Forex Trading

The foreign exchange market assists international trade and investments by enabling currency conversion. For example, it permits a business in the United States to import goods from European Union member states, especially Eurozone members, and pay Euros, even though its income is in United States dollars. It also supports direct speculation and evaluation relative to the value of currencies, and the carry trade, speculation based on the interest rate differential between two currencies.

The foreign exchange market is unique because of the following characteristics:

its huge trading volume representing the largest asset class in the world leading to high liquidity;
its geographical dispersion;
its continuous operation: 24 hours a day except weekends, i.e., trading from 22:00 GMT on Sunday (Sydney) until 22:00 GMT Friday (New York);
the variety of factors that affect exchange rates;
the low margins of relative profit compared with other markets of fixed income; and
the use of leverage to enhance profit and loss margins and with respect to account size.
As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding currency intervention by central banks.

Ancient
Currency trading and exchange first occurred in ancient times.[6] Money-changing people, people helping others to change money and also taking a commission or charging a fee were living in the times of the Talmudic writings (Biblical times). These people (sometimes called “kollybistẻs”) used city-stalls, at feast times the temples Court of the Gentiles instead.[7] Money-changers were also in more recent ancient times silver-smiths and/or gold-smiths.

During the 4th century, the Byzantine government kept a monopoly on the exchange of currency.[9]

Papyri PCZ I 59021 (c.259/8 BC), shows the occurrences of exchange of coinage within Ancient Egypt.

Currency and exchange was also a vital and crucial element of trade during the ancient world so that people could buy and sell items like food, pottery and raw materials.[11] If a Greek coin held more gold than an Egyptian coin due to its size or content, then a merchant could barter fewer Greek gold coins for more Egyptian ones, or for more material goods. This is why, at some point in their history, most world currencies in circulation today had a value fixed to a specific quantity of a recognized standard like silver and gold.

Early modern
Alex. Brown & Sons traded foreign currencies exchange sometime about 1850 and was a leading participant in this within U.S.A.[20] During 1880, J.M. do Espírito Santo de Silva (Banco Espírito Santo) applied for and was given permission to begin to engage in a foreign exchange trading business.

The year 1880 is considered by at least one source to be the beginning of modern foreign exchange, significant for the fact of the beginning of the gold standard during the year.

Prior to the first world war, there was a much more limited control of international trade. Motivated by the outset of war, countries abandoned the gold standard monetary system