What is forex trading welcome to the course in Forex trading to this eternal will also question what is Forex and where it came from for e...
What is forex trading
welcome to the course in Forex trading to this eternal will also question what is Forex and where it came from for excessive foreign exchange is also sometimes abbreviated as simply FX and Vista.
Defines foreign exchange is the exchange of one currency for another, or the conversion of one currency into another currency so simply put, foreign exchanges, exchange of currencies.
Also, Mr. Peter continues his definition by saying that foreign-exchange also refers to the global market where currencies are traded virtually around-the-clock. So let's have a look at an example.
Say for instance you going the whole day to Europe. In that case, you will take your American dolls and go to the exchange shop and convert them into euros.
By doing this you conducted a currency exchange and therefore you have become a participant of the Forex market will talk about the participants of Forex more than one of the future Charles but today let's have a look at the history of how this so used to be back in the day because it wasn't always as easy so here's a timeline and a long long time ago there was no money, no currencies, and people had to just exchange goods.
This was called Berkshire when some people would fish and other people would grow grains and crops.
They would exchange some of their goods in order to have the best of both worlds. Next, around 2600 BC Egyptians discovered gold ratio who discovered gold and wind but it's attributed to the Egyptians.
Around that time. People like gold very much because it was very dense and it felt very heavy in your hands and it felt more valuable than other things around.
It was shiny and it was soft so you could be molded into different shapes and most importantly, was very scarce. It was very hard to find.
And that's also increased its value. Next, around 1500 BC gold was used, or country started using gold for international trade.
So instead of just exchanging goods, they would exchange gold for goods and goods for gold and that's kind of simplified things than to simplify things even further around 700 BC.
The first gold coins were created and that there was a very handy thing to have, because before that people had to check that the gold of the receiving is actually gold and also they had to wait up.
But by having gold coins they could already know what value those gold coins are carrying and that speeded up the process.
All exchange sense a bit of ancient history which now brings us to the modern world in about the 17th century paper money started spreading across Europe and around 18th century became so popular that it started causing tensions because some people and countries were still using gold and silver coins were as others were actually using paper money and there was no real connection between the two, and that is when the gold standard came into play.
The gold standard was agreed upon all. In 1875 and basically what it meant was that currencies became backed by gold reserve all of their countries.
In essence, that means governments guaranteed conversion of currency into a specific amount of gold and vice versa… Are a looking example for.
For instance, country a says that it's 11 unit of its currency equals 2 ounces of gold and country B says that one unit of its currency equals to 4 ounces of gold and that basically means that you now know how to convert currency of country an into currency of country B that made us the things more simple, and also define certain rules around how these transactions occurred, and it began the gold standard became the first standardized means of exchange in history so that there is a good idea in general.
But then what happened was World War I Strunk and World War II.
During these wars, countries that were fighting with Germany a spent a lot of money on their mill treatment and basically how they were printing more and more money and which they have to back by gold reserves and the gold reserves were rapidly depleting and it got to the point where they couldn't actually guarantee all that money with gold and therefore the gold standard lost its meaning, and so to fix that issue in 1944 the Allies got together to sign the Bretton Woods agreement and Breton Woods agreement.
Simply put, it's just the same as goaltenders gold standard version 2.0 and all he did was replaced gold with the US dollar and the US dollar became the only currency in the world that had to be backed by gold at a fixed exchange rate of $35 per ounce and all other currencies had a fixed exchange rate to the US dollar.
So let's have a look at a bit more detail inch into the outcomes of the Bretton Woods agreement so first of all fixed exchange rates.
All currencies were pegged to the US dollar second of the use dollar became the primary reserve currency, which meant that it had to be backed by gold and three the creation off to our organization.
The international monetary fund, which is simply a pool of funds where all participative nations contribute to on a regular basis and then if they have problems within the country.
They can take money out of the pool to fix the problems and then return it.
Plus pay some interest and also the World Bank, which is a financial institution of the United Nations, meaning that its main purpose is to reduce poverty around the world and help developing countries.
By the way, if you're wondering why it's cold of the bread was agreement as because it was signed in a town called Bretton Woods in New Hampshire, USA, and as you can expect when you create something which is basically the gold standard version 2.0, then there's a very high likelihood of it failing just as a goal setter, Dick, that's exactly what happened to the Bretton Woods agreement over the years after World War II gold reserves of the US started depleting very rapidly, and in 1971, US Pres.
Richard Nixon closed the gold window by telling all other countries that the US will no longer exchange gold for US dollars held in foreign reserves.
This event marked the end of the Bretton Woods agreement and since then the world has been using floating exchange rates between currencies.
What we now know as the Forex market, the major takeaways from this timeline on the first of all, it hasn't always been that simple.
It took some time for nations to come up with the current Forex system that we have and secondly that there have been several attempts at creating fixed exchange rates between currencies.
For example, the gold standard and Bretton Woods agreement and all of these events have failed because it is very artificial to put such constraints on currencies and try to control it also illustrates that the Forex market that we currently have is by far the most natural thing that should govern the exchange rates of currencies between each other.
This brings us to the end of this tutorial. I hope you enjoyed it and I look forward to seeing you next time. Until that happy trading
welcome to the course in Forex trading to this eternal will also question what is Forex and where it came from for excessive foreign exchange is also sometimes abbreviated as simply FX and Vista.
Defines foreign exchange is the exchange of one currency for another, or the conversion of one currency into another currency so simply put, foreign exchanges, exchange of currencies.
Also, Mr. Peter continues his definition by saying that foreign-exchange also refers to the global market where currencies are traded virtually around-the-clock. So let's have a look at an example.
Say for instance you going the whole day to Europe. In that case, you will take your American dolls and go to the exchange shop and convert them into euros.
By doing this you conducted a currency exchange and therefore you have become a participant of the Forex market will talk about the participants of Forex more than one of the future Charles but today let's have a look at the history of how this so used to be back in the day because it wasn't always as easy so here's a timeline and a long long time ago there was no money, no currencies, and people had to just exchange goods.
This was called Berkshire when some people would fish and other people would grow grains and crops.
They would exchange some of their goods in order to have the best of both worlds. Next, around 2600 BC Egyptians discovered gold ratio who discovered gold and wind but it's attributed to the Egyptians.
Around that time. People like gold very much because it was very dense and it felt very heavy in your hands and it felt more valuable than other things around.
It was shiny and it was soft so you could be molded into different shapes and most importantly, was very scarce. It was very hard to find.
And that's also increased its value. Next, around 1500 BC gold was used, or country started using gold for international trade.
So instead of just exchanging goods, they would exchange gold for goods and goods for gold and that's kind of simplified things than to simplify things even further around 700 BC.
The first gold coins were created and that there was a very handy thing to have, because before that people had to check that the gold of the receiving is actually gold and also they had to wait up.
But by having gold coins they could already know what value those gold coins are carrying and that speeded up the process.
All exchange sense a bit of ancient history which now brings us to the modern world in about the 17th century paper money started spreading across Europe and around 18th century became so popular that it started causing tensions because some people and countries were still using gold and silver coins were as others were actually using paper money and there was no real connection between the two, and that is when the gold standard came into play.
The gold standard was agreed upon all. In 1875 and basically what it meant was that currencies became backed by gold reserve all of their countries.
In essence, that means governments guaranteed conversion of currency into a specific amount of gold and vice versa… Are a looking example for.
For instance, country a says that it's 11 unit of its currency equals 2 ounces of gold and country B says that one unit of its currency equals to 4 ounces of gold and that basically means that you now know how to convert currency of country an into currency of country B that made us the things more simple, and also define certain rules around how these transactions occurred, and it began the gold standard became the first standardized means of exchange in history so that there is a good idea in general.
But then what happened was World War I Strunk and World War II.
During these wars, countries that were fighting with Germany a spent a lot of money on their mill treatment and basically how they were printing more and more money and which they have to back by gold reserves and the gold reserves were rapidly depleting and it got to the point where they couldn't actually guarantee all that money with gold and therefore the gold standard lost its meaning, and so to fix that issue in 1944 the Allies got together to sign the Bretton Woods agreement and Breton Woods agreement.
Simply put, it's just the same as goaltenders gold standard version 2.0 and all he did was replaced gold with the US dollar and the US dollar became the only currency in the world that had to be backed by gold at a fixed exchange rate of $35 per ounce and all other currencies had a fixed exchange rate to the US dollar.
So let's have a look at a bit more detail inch into the outcomes of the Bretton Woods agreement so first of all fixed exchange rates.
All currencies were pegged to the US dollar second of the use dollar became the primary reserve currency, which meant that it had to be backed by gold and three the creation off to our organization.
The international monetary fund, which is simply a pool of funds where all participative nations contribute to on a regular basis and then if they have problems within the country.
They can take money out of the pool to fix the problems and then return it.
Plus pay some interest and also the World Bank, which is a financial institution of the United Nations, meaning that its main purpose is to reduce poverty around the world and help developing countries.
By the way, if you're wondering why it's cold of the bread was agreement as because it was signed in a town called Bretton Woods in New Hampshire, USA, and as you can expect when you create something which is basically the gold standard version 2.0, then there's a very high likelihood of it failing just as a goal setter, Dick, that's exactly what happened to the Bretton Woods agreement over the years after World War II gold reserves of the US started depleting very rapidly, and in 1971, US Pres.
Richard Nixon closed the gold window by telling all other countries that the US will no longer exchange gold for US dollars held in foreign reserves.
This event marked the end of the Bretton Woods agreement and since then the world has been using floating exchange rates between currencies.
What we now know as the Forex market, the major takeaways from this timeline on the first of all, it hasn't always been that simple.
It took some time for nations to come up with the current Forex system that we have and secondly that there have been several attempts at creating fixed exchange rates between currencies.
For example, the gold standard and Bretton Woods agreement and all of these events have failed because it is very artificial to put such constraints on currencies and try to control it also illustrates that the Forex market that we currently have is by far the most natural thing that should govern the exchange rates of currencies between each other.
This brings us to the end of this tutorial. I hope you enjoyed it and I look forward to seeing you next time. Until that happy trading
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