Prior to the exchange of metals and paper money, the exchange of valued goods by bartering has always driven the international markets. The commonalities of these goods set a basis for the global market value system upon which they are placed. Goods ranging from teeth to feathers, but now more notably gold, silver and paper currencies, serve as accepted payments and loan systems internationally.
Originally coins were minted in these preferred and rare metals that allowed a more common currency to flow throughout the international market. But soon printed paper would replace these coins on an IOU basis. This newly printed paper was used by governments to pay debts in which they had made. Because the paper money was always valued against gold, international governments could assess the value of their currency according to its ability to purchase gold.
Countries have constantly attempted to fix their own exchange rates towards gold in the past; however, this process could never occur. With the global market constantly changing there is no guarantee that a country can sustain its currency value over time. This lack of sustainability has occurred often within the past 10 years as the entire continent of Europe was influenced to change its currency to the Euro, and also in South America as a variety of currencies have been so devalued against the US dollar.
Today’s Forex Market
The market has had extreme changes within the last 100 years. Currencies are now traded and valued independently among international barterers. This system of supply-and-demand is what drives today’s Forex market. The well-known “Forex” market term was officially declared in 1978 when the market was permanently established. Countries were no longer dependant on the Gold Standard system and began trading via this free flowing market.
Today, speculators attempt to read the fluctuations in the Forex market and even influence the global market. But now, because over $3 trillion flow throughout the market, a single investment company has a minuscule effect on the entire market. This is the main reason many investors flock to the Forex market; no single party can influence its flow because of its size.
Forex is now officially the most profitable market for investors to place their business. This profitability comes directly from the markets size, having nearly $1 trillion traded each day, well more than the US and European stock markets combined.
The study of macroeconomics will help a great deal with understanding the markets stability even in times of speckled international crisis. Although some countries may suffer in these crises, others will prosper, evening the market. Market trends are far more predictable within Forex because of this. Its visibility within the mainstream media is always subtle as well, because unlike the Stock Market Exchange there is usually no physical transaction taking place. Most transactions are made online via cyber-investors that wish to trade through brokers simply and easily.