The forex market of today started in the early 1970's. The Bretton Woods Accord was the initial major leap in this market formation. The Bretton Woods restored the economy after the World War II. The Accord made a decision that major currencies should attached to the U.S. dollar. Under these principles, the major currencies worldwide attached to the U.S. dollar and they were able to experience fluctuation up to one percent.
However, the European nations wanted to shift away from their dependence of the dollar around 1970's, and then formed the Smithsonian Agreement as well as the European Joint Float. These agreements were like the Bretton Woods Accord, but permitted superior range of variation in the currency values. Nevertheless, the agreements both failed, and thus pave the road for free-floating systems. In this system, no more attachments on currencies, and they can fluctuate freely.
Most traders make use of fluctuations on the forex market. Forex traders have the opportunity to buy or sell one currency against another to make profit of the price fluctuations through thorough study about current events as well as price changes.
Since the forex market is a global market, the operations hours of the markets overlap another, so that there is an open market always. Forex market is open 24 hours a day in 5 days a week, except weekends. The forex market opens on Sundays at 21:00 GMT and closes on Fridays at 21:00 GMT.
It a typical forex trading, expect that a transaction occurs between a trading pair. The pair consists of two parts: the base currency and the quote currency. For example, the EUR/USD pair: the EUR is the base currency, while USD is the quote currency. In this example, traders will have to buy or sell the base currency with the use of the quote currency.