A lot happens in the chaos of World War II's end, later made Western Governments feel there needs to be a system that will be able to control the global economy. Then formed the "Bretton Woods System" in order to realize these dreams.
The Bretton Woods System
"Bretton Woods System" means the approval of a set of exchange rates of all currencies against gold. For some time the system is able to stabilize exchange rates. Until one time major economy in the world began to grow and change with the speed that is totally not the same. The market then felt "Bretton Woods System" too obsolete and curb.
Finally in 1971 the "Bretton Woods System" was destroyed and replaced with another Exchange rate system. The currency market was slowly beginning to evolve and move freely with the United States as the holder's control, where the exchange rate is no longer specified by default, but by obeying the economic system is simple: supply and demand.
Accustomed to a rigid system of Bretton Woods-style, was initially difficult to determine exchange rates, but along with the development of the technology market could eventually determine the exchange rate of one currency with another, or with gold, easily.
The development of the global economy and then deliver on the development of the world in which the community can participate in acquiring a world previously dominated by major banks and international scale company. Now many of the present "retail forex broker" who serve the trading currency for the community on a small scale. The interbank market compared with the standard trade size, retail brokers allow societies to trade even with 1000 trading unit size.
Retail Forex Broker
As explained in the previous lesson, above, in the years ago, only big speculators and large-scale companies are capable of trading forex. But over time, thanks to the ancestors of the previous retail forex brokers and the internet, of course, now anyone can trade forex.
Without limitation for sure, anyone can contact a or a broker, open an account, deposit money, then forex trading comfortably from home.
In General, brokers are divided into two:
1. Determining the market (market makers), where the broker is what determines their bid and ask prices.
Let's say, we're addicted to sushi and want to feel directly the raw fish fishing Japan-made. In order to feel the lembutnya meat fish in tongue, we had to switch the currency of our country with the Yen Japan. Then we went to the bank or money changer's Office premises. Well, because the yen is in need of money to us, inevitably we must obediently at the price they have specified.
It will look not like a business transaction. The clerk at the money changer will take advantage of us. The profit in the form of difference, spread, or the difference in exchange rates.
2. Electronic Communications Networks (ECN), which uses the best bid and ask prices for themselves from the institution on the interbank market.
ECN is a term for a trading platform will automatically follow the prices of orders to sell or buy a consumer has been determined in advance. The specified prices from some of the information collected from the decisive market, banks, and even traders who use ECN. Sell and buy orders at any time made, the ECN will adjust the price.
Because the freedom of traders to determine their own price, ECN broker will likely charge a small Commission. Blend of tight spreads and a small Commission which would make the transaction costs on the ECN broker cheaper than any other broker.
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