Want to succeed in forex? Let us look at the history of forex trading below!

The history of forex trading has traces since ancient times. Starting from the golden era to online forex trading, following reviews.

In the history of forex trading until the end of the 90s, only business people were wealthy or wealthy people, large financial institutions such as central banks, private and government banks, and large commercial companies like Apple or Toyota.

They trade forex for trade, debt repayment, hedging, or investment. Capital needed is large, and not just anyone can do forex business.

After the development of the internet throughout the world in the late 90's, the forex market was finally able to be followed by almost all individuals, from entrepreneurs to housewives, old and young.

Brokers also began designing forex so that they could be traded in retail by individuals. So now you can trade forex online at home. That's amazing, isn't it?

Okay, for more details, read the complete forex trading history below:

End of Exchange and Commencement of Exchange of Money.

In the history of human civilization, it is known that the exchange of goods between individuals begins with a barter system.

For example someone needs a goat to meet other people who sell two baskets of apples, then agree to exchange each other, then the transaction can occur.

However, over time, barter is not enough to meet needs. The problem, especially the barter system, is what if you can't find the person whose needs and inventory of goods to be exchanged exactly match?

In order to overcome the shortcomings of barter, payment instruments or exchange tools were created in various forms.

In this period, humanity used shells, beads, rare rocks, and precious metals as a medium. However, it should be noted that each region can implement its own "currency" based on what is considered the most valuable, publicly recognized, and is portable.

Because every region of the world uses a different "currency", traders who conduct transactions between regions or cross-island and cross-continent shipping, so often need a reference to universally accepted currency exchange.

In many locations, it is agreed to use precious metals such as Silver or Gold as a medium.

The kingdoms that were established at that time began printing their "money" by determining the level of certain precious metals in it.

In turn, exchanges are based on these levels. This was the beginning of the exchange of currencies in ancient times. When did the currency exchange begin?

The Byzantine record (around the 4th century BC) shows that the kingdom monopolized the exchange of money.

Then the Papyrus record also displays the exchange of currencies in the era of ancient Egypt. Other regions of Australia, Indonesia, India, to Europe have their records.

So, this is not something that suddenly appeared in modern times.

History of Modern Forex Trading.

Exchange of money has been going on since time immemorial, but the history of modern forex trading like the one that is now actually started after World War II.

Here's the story: Towards the end of World War II, countries belonging to the Allied alliance felt that they needed to build a monetary system to fill the gap.

Because there was a lot of chaos and economic crisis at the end of World War II, so the governments of the Allied countries felt they needed a system that would later be able to unite the global economy.

In July 1944, more than 700 Allied representatives met at Bretton Woods, New Hampshire, United States. 

Then the "Bretton Woods System" was formed to realize this dream. In short, Bretton Woods sets out as follows:

  • Is a method with a fixed foreign exchange rate.
  • US Dollars replaced the role of the gold standard to become the main reserve currency.
  • Establishment of three international bodies to monitor world economic activities: International Monetary Fund (IMF), International Bank for Reconstruction and Development, and General Agreement on Tariffs and Trade (GATT).

The main feature of the Bretton Woods system is that USD replaces gold as the main standard of exchange rates for world currencies.

United States, which currently holds two-thirds of the world's gold reserves, insists that the system rests on gold and the US Dollar. Finally, this system requires all involved countries to link the value of their currencies to gold and US Dollars.

However, it did not last long. Furthermore, USD is the only currency in the world that will be protected by gold reserves.

This is what later became the main reason for the failure of the Bretton Woods system.

Finally, on August 15, 1971, US President Richard Nixon took steps to reject all requests for exchange of USD to gold. This is the end of the Bretton Woods era.

The dollar value is no longer obtained from the gold reserves owned, but only from the promise of the US government. This action actually made the US Dollar a reserve currency for many countries in the World.

At that time, the exchange rate between currencies was no longer determined by default, but by complying with a simple economic system: demand and supply.

A new phase in the history of forex trading was born, namely a floating exchange rate system. Although the Bretton Woods system did not last long, the system left a trail that still has a significant impact to this day.

The trail is left in the form of three bodies formed when the system was inaugurated, namely:

  • IMF.
  • GATT, which later transformed into the World Trade Organization (WTO).
  • Bank for Reconstruction and Development (now part of the World Bank).

After that, currency trading transactions are mainly carried out by banks; while other parties such as the government and companies need to contact the bank as an intermediary.

Companies that need to be able to contact the bank via telephone, then the bank records at what price a currency is bought or sold.

From here the interbank market is created as an over-the-counter network where currencies are exchanged and currency exchange rates change dynamically.

The period during Online Forex Trading (currently).

The global economic development between the 80s and 90s then led the world to a new development in the history of forex trading in which the community could participate in the world which was previously dominated by large banks and international scale companies.

Transactions through banking intermediaries no longer have to start with telephone contacts, but rather with instructions via the internet.

In fact, a trading platform was created that allows anyone to see "prices" (exchange rates) and trade currencies in real-time.

Technological development is a crucial point in the history of forex trading, because it encourages trading volume in the forex market to accelerate to become the largest financial market in the world with daily liquidity reaching 5.3 trillion USD in 2013.

During this period, we can know which currencies much traded and trying to get profits from strengthening or weakening currency exchange rates.

How can we as ordinary people benefit from currency exchange?

Now there are many "forex brokers" that serve currency trading for people on a small scale.

Unlike the interbank market which has a standard trading size (100,000 USD per unit), this forex broker facilitates people to trade forex even with as little as a few tens or hundred of capital, even in the current era there are brokers who offer micro accounts (1,000 USD per unit) and only requires less than 20 USD of minimum deposit.

Even more sophisticated in the current mobile era, forex trading can be done through laptops, tablets, android, or the iPhone you normally use. Amazing!