In this article, you will be introduced to the world of forex trading. You will learn what Forex trading is all about, why someone chooses to trade Forex and what actually happens when you do a Forex trade.
We take you from a simple explanation of how Forex works for the selection of the different currency pairs that make up forex trades. We will discuss how currencies are quoted in the Forex markets. What is the base currency and what is the quote currency? How do the global forex markets work together?
We will also discuss the many reasons why someone might trade Forex instead of another investment vehicle, detailing both the pros and cons of these types of trades. This article provides the background necessary to understand our more advanced courses in Forex trading.
What is Forex trading?
We start with an introduction to Forex trading and the world of the global Forex market. It is important to understand the basics from the outset so that the aspiring trader asks the question “What is Forex?” Can answer, beyond simple currency exchange.
Additional information on what forex trading is
Any introduction to forex trading should have a little history. The creation of the gold standard monetary system in 1875 was extremely important in the history of the Forex currency market. Countries added an amount of their currency to an ounce of gold; the changing price of gold between two currencies became the first standardized means of currency exchange in history.
The gold standard broke in World War I because the major European powers did not have enough gold to exchange for all the currency the governments printed at the time to complete major military projects. The gold standard started again between the wars, but was lifted by the start of World War II. Gold has never lost its place as the ultimate form of monetary value.
In 1944, the Bretton Woods system was implemented, which led to the formation of fixed exchange rates, with the US dollar replacing the gold standard as a reserve currency. Thus, the US dollar became the only currency to be backed by gold. 1971 marked the end of this system when the US declared it would no longer trade gold for US dollars held in foreign reserves. This led to the near-global adoption of floating currency exchange rates in 1976 and, in effect, produced the current exchange rate. It wasn’t traded electronically until the mid-1990s.
Forex Trading vs Bitcoin Trading: Which Market Is Better?
There is a difference between bitcoin and forex trading. The Bitcoin it is a crypto currency and thus cannot be regulated by any bank or institution as the forex trades international currency pairs regulated by banks and institutions and therefore it suffers from the political and economic factors of the countries.
However, the trader you can test and take advantage of the opportunities of these two markets, it depends on the economic scenario and the most interesting opportunities to take advantage of.
Always remember to study forex, it may seem confusing at first, but after creating an account with the broker like Blackstone Futures you will begin to understand in practice how it works. Use the tools available in the market to help you in your business and remember.