THE HISTORY OF FOREX

19 дек. 2022 г.

Hello everyone!
Today I want to dive into the history of the Forex market.
Knowing history is useful, because sometimes history repeats itself.
The one who knows history will not make the mistakes of the past.

The beginning of the story

With the advent of markets, the question arose how to pay for the goods.
In ancient times, the first way was barter.
People exchanged some goods for others.
This method developed and at some point salt and spices became popular means of exchange.
In the 6th century, people realized that they needed to come up with something universal, so the first gold coins came to replace spices as payment.
Gold coins differed from spices and other trading methods in important features: portability, durability, divisibility, uniformity, limited supply and acceptability.

The Gold Standard

For a long time, gold coins were used as payment.
The problem was that they weighed a lot and it was extremely inconvenient to carry them in large quantities.
So, in the 1800s, countries adopted the gold standard.
The idea was that the government promised to redeem paper money if someone decided to exchange it for gold.
The amount of gold is limited and its extraction costs money and time, in difficult times it has become difficult to get enough gold to print a new volume of paper money.
During the First World War, countries had to suspend the gold standard, because more money was needed to wage war, and right now.

The Bretton Woods system

After the Second World War, representatives of the United States, Great Britain and France to create a new world order.
The whole of Europe suffered from the war and only the United States was able to emerge victorious, because the dollar had only become stronger by that time.
The adoption of the Bretton Woods Agreement was aimed at creating a regulated market with a currency peg.
A regulated fixed exchange rate is an exchange rate policy in which a currency is fixed against another currency.
All countries fixed their exchange rate to the dollar, and the dollar was pegged to gold, since after the Second World War, the SS owned the largest reserves of gold.
In the end, the old gold problem loomed over the market again. More money was needed, and there wasn't enough gold for that. Therefore, in 1971, Richard M. Nixon put an end to the Bretton Woods system, which soon led to the free floating of the US dollar against other foreign currencies.

The beginning of a free-floating system

European countries were not happy with the dollar peg, so in 1972 an attempt was made to get rid of the dollar.
The agreements created by the Europeans, like the Bretton Woods Agreement, collapsed in 1973 and all this led to the transition to a free-floating system.

Plaza Accord

In the 1980s, the dollar rose strongly, exporters did not like it.
In the early 1980s, the dollar rose strongly against other major currencies. It was hard for exporters and the subsequent US balance of payments.
The US dollar weighed on third world economies and led to factory closures.
In 1985, a secret meeting was held between representatives of the largest economies, but information about the meeting leaked to the media, which forced the countries to make a statement encouraging the strengthening of non-dollar currencies.
This event was called "Plaza Accord", after which the dollar began to fall sharply.

EURO

The Second World War broke up the countries of Europe, creating many economic problems for the region.
Wanting to save the region, many treaties were concluded, but the most fruitful was the 1992 treaty called the Maastricht Treaty.
The introduction of the euro has given European banks and businesses a clear benefit from eliminating currency risk in an ever-globalizing economy.

Online trading

In the 1990s, the world began to develop rapidly.
What used to require more time and human resources was now being done faster and cheaper thanks to the Internet.
Money began to flow quickly from hand to hand, between continents, volumes grew rapidly.
The fall of the Berlin Wall and the collapse of the Soviet Union made the world open, there was an opportunity to trade Asian currencies that were previously inaccessible to traders.

Online trading has started to reach a new level.
Liquidity has increased dramatically due to the congruence of markets, spreads have decreased due to the competition of online brokers and new technologies.
The time has come when anyone could enter the forex market and try to make money.
The volume of funds in the market grew at an incredible rate.

The future of the Forex market

The forex market is growing from year to year.
Volumes are increasing.
There are more and more opportunities.
Trading is evolving, as is the currency, which has led to the creation of cryptocurrencies and the crypto market, the development of which is striking in its rapidity.
Never in history has a person had such an opportunity to earn a lot of money sitting at home.
But do not forget about the risks, study the market and trading methods and then you will be able to grab your piece of the big pie.

Good luck!

Traders, if you liked this idea or if you have an opinion about it, write in the comments. I will be glad 👩💻