WHAT IS FOREX?

Forex (foreign exchange market or currency market) is a young and developing market of currency exchange, whose daily turnover exceeds all the financial markets of the world. According to the Bank for International Settlements, daily turnover reached the level of 4 trillion USD in 2010, compared with the daily turnover of American stock exchanges, which is “only” 300 billion USD.

All the operations carried out on the Forex market can be divided into several groups: speculative, hedging, trading and regulating.

History of Forex: How Did the Biggest Worldwide Financial Market Appear?

The market of currency exchange started its history in 1971, from the moment of gold standard cancellation. The 37th president of America, Richard Nixon, was the initiator. Because of the cancellation of the gold standard, the system of stable currency rates was destroyed. As a result of the Smithsonian agreement in December 1971, constant currency fluctuations within 4.5% (against USD) were permitted (within 9% for currency pairs that do not contain USD). The decision on principles of a new currency system was made in Kingston (Jamaica) only on January 8, 1976. All the participants-members of IMF refused to set the official price for gold and limits on changes in the currency rates. The development of the currency market starts with this decision.

All the operations carried out on the Forex market can be divided into several groups: speculative, hedging, trading and regulating.

Unlike stocks, Forex is an over-the-counter (OTC) market, that does not have one specific place for trading and set working hours. That is because the main volume of all the transactions occurs between major world banks. As all the banks are situated in different places all around the planet, operations are carried out 24 hours a day (except during bank holidays).

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