A Brief History in the Foreign Exchange Market
Bretton Woods System would soon be obsolete and was abolished in 1971. The system that replaced it was determined by supply and demand. Although gold was initially used as the base reserve currency, the U.S. dollar quickly gained momentum as the international reserve currency following the recovery after World War II. The market evolved into a free-floating currency valuation system. Before computers came along it was hard to determine fair exchange rates. Advances in technology made it possible for creative minds to create internet trading platforms. These platforms could stream live quotes and execute trades instantly.Retail forex brokers brought about the entry of speculators by allowing smaller units of trade. The standard for interbanks is one million units but retail brokers allow trades of just one thousand units. Two forms of brokers are Market Makers and ENC, Electronic Communications Networks.
Retail market makers provide liquidity by "repackaging" large contract sizes from wholesalers into smaller lots so traders with small pockets can trade forex. They make their money from the spread of the bid/ask price. These spreads are very small but add up when you consider the millions of daily transactions.Electronic Communication Networks are platforms that automatically match buy and sell orders. These platforms match these orders to the best bid/ask price they can find in the system. ENC brokers will charge a very small commission for trades. Today anyone can trade on the forex market. Many people consider forex a great way to make quick and easy money but only those who put it the time learn actually make a profit. Knowing your history can help you understand past mistakes and learn how to overcome adversity. Learn more at [http://xtremeforexprofits.com]