Forex trading is exchanging fiat currencies based on the prevailing exchange rates. The process of exchanging currencies has been with us for centuries and dates back to the Babylonian era. Nowadays, forex trading is one of the most significant financial markets globally. It’s mostly liquid and accessible to everyone.
This is why traders must realize the history of forex and the historical events that have shaped the market we know today. You can even learn a bit about forex history through our online mentoring platform’s online courses.
Let’s briefly discuss the history of forex trading to help you understand better.
Where It All Began
Forex originated from the barter system, which was the main method of trade back in 6000 BC. The tribes introduced this system in Mesopotamia. Under this system, goods used to be exchanged for other goods.
In the early 6th century BC, gold coins were introduced. These coins were the first currency with divisibility, portability, uniformity, durability, and accessibility. Gold coins were widely adopted as a medium of exchange.
In the early 1800s, the gold standard was adopted where the government was able to redeem paper money in its gold value. This only worked until World War 1. Later in the early 1900s, the gold standard supported the foreign exchange market. The countries started to trade with each other to convert the currency into gold.
Key Events in Forex History
In the 1990s, the currency markets were becoming more complicated and faster than before as the money value changed. With the internet, a person sitting home can find an accurate price for their currency. This previously required several brokers and traders.
Because of the internet, advancements in communication were a great way for countries to globalize and capitalize on their currency markets. New and emerging markets flourished by currency speculations and attracting foreign capital.
The history of forex since 1944 is a classic example of how a free-market works. The competing forces had given birth to a marketplace where liquidity was unparalleled. The spreads also fell dramatically, which further increased the competition. People trading larger amounts could now access the same communication networks that global merchants and banks used.
Forex Now and In the Future
Nowadays, the forex market is one of the largest markets in the world. In 2019, there was more than $6.6 trillion worth of trades on the forex market daily. However, the future of forex is uncertain as several factors keep changing, creating various opportunities for the traders.
Forex traders need to stay ahead of this fluctuating curve to succeed in the ever-changing market. This is why taking online trading training courses is essential for understanding the ins and outs of the market.
Trading Mentor offers professional forex trading mentors who will help you make more profitable decisions by guiding you with their industry experience. We also offer stock trading courses for beginners and advanced stock market investment courses for traders who are looking to hone their trading style even further. Contact us today to choose a mentor that best fulfills your learning requirements.