THE HISTORY OF FOREX MARKET

in #steemit7 years ago

()
We don’t really want to bore you to death, however it is crucial for your personal forex knowledge base that you are aware of the history of forex; how far it has come and how rapidly it is growing! In historical literature, the great depression appears as an earthquake or plague alongside the removal of the gold standard back in 1931, which left a bleak atmosphere within the foreign exchange market activity. The gold standard was used to describe any currency that was pegged to the amount of reserved gold, for instance if you had one US Dollar, you could take it to the government any and trade it for a fixed amount of gold! In the U.S. on average $20.67 yielded you with 1 ounce of gold year after year. From 1931 up until 1945 there was a 14 year period where fiat, non–backed paper money was dominant, which lead to huge economic imbalances from country to country and was a major contributing factor towards the beginning of World War I. The market experienced fast paced evolutionary changes from 1931 up until 1970, which at the time had a great impact upon the global economies. The forex market was fully established in 1971 but from its infantile stages during the middle ages up to World War I, it was relatively stable and did not attract much speculative activity or the interest of investors. It was only until after World War II however, that the markets started to pick up in volatility and speculative activity increased tenfold! A government change in policy was introduced around 1963 when the new federal reserve notes (with no promise to pay in ‘lawful money’) were released with no guarantees and no value! Two years later, in 1965 silver was completely eliminated from all coins. Lyndon Johnson signed the coinage act of 1965, which terminated all previous legislations set up by George Washington 173 years earlier. Currencies of the major industrialised nations became free floating and therefore becoming subject to the prices set for them in the actively traded forex market. As speculators and investors gained a greater interest, the liquidity began to steadily increase and prices fluctuated each day.
abbbba.PNG
In the early 1980s the telecommunication and computer industries grew, encouraging the global financial markets to surge worldwide. All markets then became accessible to everyone regardless of the time zone and time of day. Trading was only available through combinations of technological, communicational and political advances, all charting had to be done by hand on paper whilst all trading orders had to be executed via telephone! Transactions in the Forex market increased from about $68 billion per day in the early 1980s to over $3 trillion a day in 2006, although it did not become widely electronically tradable until the 1990s. The Forex Market today in 2016 is estimated to be turning over $5 trillion plus and is growing day by day as more and more aspiring retail traders are discovering the market alongside its lucrative potential. Due to the technical advancements of the Internet and the large number of brokers available worldwide, the major modern day currencies move independently from other currencies and are traded by absolutely any individual who wishes to do so. This has caused a recent influx of speculation by banks, hedge funds, brokerage houses and individuals. Central banks are seen to occasionally intervene in an attempt to move currencies to their desired levels. The underlying factor that drives today's forex markets, however, is supply and demand.

abba.PNG

Sort:  

Congratulations @wileschad! You have completed some achievement on Steemit and have been rewarded with new badge(s) :

You got a First Reply

Click on any badge to view your own Board of Honor on SteemitBoard.
For more information about SteemitBoard, click here

If you no longer want to receive notifications, reply to this comment with the word STOP

By upvoting this notification, you can help all Steemit users. Learn how here!