The History of Forex Trading
Forex
trading can be tracked down
to ancient times. Trading of coins from different countries was
done regularly by mere merchants. The first coins came from ancient
Egypt and paper notes followed in the regulation by the Babylonians. Up
until the middle ages, forex and
trading continued on through the international banks. This basically
paved the way for growth for the European powers and also generated the
spread of foreign currencies all throughout
Europe and across the Middle East. Forex trading is actually the
longest of all the other markets’ histories.
In 1816, the Gold Standard put their mark in forex
history and changed it forever. This standard was the fixed trading
value. A certain weight of gold was the reference point of value for
foreign currencies. During that year, the British pound was defined as
123.27 grains of gold. The British banks defined the exact assessment of
the value which aided in setting the UK standard currency as stable. In
1879, the US employed the same gold standard and thus replacing the
British pound.
The Bretton Woods Agreement found its way into
forex history in
1944. After World War II, the economic status of the biggest
nations of the world changed dramatically. To name a few, the UK
suffered insurmountable financial blow. While the US remained unharmed
and their financial state stable even after the war. The US dollar then
became the new standard of the financial market. This international
financial framework leads the dollar to becoming the new global reserve
currency. This new settlement started the tracking and monitoring of
currencies as well as the International Monetary Fund (IMF), and
launched the World Bank. This aimed at setting up the international
monetary stability by means of preventing monies from taking flight
across nations, along with constraining speculation in the world
currencies.
The Forex market as we know it today
was actually established in 1971. The making of the market was to
accommodate the floating exchange rates as they gradually materialized.
By the year 1972, major countries had economical difficulties and
generated the floating of their currencies. Another agreement was
signed—the Smithsonian. This accord now meant having a more flexible
movement for the currencies, thus allowing the currencies to vary and
fluctuate further. With this agreement, the European market tried to
detach them from the dependency on the US dollar. This was possible with
the agreements of the currencies’ unlimited variety and flexibility.
This gave way to the free-floating currency system. This free-floating
system was officially mandated in 1978. Since then, prices were floated
everyday along with volumes, speed and price volatility. This was the
reason behind new financial instruments, market deregulation and trade
liberalization.
With advancing technology and computers, cross-border capital movement
picked up its pace. This extended the market range all the way through
Asian, European and American time zones. Forex trading rose dramatically
from $70 billion a day in the 1980s and $1.5 trillion daily only 20
years later, and the rest is forex history. |
Learn
to make huge gains
