The Expansion of Forex Trading

The Bretton Woods Accord lasted until 1971, after this accord came the Smithsonian Agreement in December of 1971. Similar to the Bretton Woods Accord, it allowed for greater fluctuation within the Forex forum. This was eventually replaced with the free-floating system in place today, this transpired by default as no new agreements were devised. It allowed governments in FX trading to peg their currencies, semi-peg or allow them to freely float. In 1978, the free-floating system was officially mandated. The major currencies of today move independently from other currencies utilizing the services of currency dealers. In a free and open foreign exchange market there are no limitations on investors and currency dealers who wish to trade currencies. This has caused a recent influx of speculation by banks, hedge funds, independent broker dealer, future trading broker, brokerage houses and individuals.The underlying factor that drives today's Forex market is supply and demand along with the huge scope for profit potential amongst currency dealers. This free-floating system is ideal for today's Forex market that experiences a change in currency rate every 4.8 seconds. The foreign exchange market has evolved from a group of loosely connected financial centers to a single integrated market, playing a far greater role in the economy of a country. The expansion in the Forex market globally reflects the ongoing growth of international trade. When considering the vast size of the FX trading market it is important to realize that an initial dealer transaction with an independent broker dealer or a future trading broker and a customer will normally lead to further transactions. This is due to the brokerage institutions readjusting their own positions to manage or offset their risks