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History of the forex market in the world and how it became the largest financial

The market forex is one of the largest and most liquid markets in the world. In 2010, the daily trading volume in the foreign exchange market exceeded US $ 3 trillion. In the past ten years, the daily volume of foreign exchange transactions has increased by 40%, reaching 6.6 trillion dollars a day.


This is the nine-year peak since 2010. But the surprising fact is that this market has not existed for a century. Unlike the stock market, we cannot trace the roots of the foreign exchange market. Let’s take a look at the origin of the foreign exchange market and how it works today. 


How old is the foreign exchange market?


Some say that the forex market is as old as the foreign exchange system. Yes, this led to the birth of a monetary system for foreign exchange purposes, but there is no evidence that there is a lack of money.


The main reason why there was no real foreign exchange market in the past is that most currencies in the world were gold and silver. The first bills were the looting of precious metals contained in reserves.


The following is a historical record of events that affect foreign exchange transactions:

  • Bretton Woods system (1914-1939):


During the First World War and World War II, the gold standard was destroyed, leading to the Bretton Woods system. The United States, France and the United Kingdom met at the United Nations Monetary and Financial Conference in Bretton Woods to produce a new economic order that would have a global impact.


  • Plaza Accord (1985):


In the early 1980s, the US dollar rose sharply against other major currencies in the financial market. This has become a challenge for exporters: the US deficit is 3.5% of GDP.


The weight of the dollar prevents other countries from competing with foreign competitors, so they go into debt and close factories in the United States. This led to the formation of the Plaza Accord, which started to stimulate the appreciation of currencies other than the US dollar.

  • Business on the Internet (1990)


In the 1990s, coin makers became more structured and systematized. Trade is faster than ever, because people’s perceptions are changing. Capitalization and globalization are accompanied by progress.


For the foreign exchange market, everything changed. Closed currencies can now be traded flexibly. New markets began to appear in Southeast Asia and elsewhere. They started to attract capital and speculation.


The foreign exchange market calendar since the Bretton Woods system symbolizes market freedom. The impact of competition has created a highly flexible and non-fragmented liquid market.


Spreads have dropped dramatically and there is great competition between participants. After the emergence of online brokers providing foreign exchange trading services, major currency transactions provided high leverage of 1: 400 or 1: 500. Many brokers, such as T1 Markets, are the first to recognize currency transactions and provide the lowest spreads and considerable leverage for transactions.


Why does the foreign exchange market never fall asleep?


The foreign exchange market’s ability to stay awake and trade 24 hours a day is its way of participating in different time zones. In addition, transactions are conducted on multiple computers and are not limited to physical exchanges that must be closed at any time. According to the different regions, the foreign exchange market can be divided into three main parts:


  • Europe
  • North America
  • Oceania


There are several central financial centers in these central regions for foreign exchange transactions.

What makes the foreign exchange market so famous and widespread?


The following are several important reasons why the foreign exchange market has become the largest market at the moment:

  • First, foreign exchange transactions have a wide range of influence and provide more flexible transactions. This in turn provides high liquidity. A computer with Internet access is sufficient. Currently, the market is open 24 hours a day, 7 days a week. You can find someone to negotiate at any time.


  • The foreign exchange market has opened doors for several opportunities for traders. People can trade without actually owning the currency. You can use the selected currency pair for short and long term transactions. In addition, you can use various strategies, such as leveraging your business to make big profits.


  • People can benefit from the high volatility of the foreign exchange market. If done well, the high volatility will increase the chances of making more substantial profits.


  • Another reason why the foreign exchange market is the largest market is that it is used and traded by large entities, such as multinational companies, commercial and investment banks, hedge funds and investment managers and central banks.

How is theforex market today?


According to a survey by the Bank for International Settlements (BIS), as of April 2019, the daily trading volume in the foreign exchange market reached 6 trillion dollars. The estimated value of the entire global money market is approximately $ 2,409 trillion. The turnover in foreign currency exceeds even that of the largest stock exchanges, such as Nasdaq, with a daily turnover of US $ 200 billion.


The forex market is traded in approximately 170 countries around the world. The eternal foreign exchange market offers unlimited opportunities for traders and investors. The market is the largest and most liquid because it can carry out the most flexible trade and has global influence. Although the market is already large, some projections point to an annual growth rate of 6% over the next five to six years.


Conclusion on the forex market


The foreign exchange market has become the largest financial market in the world because it allows retail investors to seek opportunities from devout central banks to profit from currency fluctuations and changes in exchange rates on a global scale. Like hedge funds, all types of trading, speculative trading, day trading or any other trade are driven by profits. You can find the most viable variant and then trade on the foreign exchange market.


The global high-liquidity market affects and affects companies and businesses worldwide. Market volatility and volatility are caused by each country’s global gains, inflation and balance of payments (BOP). The comfort and flexibility provided by the foreign exchange market make it a reality.

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Mick is Editor in Chief and writer here on 361forex. I have been involved with the financial market for over 10 years as a self-taught professional trader and financial manager. Other features he loves to ride his bike on weekends, loves movies and going out with friends.


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