In order to make money on the stock market you must understand some principles which rule it. The understanding of how the system works is 10 times more important than knowing all of forex trading strategies. The stock exchange in
many ways is similar to traditional trade at the fairs. Focus and read the brief history of the stock market to find out in which way the barter has progressed to what is known as foreign currency exchange. Notice that today the money has become a commodity.
BRIEF HISTORY OF FOREX MARKET
The Stock Exchange
If you're reading this it means that you decided to get to know a bit more about forex trading (stands for foreign exchange trading). The modern stock exchange is taken as the newest form of global trade, which took a lot of years to develop. Merchants and traders developed from working in caravans and noisy bazars to organizations like stock exchanges.
In Middle Ages merchants only met at certain place (fairs or markets) once a year. Meanwhile nation states and new trade routes were developed, new continents were discovered and new goods appeared in the market. In large sea ports, like Antwerp, trading began to take place on daily basis. Initially it was in the open air and later in a building specifically designed for this purpose. One of the first European Stock Exchanges was opened in Antwerp in 1531. Over the years a set of rules, governing exchange trading, have grown up and in the most developed economic nations these rules have been enshrined in law. Modern stock exchanges are the most important elements of global economy.
The Global Currency System
The Second World War has not only changed the political balance of power, it also has left both Europe and Japan in ruins. In 1944 financial representatives of the Allies met in Bretton Woods, USA to discuss the problem of post war economic mechanism and the restoration of global economy. Thanks to this the International Monetary Fund was found. Now the US dollar has taken the lead before British pound as the World's currency. It predominated international payments since the mid-19th century.
By the early 70s the global economy began to upturn. Germany and the Japan, which were defeated nations in the war developed into the economic powerhouses. In 1971 the Bretton Woods agreements were temporary suspended. By 1979 a floating currency system was established. Today prices of metals, petroleum and international debts are still in US dollars, because few years after the War there were no alternatives. The US dollar is the World's reserve currency, because the USA has the largest economy in the world and because of the key role which the Bretton Wood Agreement played in post war reconstruction.
The times are changing. In 1999 12 European countries relinquished their national currencies and created a new single European currency, the euro. Without doubt it was an attempt to create an alternative global monetary unit.
Money As A Commodity
It's possible to buy and sell money for money just like any other commodity. The payment for money is the interest rate which the seller receives. At the basic level when you put the money to your bank account, the bank is the buyer and you are the seller. The bank pays you interest for use of your money. The Money Markets were set up to trade with money. The participants of this market give or take money for a period of time in the interest rate. The companies, the banks and the State buy and sell money in form of certificates of deposit, bills and so on. These operations are made in the national currency. After that national currencies began to go on sale for foreign money. This way money had become a commodity, an exchange commodity
As you see money can be a commodity. Middle Age traders were selling merchandise at the markets. Modern forex traders can sell "goods" which are not in fact physical. What is more, at forex market it is possible to sell something you do not possess!
More about forex trading in future entries.
If you want to learn how to earn money on forex market, follow forex trade strategies blog and future EzineArticles entries.
Wish you luck and lots of pips,
Forex Tutor
Forex Tutor
Article Source: http://EzineArticles.com/?expert=Piotr_Kowalski
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