The History of Forex Trading
Forex trading, short for ‘foreign exchange trading’, has been around since the dawn of international trade. However, currency trading as an investment tool really only began in the 1970s, when free exchange rates and floating currencies were introduced.
Before the 1970s, the Bretton Woods Agreement, which was established in 1944, fixed the value of national currencies against the US dollar. This meant that exchange rates were highly regulated, and not subject to the wild fluctuations seen in the market today.
In the late 1960s, however, the US government had begun printing more money to finance the Vietnam War, causing inflation and a loss of confidence in the US dollar. In 1971, President Nixon declared the end of the gold standard, thereby freeing exchange rates and allowing currencies to float against each other.
This marked the beginning of the modern forex market, which operates 24 hours a day with trillions of dollars in daily trading volume. Forex trading became more popular in the 1980s, and by the 1990s, with the widespread use of the internet, currency trading became more accessible to individual investors.
In the early 2000s, advances in technology led to the development of forex trading platforms, allowing forex traders to access the market online and trade from anywhere in the world. Today, forex trading is available to traders of all levels, including retail investors and institutional traders.
As forex trading continues to evolve and grow in popularity, it remains important to understand the history that has shaped the market into what it is today, and learn from the lessons of the past in order to succeed in the future.