The Beautiful Market
Tuesday 2 November 2010
Foreign exchange today may seem too complex for the average person to grasp. The images of the market that dominate the media — Walls of blinking, computer screens, screaming traders, giant blocks of money traded at the speed of light, defined by an intricate interplay of events — reinforce this perception. But these images are actually part of a facade, masking a relatively simple transaction. At its heart, each foreign exchange is a trade — an exchange of one monetary unit (currency) for another.
Dealers and Investors
May employ intricate strategies or use technical trading language and develop rich models, but that doesn’t fundamentally alter the act. Understanding this helps cut through the clutter, misperceptions, and mystery that surround this market.
Very little of what is done in foreign exchange today is vastly different from how individuals have traded for thousands of years. The techniques and tools have changed, but the simple exchange remains the same.
Because foreign exchange is in fact so old, it is important to trace its roots, to explore how this market has evolved over the millennia. Individuals — kings and emperors, traders and dealers, common citizens and thieves — have employed all kinds of methods to use money and markets to their advantage. Their strategies have resulted in success and disaster. But all contain examples and lessons that will be helpful for the modern investor to understand this market.
This chapter also looks at the nature of money, how it has been used by different societies throughout history, and how its value can fluctuate. What emerges is the story of a long struggle between government and markets over who gets to control money — a struggle that continues to this day.
Dealers and Investors
May employ intricate strategies or use technical trading language and develop rich models, but that doesn’t fundamentally alter the act. Understanding this helps cut through the clutter, misperceptions, and mystery that surround this market.
Very little of what is done in foreign exchange today is vastly different from how individuals have traded for thousands of years. The techniques and tools have changed, but the simple exchange remains the same.
Because foreign exchange is in fact so old, it is important to trace its roots, to explore how this market has evolved over the millennia. Individuals — kings and emperors, traders and dealers, common citizens and thieves — have employed all kinds of methods to use money and markets to their advantage. Their strategies have resulted in success and disaster. But all contain examples and lessons that will be helpful for the modern investor to understand this market.
This chapter also looks at the nature of money, how it has been used by different societies throughout history, and how its value can fluctuate. What emerges is the story of a long struggle between government and markets over who gets to control money — a struggle that continues to this day.
Labels:
History of Forex