Anyone that wants to make a living from trading Forex needs to understand the basics of the Forex market to a very reasonable extent. By so doing, there will be a high possibility to make a smooth and profitable Forex career.
It is quite unfortunate that many do not find the time to study the market before investing in it; which has continued to result to losses of about 90% of trades that take place in the Forex market.
In this article, the focus will be on the basic things one must understand before investing in the Forex market, but first, here is a brief history of the Forex market.
A BRIEF HISTORY OF THE Forex MARKET:
The international monetary system has come a long way; from the early days of gold standard system, to this era of social trading.
These improvements were initiated by major market players who came up with theories on how best to approach trades; some of which are still viable to this day. The history of the international monetary system has continued to evolve, and traders need to understand how it works and apply this understanding in their trades.
THE GOLD STANDARD SYSTEM:
The gold standard system is a monetary regime that allows the dominating government currency to be fixed and be freely converted to gold. This system also supports the use of gold or bank receipts for gold to be used as the principal medium of exchange. With this system, gold or gold receipts also serve as a standard of international trades, wherein the exchange rate of different countries are fixed based on the relative gold equivalent values between individual currencies.
Before the advent of fiat currencies, gold and silver were used for payments in national and international trades. A person can give a certain quantity of gold in exchange for a measure of merchandise; that (and some other outdated methods of payment) was the nature of all kinds of trade in the past.