| In a world of national currencies, the forex (foreign | | | | General Agreement on Tariffs and Trade, the North |
| exchange) market provides the mechanism for | | | | American Free Trade Agreement, and US bilateral |
| making payments across borders, transferring money | | | | trade initiatives with the European Union, China and |
| (and thus purchasing power) from one currency to | | | | Japan. |
| another and of course determining exchange rates. | | | | 5. Technological advances which have made it |
| The forex market has seen profound changes since | | | | possible to achieve the real-time transmission of huge |
| the early 1970s, not only in its size but also in the | | | | amounts of market information worldwide and to |
| way in which it operates, as a result of structural | | | | analyze that information rapidly so that market |
| shifts in the world economy and in the international | | | | opportunities can be identified and exploited. In |
| financial system. Some of the main changes which | | | | addition, financial transactions can now be executed |
| have occurred in the world's financial environment | | | | quickly and safely, with a level of efficiency which |
| include: | | | | allows costs to be kept at level well below those |
| 1. A fundamental change in the international monetary | | | | which were possible previously. |
| system from the fixed exchange rates arising out of | | | | 6. New thinking in terms of both the theory and |
| the Bretton Woods agreement to a much more | | | | practice of finance which have resulted in the |
| flexible system in which countries can float their | | | | development of many new financial instruments and |
| exchange rates or follow other exchange rate | | | | derivative products. Advances in thinking have also |
| practices of their own choosing. | | | | served to change our understanding of the |
| 2. Major financial deregulation across the globe | | | | international financial system and the techniques we |
| including the elimination of government controls and | | | | need to use to operate within it. |
| restrictions in almost every country, which has | | | | As markets have grown and developed since the |
| resulted in far greater freedom in national and | | | | 1970s in a climate of much greater freedom and |
| international financial transactions and hugely increased | | | | competition, the role of the markets themselves has |
| competition among financial institutions. | | | | changed and we have developed the tools and |
| 3. A fundamental change in savings and investment, | | | | techniques to allow us to exploit these growing |
| with funds managers and investment institutions | | | | markets to the full. One major beneficiary of these |
| around the world diversifying their investments | | | | changes has been the forex trader who has an |
| across international borders and into multiple | | | | investment vehicle available today which was |
| currencies. | | | | undreamt of a few years ago and which will continue |
| 4. Major changes in, and liberalization of, international | | | | to provide the small investor with an excellent trading |
| trade as a result of a series of trade agreements | | | | opportunity for many years to come. |
| including the Tokyo and the Uruguay Rounds of the | | | | |