The history of forex trading dates back to ancient times when the means of exchange was trade-by-barter. This practice was later modified and replaced by the Gold standard. The gold standard was further substituted with the US dollar as the standard means of exchange after the Bretton Woods conference which ended in 1971. Since then, forex trading has extended across the globe and had remained the same till the present moment. Only the trading volume keeps increasing daily.
This work will therefore help you learn more about the history of forex trading and the basic requirements to trade forex today.
What is Forex trading
Forex trading is an investment package that allows investors to buy and sell different currencies and other valuable assets in the hope of benefiting from their price volatility.
History of forex trading
The history of forex trading dates back to ancient times (over 6000 BC) when the first exchange market was created in the form of trade-by-barter. The common practice then was to exchange goods (Commodities) with their equivalence. This was later replaced with the introduction of currencies like the silver coins which became the new means of exchange.
However, the first organized forex market could be traced to 1871 when the Gold standard was introduced. The gold standard was chartered by the world wars and after the wars, the US dollar was established as the standard means of exchange following the Bretton Woods conference which lasted from 1944-1971.
Nonetheless, online forex trading became more popular in the late 1990s when the internet was introduced. With the creation of the internet, it was easy to have online brokers who made it easy for individuals to participate in the exchange market from the comfort of their homes. At this point, forex trading spread like wildfire across all parts of the globe.
Has Forex trading Changed?
Forex trading is one of the oldest investment packages that has remained unchanged till the present time. The only change that could be said to have taken place in forex trading from its invention till the present moment is the possibility for the individual to trade forex from the comfort of their homes using the internet. This has been made possible with the advent of online brokers after the internet was created in the late 1990s.
Basic requirements for forex trading today
There are four basic requirements for trading forex today. We have listed them below:
- Mobile phones or laptops: Good smartphones or laptops are needed to download the trading softwares.
- Internet access: A strong internet connection is necessary to access the trading platform such as MT4 or any other trading platform provided by the broker.
- Brokers: Brokers are the link between the trader and the market. They execute the trader’s orders at the market and deliver the returns. There are a lot of forex brokers for beginners to choose from, especially the regulated brokers.
- Minimum Capital: This is the amount the trader needs to begin his trading activity. The minimum capital required to begin trading could vary depending on the broker one chooses to trade with. Some brokers usually indicate the minimum capital as $10 while others require a higher amount of up to $100 to begin trading.
Advantages of forex trading
- Exposes the trader to the financial market
- Helps investors in hedging against inflation
- Serves as an investment package
- Provides employment opportunities for hedge fund managers
- Provides an alternative source of income to the investors.
Disadvantages of forex trading
- It is a risky investment
- Consumes a lot of time and energy in analyzing the market