gold made the US dollar the main currency of the Burton Woods meeting, and other currencies had to value and declare their value in US dollars, and the US dollar was gold. . But the Burton Woods law also couldn't solve the problem because the US dollar was much larger than the amount of gold available (due to lending to different countries). As a result, in 1971, US President Richard Nixon annulled the Burton Woods contract, which floated the value of the US dollar against other currencies.
Following the Breton Woods agreement, the Smithsonian agreement came in 1971, which set the value of one ounce of gold at 38 US dollars, linking the US dollar to the global ounce, allowing other countries to exchange currencies. They have 2.25% volatility against the US dollar.
In 1972, Europe tried to break away from its dependence on the US dollar, creating a group of countries including Germany, France, Italy, the Netherlands, Belgium and Luxembourg, but in 1973 due to errors and differences of opinion. It disappeared. This US dollar's dominance of the world economy peaked in 1980, with the sharp rise in the value of the US dollar against the currency of other countries and the sharp decline in the value of other countries' currency, causing the bankruptcy of many industries, companies, and factories. Countries and, on the other hand, brought great growth and profits to US companies and factories, which caused global dissatisfaction with the US and US dollar colonial policies that led to the G5 meeting in 1985 with the United States, Britain, France, West Germany and Japan, leading to the signing of the G5 agreement or the famous Plaza Hotel ( A hotel in New York (where the leak was held) was called to reduce the value of the dollar and thereby increase the value of other world currencies. Finally, in 1992, with the formation of the European Union and the creation of the euro, it was able to offset some of the dependence on the US dollar.
In the 1990s, financial markets became more sophisticated with the advent of technologies such as the telephone, and traders were informed by a simple touch of stock prices and the exchange rate of foreign exchange and dealing simultaneously with events such as the collapse. It was the Berlin Wall and the collapse of the Soviet Union. After the European economic boom, economic boom emerged in Southeast Asian markets, creating a connected, American, European and Asian economy that brought high liquidity into the Forex market and global currency trading.
Forex Market Features:The Forex market is one of the most convenient trading and trading markets in the world, wherever and wherever stocks and currencies in the market can be bought and sold.
1. The inability to manipulate the market through the political pressure of individuals and institutions and countries
2- 24 hour market activity in 5 working days
3 - No gender, age or physical restrictions for traders
4- High volume of cash for buyers and sellers
5 - Ability to deal with all operating systems whether computer systems or mobile phones and ...
6- Opening and trading on demo accounts
7 - Very low fees for transactions
8 - Access to markets and transactions as quickly as possible
9 - Ability to use software and auxiliary systems to increase transaction success
10 - No need to pay taxes or duties to companies and countries and even individuals
11 - Ability to buy and sell more than 100 currency symbols and metals and more than 300 stock symbols
12 - No need to know countries' legal regulations for trading
13 - Trading commission is very low and in some cases zero
14 - Lack of time and space for transactions, wherever the Internet and a phone or computer is possible to participate in transactions.
15 - Easy and fast access to influential Forex market political and economic news through reputable trading companies or reputable news.
16 - A very powerful marketplace that allows you to trade and buy or sell at any cost.
17 - Transparency and full access to account information and transactions
18 - Opportunity to trade in two directions (up or down) and gain two-way profits
Also possible leverage for traders (Leverage) Traders can multiply trading capital