The Foreign Exchange Market – commonly known as the Forex Market – is the most prominent and liquid industry in the global financial industry. But what are the main mechanics behind this trillion-dollar market that makes it so significant to you and me? To put things simply, currencies are traded globally in order to conduct foreign trade, commerce and business. For example, if you own a traditional Italian restaurant in the United States and need to purchase the finest cheese and wine from Italy, you will need to convert the US Dollar (USD), into the Euro (EUR) for an effective foreign trade to be made.
To make a successful trade, currencies are made in pairs like the US Dollar and the Euro. Participants in the Forex Market work with four major currency pairs and three commodity pairs. The four major currency pairs are the most traded in the market, whereas the four commodity pairs are associated with commodities like energy and metals. Factors to consider that will influence whether or not you buy or sell currencies includes the current economy, inflation and industrial production. But like all successes comes a fluctuation of major trials and tribulations. So how did this trillion-dollar industry start and how does it seem to be progressing in 2014? Find out in the timeline presented below!
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