FOREX Trading History
The FOREX trading system was originated centuries ago. Since the
era of Babylonians, the need to own and exchange different
countries for trading purposes existed. Although, during that
time, it was more known as the Barter System, which we call
More like a give and take situation, Barter system involved
weighing the worth of one good in terms of the other. But with
time and extensive use of this Barter system, lots of apparent
limitations also came on the surface slowly, hence convincing the
people to seriously think on the lines of establishing some more
well-known and recognized mediums of exchange.
When extensive trading started happening between the people of
various countries like Africa and Asia with the help of this
system, another main issue of concern came into existence. Where
in some economies, goods such as feathers, stones and teeth
provided as base economies, in others, other goods were given more
Soon, it became very important for all the people to demand for a
establishing a common base of value. And shortly, assorted metals
like gold, silver and bronze began to ascertain themselves as the
established payment methods. Further more, they also established
themselves as a consistent storage of value.
With the invention of the Coins in the Middle Ages, which were
originally cast in the chosen metal, the creation of a papered
structure of governmental I.O.U. also achieved approval and
recognition under the steady political administration. Though
earlier when introduced, it was not easily accepted by people, and
so establishing it through force had proved more effective than
through advising. And today, this papered form is the basis of our
modern day currencies.
Along with being credited with the first use of paper notes, they
also initiated the use of papered receipts. During that time,
speculation in trade was hardly experienced by people, and if we
compare that market situation to the one we have today, the huge
speculative movement in the exchange markets nowadays, would not
have been appreciated at all.
The elimination of the gold standard in the year 1931 along with a
big decline in the market created some severe stillness in the
Forex trading activities. From 1931 to 1973, the Forex market
underwent a lot many modifications and alterations. So, with the
aim of guarding the nationwide interests, improved foreign
exchange controls were set up to stop market forces from demanding
The Bretton Woods contract was achieved on the proposal of USA in
July 1944, nearing the conclusion of World War II. The conference
being held in Bretton Woods, New Hampshire for this agreement
discarded John Maynard Keynes proposal for a new world reserve
exchange in support of a structure built on the US Dollar.
As a result to the Bretton Woods agreement, a method of fixed
exchange rates was decided upon, which partially re-established
the Gold Standard, setting up the USD price at $35.00 per ounce of
Gold. While this was how a USD was priced, other main currencies
were set up against the dollar.
During the early 1980’s, London became the main hub of the
Euro-dollar market. What contributed to this situation were the
British banks, which began loaning dollars as an option to pounds.
They took this step just to retain and continue their primary
position in worldwide economics, and till today, London
successfully remains the key offshore market.
Since the time of Babylonians to the present era, we have seen a
vast development in the foreign exchange trading, slowly
escalating amongst the other exchange markets, just to reach the
top to become the world’s biggest trading market.
Limitations on currency flows have since been eliminated in nearly
all countries, thus allowing the market forces to be free to
regulate foreign exchange prices in agreement to their apparent