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history of forex trading

History of Forex Trading

History Forex

Even in ancient times, there was a kind of currency trade that enabled the transfer of goods and services without providing anything in return to the form of other goods and services. But it was to take around 2000 years until the history of international currency trading began around 1880. Because around 1880, companies could have payments from foreign customers and partners transferred directly to an account abroad, thus saving a lot of time and money – unlike today, thanks to IBAN and BIC, the money transfer could take several weeks back then. The fees were also extremely high. Anyone who not only sold but also bought abroad or hoped for better exchange rates had good chances of a better return as an entrepreneur with foreign accounts. Overall, the foreign accounts boosted the export economy and ensured increasing prosperity in the real economy.

With the founding of the IMF (International Monetary Fund – in the English International Monetary Fund IMF) and especially through the so-called Bretton Woods Agreement of July 22, 1944, fixed exchange rates were created worldwide at which currencies were traded. The idea that states must have their own gold reserves as large as possible also dates back to this time – since the value of currencies was tied to the gold reserves of the countries. There was only little range of fluctuation and world trade was able to adjust to largely reliable prices even without uniform currencies.

On September 30, 1969, however, these fixed exchange rates were relaxed for the first time. A few years later, in 1973, fixed exchange rates were history. The free exchange rates brought enormous risks to the previous market participants (particularly investors and trading companies) because, in addition to the currencies themselves, the stock and interest markets were now also fluctuating.

These changes ensured that more and more banks, which had previously hedged their transactions on the currency markets or were active in the field of money transfers on the foreign exchange markets, now acted as gamblers. Today, foreign exchange trading takes place largely between the market participants themselves. It is therefore not possible to directly locate a single stock exchange where trading is taking place. According to the Bundesbank, the foreign exchange market (also known as the foreign exchange market or forex) is the largest financial market in the world with a global daily turnover of around 5.3 trillion US dollars in 2013.

Who Trades Forex?

In addition to many companies that are often active in the foreign exchange business due to foreign contacts in a broader sense, there are also many institutional or private investors who are trying