The Bretton Woods agreements of 1971 and the questioning of the system of fixed exchange rates allow the foreign exchange market to develop in the way we know it today.
Forex refers to foreign exchange market, and brokers and banks are connected every day through an electronic network that allows them to convert the currency of all countries.The forex market is the largest and most liquid financial market in the world. The volume of currency treaty $ per day is greater than 1900 billion USD.
Forex Treaty could be that central banks and commercial or investment banks, but that was before the internet makes this market accessible to private investors.The currency is treated the U.S. dollar, Japanese Yen, the Euro, the Pound, Swiss franc, Canadian dollar and Australian dollar. The Forex market 24/24, 5 days a week. It is not centralized in one physical location as is the case for other markets.
The foreign exchange market is to simultaneously buy one currency and selling another. The currencies are treated in pairs, for example Euro / US Dollar (EUR / USD) or U.S. Dollar / Japanese Yen (USD / JPY).
For example, you perform an operation when you expect the currency you purchase will rise from what you sell. If the currency you purchase increases in value, you must sell the other currency to close your position and take your profit. The first currency in the index pair is called the base currency and the second is called the currency traded. Most often it is the U.S. dollar that is taken as the base currency, and quotations are given for one dollar for the currencies listed. The exceptions are the British pound, Euro and Australian dollar.
Comprehension of forex quotes : 1 unit of base money = the exchange rate quoted in the currency. If eg EUR / USD at 1.2762 is treated, 1 Euro will give 1.2762 dollars.
Comprehension the size of contracts on the foreign exchange market: the size of the contract is usually a batch of 100,000. This means that for a standard contract you control 100,000 units of each pair, eg if you buy the EUR / USD you actually buy and sell 100.000 EURO 100.000 dollars simultaneously. For this type of contract, each pip (the smallest unit of price) is $ 10. But more and more companies to deal with lots of 10,000 with a value of $ 1 pip. Forex can offer much lower margins than other markets.
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