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| Forex Trading with MetaTrader |
1️⃣The process and developing events before the Forex market was established.
After World War II, world governments came together
to rebuild the global economy and ensure financial stability. An international
conference held in Bretton Woods, New Hampshire, 🗽United States, from July 1 to
July 22, 1944, resulted in the signing of the “Bretton Woods Agreement”.
A total of 44 countries signed the agreement, including notable states such as
the United States, United Kingdom, Soviet Union, France, Turkey, Canada,
Australia, Brazil, India, Netherlands, Argentina, Republic of China (Taiwan),
Belgium, Mexico, Portugal, New Zealand, and more. These countries aimed to
restructure the global economy through international cooperation and ensure
financial stability in the post-war era. The agreement led to the establishment
of two significant institutions:
- International Monetary Fund (IMF)
- International Bank for Reconstruction and Development (World Bank).
At the same time, the Bretton Woods Agreement officially
adopted “the Gold-Dollar standard”. The Gold-Dollar standard would serve
as a currency system used in international trade and financial relations. Under
this system, national currencies were directly pegged to gold or backed by
gold. This facilitated international trade and financial transactions to be
conducted in terms of gold. Accordingly, participating countries fixed the
exchange rates of their own currencies to the U.S. dollar at a specific ratio.
The U.S. dollar, in turn, was linked to gold. In other words, the holder of
U.S. dollars could convert them into a certain amount of gold. However, over
time, the gold link to the U.S. dollar began to weaken. Due to the “Vietnam
War” and internal economic issues in the late 1960s, the United States had
to print a significant amount of money, which undermined the dollar’s
connection to gold. As a result, in 1971, U.S. President Richard Nixon
ended the gold-dollar standard and allowed exchange rates to float freely. This
led to international exchange rates becoming flexible and fluctuating.
Following this date, currency fluctuations started to impact trade and
investment activities. The late 1970s marked a period of significant changes in
financial markets, fueled by the development of computer technology. During
this era, interbank electronic trading platforms were established, making
currency trading faster and more efficient. It was during this period that the
forex market began to take shape.
2️⃣Establishment of the Global Forex Market:
On January 8, 1976, at the Kingston Summit in
Jamaica, attended by finance ministers of member countries of the International
Monetary Fund (IMF), the decision was made to establish the International
Foreign Exchange Market, commonly known as Forex. Central banks were
allowed to engage in buying and selling currencies and gold as commodities.
This gave central banks the ability to intervene in the trajectory of national
currencies not only through administrative means but also through free market
methods. The modern structure of the Forex market has progressively grown and
developed alongside technological advancements and the process of globalization.
In this context, online trading of the foreign exchange market was introduced
starting from the year 1993.
Forex (Foreign Exchange), also known as the foreign
exchange market, is a financial market that creates a two-way (buying and
selling) trading opportunity related to the appreciation or depreciation of one
country’s currency against another country’s currency. In addition to this,
Forex is the largest and most liquid financial market in the world. The Forex
market involves the exchange of one country’s currency with another country’s
currency, in other words, the conversion of one currency into another, within a
global marketplace.
3️⃣Trading Hours in the Forex Market:
Forex is an investment market that operates 24/5,
providing participants and investors from different geographical regions the
ability to trade almost anywhere with continuous access. The market is formed
through the participation of various countries worldwide. Due to the different
trading centers of various countries operating in different time zones, as one
trading center closes, another opens. As a result, a constant flow of trading
occurs according to global time, allowing the market to remain open
continuously. Let’s take a look at a general timetable that indicates when
these sessions are active and how one session overlaps with the opening of
another as it closes:
🕛 Asian Session (Tokyo Session):
- Opening: 00:00 UTC
- Closing: 09:00 UTC
- Major currencies: Japanese Yen (JPY), Australian Dollar (AUD), New Zealand Dollar (NZD)
🕗 European Session (London Session):
- Opening: 08:00 UTC
- Closing: 17:00 UTC
- Major currencies: Euro (EUR), British Pound (GBP), Swiss Franc (CHF)
🕐 North American Session (New York Session):
- Opening: 13:00 UTC
- Closing: 22:00 UTC
- Major currencies: US Dollar (USD), Canadian Dollar (CAD)
🕙 Pacific Session (Sydney Session):
- Opening: 22:00 UTC (Previous day)
- Closing: 07:00 UTC
- Major currencies: Japanese Yen (JPY), Australian Dollar (AUD), New Zealand Dollar (NZD)
As these sessions proceed sequentially, one session closes
while another opens, ensuring a continuous flow of trading 24 hours a
day, 5 days a week. The forex market refers to the trading of foreign
currencies under predetermined conditions. Unlike other financial markets, the
forex market does not take place in a physical location and is an
over-the-counter (OTC) market. The forex market is the world’s largest
international currency market, and the most heavily traded currencies include:
Euro (EUR), US Dollar (USD), British Pound (GBP), Japanese
Yen (JPY), Swiss Franc (CHF), etc.
New York, London, Tokyo, Frankfurt, and Sydney are important
centers of the forex market. Additionally, the credit-supported trading system
implemented in the forex market provides attractive conditions for investors.
In the forex market, it is possible to trade a wide range of financial
instruments, including currency pairs, commodities, and indices.
4️⃣Players in the Forex Market:
The main participants in the forex market are as follows:
🏦Central Banks:
Central banks, which manage countries’ monetary policies,
hold a significant position in the forex market as they manage foreign exchange
reserves and determine the value of currencies.
💰Investment Funds:
Investment funds are financial institutions that typically
gather money from individuals or institutional investors to create a
diversified portfolio in various asset classes. Funds investing in the forex
market aim to benefit from currency fluctuations while managing their own
portfolios.
🤵Commercial Banks and Market Makers:
Commercial banks enable their clients to engage in foreign
exchange trading and also conduct transactions for their own accounts. Market
makers, on the other hand, are participants often represented by Forex brokers
or banks that establish buy and sell prices in the market. These entities assume
the role of maintaining market liquidity and facilitating trading activities.
💼Commercial Companies:
Large corporations seek potential gains by investing their
own capital in the Forex market. Additionally, when any company conducts sales
in a foreign country and receives income in a different currency, these
corporations engage in Forex trading to manage the risk arising from
fluctuations in exchange rates.
👨💻Individual Investors:
In the modern age, with the widespread use of the internet,
individual traders can also access the Forex market. Through online trading
platforms, they can engage in currency trading with a small amount of capital.
These individuals can easily access the Forex market through various brokerage
firms and brokers. By choosing a Forex broker, you can open an account. Many
Forex brokers offer free demo accounts to new traders, allowing them to
understand the market and practice trading. These accounts enable us to trade
under real market conditions using virtual money. The best part is that Forex
brokers often provide resources such as educational materials, webinars, and
analytical tools. These resources help us gain more knowledge about the market
and develop our trading strategies.
To summarize, it is possible to quickly achieve profits by
trading correctly in the Forex market. By utilizing leverage, we can conduct
large trades with a small capital and potentially increase our gains. In the
Forex market, we can trade not only currency pairs but also different asset
classes such as commodities, stocks, indices, and cryptocurrencies. While
trading in this market offers a high profit potential, it also carries high
risks and comes with the possibility of losses due to rapid price fluctuations.
Good training, strategy and discipline are required to succeed.