Currency Trading...
The Bretton Woods Agreement
In 1944, nations attempted to stabilize international currencies in the Bretton
Woods Agreement. Realizing that speculation in national currencies contributed
to destabilization, nations agreed to measures that would restrict the flow of
money from one country to another. Nations promised to try to maintain the value
of their currency against the dollar, whose value was correlated to a certain
amount of gold. However, the dramatic increase in world trade, beginning after
World War II, led to staggering amounts of capital flowing globally.
Foreign exchange rates became increasingly erratic.
Consequently, the United States went off the gold standard in 1971. Currency
trading then took off, as currency traders recognized the unregulated
marketplace as a burgeoning source of potential profit. The forex marketplace
was, and is, a developing force in the volatile world of foreign currency
exchange.
Currency Trading Today
Spot currency trading exists only because of willing buyers and willing sellers.
Price is the overriding factor in forex trading. There is no central stock
exchange or bank in which transactions take place. Rather, forex is an
over-the-counter, or interbank, forum. Investors conduct business on the phone,
computer, or Reuters, an electronic network.
Foreign currencies are always traded in pairs, with the
simultaneous purchase of one currency, and the sale of another. For instance, an
investor might buy the euro and sell yen. This would be expressed with the
symbols for each nation and/or its currency: EUR/JPY. Most currency trading
involves the major currencies of stable countries: the United States Dollar,
British Pound, Japanese Yen, Australian Dollar, Canadian Dollar, Swiss Franc,
and Euro.
Today's Forex Price (Four Major Currency Pairs)
EUR/USD USD/CHF
GBP/USD
USD/JPY
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