Online Forex Guides

Evolution of Forex Trading

Trading Forex has not always been as easy as it is today. In fact, Forex trading was very strict up to 1971 until the Bretton Woods agreement was abolished.

The Bretton Woods agreement is an agreement of participating countries to try to maintain their currency’s value with only a narrow margin and when needed the corresponding rates of gold. Countries were prohibited to devalue their currencies for their own trade advantage. If they would have to devalue their currency, they were only allowed to devalue it for less than 10%.

The aim of the agreement was to install international monetary stability. The agreement plans to do so by preventing money from simply fleeing across nations, and restricts speculation of other countries’ currencies.

The Bretton Woods agreement was believed to be a step up from the old ways of the gold exchange standard. This is because as economies of countries improved, they would need to import more. Importing too much ran down their gold reserve to back their money. Therefore money supply would be reduced, interest rates rose up and the economy slowed down almost to recession.

When the prices of gold had become lower, other nations would eventually stack up on gold to replenish their money supply. By doing so, their interest rates also became lower and the economy became a bit loose again.

That is why financial leaders decided to establish the Bretton Woods agreement. However, after World War II, massive movements of money were needed for post-war reconstruction. So by 1971, the agreement was abolished and Forex were able to flow more freely.

Forex were able to flow more freely because of the advent of modernization. Because of the technology of the Internet, Forex transactions are easier to make online.

Forex was able to maximize their potential because it doesn’t have to rely on a physical trade center that has limited office hours. Instead, with the benefit of going online, Forex can now be traded 24 hours a day. That is why the Forex has been greatly known as having a digital market. This is because Forex trading can be done mostly by being online.

Simply put, everyone who is interested to be part of the continuing history of Forex trading can do so easily. The only thing a person interested in Forex trading needs is a computer that can go online.

Even though Forex is easily tradable by going online, there are still ins and outs that interested traders should learn first. What online technology was able to do was make Forex trading more convenient and be able to maximize Forex operational capacity for 24 hours.