1.1 What is Forex Trading?

We begin with an introduction to the world of Forex — the global foreign exchange market. Understanding the basics from the start is essential, so you can confidently answer the question: “What is Forex?” beyond simply exchanging one currency for another.

In this lesson, you’ll explore the foundations of Forex trading, how the currency markets operate, and what it truly means to trade Forex.

📚 Background: A Brief History of Forex Trading

Any proper introduction to Forex should touch on its historical roots.

• In 1875, the gold standard was introduced, linking currency values to gold. This became the first systematic method of currency exchange.

• During World War I, countries printed more currency than they had in gold reserves, leading to the collapse of the gold standard.

• After temporary recovery, World War II prompted another collapse, though gold remained a symbol of ultimate value.

• In 1944, the Bretton Woods System was created, replacing gold with the U.S. dollar as the global reserve currency.

• In 1971, the U.S. stopped converting dollars to gold, and by 1976, floating exchange rates were widely accepted — forming the foundation of today’s modern Forex market.

• By the mid-1990s, Forex trading went fully electronic, increasing its accessibility and global reach.

💡 Key Concepts: What is Forex Trading?

This lesson marks the beginning of your journey with Master FX Academy. Throughout this course, we will guide you through the ins and outs of the Forex market — one of the most dynamic and accessible trading arenas in the world.

The term Forex is short for foreign exchange, a market where currencies are traded continuously by millions of people globally.

Here’s how it works in everyday life:

• A traveler exchanging Euros for Egyptian Pounds to buy goods in Egypt is participating in Forex.

• A consumer in the U.S. buying French wine indirectly participates in Forex when the importer exchanges USD for Euros.

Unlike centralized stock markets, Forex trading is conducted over-the-counter (OTC) — meaning it happens via computer networks rather than a central exchange. The Forex market operates 24 hours a day, five and a half days a week, making it the most liquid and active financial market in the world, with over $2 trillion traded daily.

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🚀 Why Learn Forex?

Forex offers vast opportunities to build wealth — but success depends on knowledge and discipline. The better you understand the market, the better your results will be.

📘 Coming up next: Learn what exactly is traded in the Forex markets and how you can get started.

Stay tuned!