The Forex day trading system is the largest financial market in the world where currencies of all the countries are traded. The currencies are constantly being bought and sold across the Forex market by banks, brokerage firms or organizations and individuals. Due to this, the global markets and investment values increase or decrease as per the movement of the currency. Just like a stock market, the value of global currencies change according to the real world events. A unique feature of the market is that there is no central marketplace to conduct business. Trading is carried out electronically via computer networks between the investors and traders all over the world. It never closes i.e. it is a 24 hour market, so one can trade online anytime.
History of the Forex Day Trading System
By the end of the World War II, the Western nations made the Bretton Woods Agreement that fixed the exchange value of all currencies in terms of the U.S. Dollar. During that time, the U.S. dollar was $35 per ounce and set to the current gold standard. Since the global economy was completely disturbed, the aim of the agreement was to stabilize the world economy and avoid political and social turmoil. It worked well for some time, but later the agreement became outdated and restrictive. Finally, the Bretton Woods Agreement ended in 1971 and the basis of today's currency market was established, with the United States in the lead. The currency market gradually evolved and with the arrival of the Internet, currency trading became much simpler. The continuous practice of depositing U.S. currency in foreign banks exhilarated the Forex market and today the market averages over $3 trillion per day in transactions.
How To Trade on the Forex Market
There are mainly three ways in which the banks, corporations and individuals trade on the Forex market: the spot market, the forwards market and the futures market. In the spot market, the currency is bought and sold at its present price. It has always been the largest of the three markets. The forward and futures markets handle the contracts which represent the assertion to a certain currency type, a specific price per unit and a future date for settlement. Earlier the futures market was the most important market, but with the rise of electronic trading everything changed. Now, forwards and futures market are used by companies that require to hedge their foreign exchange risks out to a specific date in the future.
The Forex market is purely a liquid market with simple currency trading. It is highly volatile i.e. it can rise and fall very quickly, offering profits and loses within minutes of trading. But the necessary software is available that helps minimize risk and generate profit, even when the market is bearish.
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