Forex (foreign exchange) trading, in its modern form, began in 1973 when the Bretton Woods Agreement collapsed. This agreement, established in 1944, had pegged the value of major currencies to the U.S. dollar, which was convertible to gold at a fixed rate. After the agreement collapsed, countries began to let their currencies float freely, leading to the establishment of the modern foreign exchange market, where currencies are traded against one another based on supply and demand.