Why eToro is NOT a Forex Trading Company

The online Foreign Exchange trading industry has grown to massive proportions over the last decade, and has made it hard to distinguish one Forex exchange company from another. Sure, online FX trading platforms often have different features, different interfaces and different strengths and weaknesses, but at the end of the day they all provide the same service: facilitating the connection between the trader and the foreign exchange market.

This is why eToro is much more than an online FX company

While it’s certainly true that eToro gives users access to the FX market, as well as the commodity and indices markets, this is not the primary purpose of our company. eToro’s main goal is to connect online Forex traders into an investment network, which then enables them to trade as a community while harnessing  their collective potential.

Our flagship social trading application, the eToro OpenBook makes it easy for members of our investment network to share information, and to apply that information directly to their Forex trading accounts. Any trading action made by any trader in the investment network in immediately recorded in live streaming feeds, visible to all other network members. The eToro OpenBook then provides traders with tools to utilize this information.

While the information in the feeds is valuable in itself, since it can teach you new forex trading techniques or alert you to new opportunities in the foreign exchange market, the main advantage of the eToro OpenBook are its copy functions. At the most basic level, if you see an FX trade you like in any live feed, you can very easily copy this very trade by clicking on the “Copy” button and setting your own parameters.

However, if you like a specific Forex trader, and not just an individual trade, it makes no sense to monitor his/her activity and copy each trade individually. This is where the CopyTrader comes in. The CopyTrader makes it possible for you to trade like the best traders in the investment network. Simply use the search box to locate the best traders suited to your trading style and then click on CopyTrader in their profile to start copying trades automatically.
As you can see, all of these groundbreaking social trading features make eToro very different from just your standard online Forex trading platform.

eToro is first and foremost the largest investment network in the world, connecting over 1.75 million traders together and enabling them to take on the foreign exchange market together.

US doller forex history

Currency Name : US Dollar
Currency Symbol : $
Web Site : US Central Bank
Denominations : Coins :
Penny - $.01 or 1/100 of a dollar
Nickel - $.05 or 5/100 of a dollar
Dime - $.10 or 1/10 of a dollar
Quarter - $.25 or � of a dollar

Banknotes / Bills :
$1, $5, $10, $20, $50, $100
The history of the US Dollar
The currency of the United States can be traced back to 1690 before the birth of the country when the region was still a patchwork of colonies. The Massachusetts Bay Colony used paper notes to finance military expeditions. After the introduction of paper currency in Massachusetts, the other colonies quickly followed.

Various British imposed restrictions on the colonial paper currencies were in place until being outlawed. In 1775, when the colonists were preparing to go to war with the British, the Continental Congress introduced the Continental currency. However, the currency did not last long as there was insufficient financial backing and the notes were easily counterfeited.

Congress then chartered the first national bank in Philadelphia - the Bank of North America - to help with the government's finances. The dollar was chosen to become the monetary unit for the USA in 1785. The Coinage Act of 1792 helped put together an organised monetary system that introduced coinage in gold, silver, and copper. Paper notes or greenbacks were introduced into the system in 1861 to help finance the Civil War. The paper notes used several different techniques including a Treasury seal and engraved signatures to help diminish counterfeiting. In 1863, Congress put together the national banking system that granted the US Treasury permission to oversee the issuance of National Bank notes. This gave national banks the power to distribute money and to purchase US bonds more easily whilst still being regulated.

The Federal Reserve Act of 1913 created one central bank and organised a national banking system that could keep up with the changing financial needs of the country. The Federal Reserve Board created a new currency called the Federal Reserve Note. The first federal note was issued in the form of a ten dollar bill in 1914. Finally, a decision by the Federal Reserve board was made to lower the manufacturing costs of the currency by reducing the actual size of the notes by 30%. The same designs were also printed on all dominations instead of individual designs.

The designs of the notes would not be changed again until 1996 when a series of improvements were carried out over a ten-year period to prevent counterfeiting.

Participating Members
The United States Dollar has been adopted, and in some cases used as the official currency, in many different territories and countries. This process of incorporating the currency of one country into a different economic market is called 'dollarization'. Dollarization of the US Dollar has occurred in the British Virgin Islands, East Timor, Ecuador, El Salvador, Marshall Islands, Federated States of Micronesia, Palau, Panama, Pitcairn Islands, and Turks and Caicos Islands.

Forex Market History

This article is an overview into the historical forex market evolution. It follows the forex market history and roots of the international currency trading from the days of the gold exchange, through the Bretton Woods Agreement, to its current setting.

The Gold exchange period and the Bretton Woods Agreement.

The Bretton Woods Agreement, established in 1944, fixed national currencies against the dollar, and set the dollar at a rate of 35USD per ounce of gold. In 1967, a Chicago bank refused to make a loan in pound sterling to a college professor by the name of Milton Friedman because he had intended to use the funds to short the British currency. The bank's refusal to grant the loan was due to the Bretton Woods Agreement.

This agreement aimed at establishing international monetary steadiness by preventing money from taking flight across countries, and curbing speculation in the international currencies. Prior to Bretton Woods, the gold exchange standard - dominant between 1876 and World War I - ruled over the international economic system. Under the gold exchange, currencies experienced a new era of stability because they were supported by the price of gold.

However, the gold exchange standard had a weakness of boom-bust patterns. As an economy strengthened, it would import a great deal until it ran down its gold reserves required to support its currency. As a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities would hit bottom, appearing attractive to other nations, who would sprint into a buying fury that injected the economy with gold until it increased its money supply, driving down interest rates and restoring wealth into the economy. Such boom-bust patterns abounded throughout the gold standard until World War I temporarily discontinued trade flows and the free movement of gold.

The Bretton Woods Agreement was founded after World War II, in order to stabilize and regulate the international Forex market. Participating countries agreed to try to maintain the value of their currency within a narrow margin against the dollar and an equivalent rate of gold as needed. The dollar gained a premium position as a reference currency, reflecting the shift in global economic dominance from Europe to the USA. Countries were prohibited from devaluing their currencies to benefit their foreign trade and were only allowed to devalue their currencies by less than 10%. The great volume of international Forex trade led to massive movements of capital, which were generated by post-war construction during the 1950s, and this movement destabilized the foreign exchange rates established in the Bretton Woods Agreement.

1971 heralded the abandonment of the Bretton Woods in that the US dollar would no longer be exchangeable into gold. By 1973, the forces of supply and demand controlled major industrialized nations' currencies, which now floated more freely across nations. Prices were floated daily, with volumes, speed and price volatility all increasing throughout the 1970s, and new financial instruments, market deregulation and trade liberalization emerged.

The onset of computers and technology in the 1980s accelerated the pace of extending the market continuum for cross-border capital movements through Asian, European and American time zones. Transactions in foreign exchange increased intensively from nearly $70 billion a day in the 1980s, to more than $1.5 trillion a day two decades later.

Read more about the history of gold trading.

The explosion of the Euro market

The rapid development of the Eurodollar market, where US dollars are deposited in banks outside the US, was a major mechanism for speeding up Forex trading. Likewise, Euro markets are those where assets are deposited outside the currency of origin. The Eurodollar market first came into being in the 1950s when the Soviet Union's oil revenue - all in US dollars - was being deposited outside the US in fear of being frozen by US regulators. That gave rise to a vast offshore pool of dollars outside the control of US authorities. The US government imposed laws to restrict dollar lending to foreigners. Euro markets were particularly attractive because they had far fewer regulations and offered higher yields. From the late 1980s onwards, US companies began to borrow offshore, finding Euro markets an advantageous place for holding excess liquidity, providing short-term loans and financing imports and exports.

London was and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance. London's convenient geographical location (operating during Asian and American markets) is also instrumental in preserving its dominance in the Euro market.

forex history

The history of the Forex market began during the middle ages where currency was traded through the international banks. This helped the Europeans spread currency trading throughout Europe and the Middle East.

1875 marks the most essential event in the history of currency trading, when the Gold Standard Monetary System was created. Before that, countries commonly used gold and silver as means of international payment.

The Bretton Woods Agreement provided changes in exchange rates. In 1947 as the IMF began operating, the U.S. dollar served as the price of gold, fixed at $35 per ounce.

The U.S agreed to maintain that price for buying and selling gold. Eventually, the market  economies of the world was set on dollar standard, The U.S dollar served as the world’s principal currency.

However, the gold standard monetary system eventually broke down, during World War I.

The Bretton Woods Agreement has a great part in the history of currency trading. Signed in 1944, the agreement replaced gold as the main standard of convertibility with U.S. dollar. Furthermore, the U.S. dollar became the new standard of the financial market.

This is how the dollar became the new global reserve currency.
Bretton Woods Agreement set the creation of International Monetary Fund and the World Bank. The agreement aimed at setting up international monetary stability by preventing free exchange of money across nations.

In 1971 the Bretton Woods Agreement broke down and the modern foreign currency exchange was born.

From there began the history of Forex market, as we know it today. Currency trading rose from $70 billion a day in the 1980s to $1.5 trillion daily only 20 years later.

History of the Forex Market

History of the Forex Market
Overview
Until the 1970s or so, currency trading was limited mostly to the needs of large companies conducting business in multiple countries.
Trading for investment and speculative purposes was not widely practised at this time, and most trading was centered on commodities and individual stocks.


Speculation – An attempt to profit on the fluctuation in prices for currencies and other investment securities.

The Bretton Woods Accord – Courting Controversy
After World War II, economies in Europe were left in tatters.
To help these economies recover – and to avoid mistakes made in the wake of the First World War – the Bretton Woods Accord was convened in July 1944.
Several resolutions arose from Bretton Woods, but it was the "pegging" of foreign currencies to the U.S. dollar that arguably had the greatest immediate impact on the global economy.


Gold Standard Currency – A commitment to fix the value of a currency to a specific quantity of gold. Under this system, the holder of the country's currency can convert funds to an equal amount of gold.

Fiat or Floating Currency – Fiat currency is the opposite of a gold standard arrangement. In a fiat currency system, the currency's value rises and falls on the market in response to demand and supply pressures. It is this fluctuation that makes it possible to speculate on future currency values.

Pegging U.S. Currencies to the U.S. Dollar
By pegging (or linking) these currencies directly to the dollar, the value of the pegged currencies remained dependent on the value of the dollar.
At the same time, the value of the dollar was tied to the price of gold which, at the time of the Bretton Woods Accord, was valued at $35 an ounce.
The U.S government was obligated to maintain gold reserves equal to the amount of currency in circulation, making the United States a true gold standard economy.

Forward deals of forex

Forward deals

What are forward deals?

A forward deal is a contract where the buyer and seller agree to buy or sell an asset or currency at a spot rate for a specified date in the future (usually up to 60 days). Forward contracts are conducted as a way to cover (hedge) future movements in exchange rates. Margin spreads are higher than in Day Trading but no renewal fees are charged. Forward deals with easy-forex® are only offered in some world regions.

What is the difference between forwards and futures?

The main difference between forwards and futures is the way they are settled.

Forwards are settled at the close of the deal. Futures are settled at the end of each day. This is called "mark to market". Daily changes are settled each day until the end of the deal. If there has been a move in the market that causes a loss, the trader is asked to deposit to cover the loss.

The terms and conditions of futures have tight controls put on them in the market.

Forward trading with easy-forex®

Forward trading with easy-forex® is easy. Here are the steps you take:

1. Choose the buy currency and the sell currency – the exchange rate appears automatically called the Spot Rate
2. Choose the forward date. The Forward Points and the Forward Rate appears automatically.
3. Choose the amount of the deal and the amount you want to risk. The Stop-Loss rate appears.
4. Read the "Response Message" – this tells you if you have enough in your account to make the deal
5. You can freeze the rate for a few seconds to give you some time to decide if you want to accept.
6. Press the "Accept" button – your deal is open and running.

You have made sure of the exchange rate for the date you choose. Nothing can change that.

What happens next?

What happens next depends on the deal you made. Here is an example of a possible deal:

You purchase a forward deal, buying USD 10,000 and selling euros, dated 60 days from today at USD 1.0700 per euro. You risk EUR 200. The Stop-Loss rate is 1.0900.

Let's see what happens when the deal ends, using different exchange rates:

• The EUR/USD exchange rate reaches 1.1000 sometime before the settlement date. In this case, the deal has already closed at your Stop-Loss rate of 1.0900. You have lost 200 euro, the amount you risked.
• The EUR/USD exchange rate at the settlement date is 1.0800. In this case you lose just EUR 100.
• The EUR/USD exchange rate at the settlement date is 1.0200. You have made a profit of EUR 500!

Note: Forward trading with easy-forex® is not available in all regions.