10 Cool Things You Didn’t Know About Forex Trading

10 Cool Things You Didn't Know About Forex Trading

For anyone interested in learning more about forex and trading, there is a huge amount of information available. The industry also has a long history, so there are literally thousands of facts to discuss. We’re going to uncover some of the strange and astonishing facts about trading. No doubt, some of them are well-known, while others may be more obscure to a smaller audience, and still others may come as a complete revelation. Let’s take a closer look at some of the facts concerning trading, shall we?

Throughout the Ages, People Have Been Trading

For hundreds of years, people have been swapping currencies, but the practice of trading actual currency is a fairly recent development. In the past, we may have traded some maize for a sheep, but today we trade the EUR with the USD. 

Although the Torah dates back to antiquity, it does mention financial arrangements. When it came to exchanging currencies, moneychangers set up several stands, where they would take a fee for the transaction. In ancient Egyptian ancient manuscripts dating back as early as 260 BC, these kinds of trades are chronicled.

The Cable

Is it any surprise to you that the GBP/USD currency is referred to as “the cable?”

In the days before satellite and fiber optic internet, information was sent between the London and New York stock exchanges via a massive steel cable that crossed the Atlantic Ocean and was used to synchronize the exchange rates of various currencies on both stock exchanges. This cable is what we call it today.

Although it is no longer required, it still serves a purpose in current times, but it is no longer utilized for the synchronization of data, as this can be done more swiftly via fiber and satellite.

Money Inflation At Its Worst

If you’ve been paying attention to the news or social media lately, you’ve probably heard or seen that the currency inflation rates in Zimbabwe have skyrocketed, which is out of line with most of the rest of the world. Inflation in the country reached 6.56 sextillion percent, a staggering figure that many people were undoubtedly unaware of. This was the country’s worst inflation in recorded history.

In 2009, Zimbabwe had to wipe out its currency and fully get rid of it, and it had to utilize foreign currencies as its primary currency until 2014. The banks in Zimbabwe had to limit back withdrawals to Z$500,000, which corresponded to just $0.25 USD, during the high levels of inflation.

Is There No Collapse in the Market?

It’s a common misconception that the FX markets have seen a financial collapse. There has been some volatility, but no true collapse. Like the stock markets, which have seen numerous crises where the stock values collapsed and people lost thousands or even millions of dollars.

Traders and prices depend on them rather than on firms and shareholders, which is why those crashes did not affect the forex markets as much and they can possibly endure anything. This is why the forex market has been able to weather similar crises.

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Creating Currency

Before the US Federal Reserve was created in 1908, most American banks were able to print their own money. This is an intriguing tidbit about American banking. To avoid a dramatic increase in inflation, the Federal Reserve of the United States put an end to this practice.

Massive Figures are Being Traded

FX is the most liquid market on earth since it sees daily trades of enormous amounts of currency. An estimated $6.6 trillion is traded every day. A statistic that will most likely never be topped other by the currency markets themselves. There is no other market that comes even close, and it’s unlikely that there ever will be.

Faced with a New Threat: Cryptocurrencies

However, if any market threatens the forex market, it will have to be the cryptocurrency markets, which now have a lower trading volume and price than the Forex markets. In the tens of billions, far behind the FX markets, there has been a significant increase in transaction volume, and it continues to rise each year. In the tens of billions, far behind the FX markets, there has been a significant increase in transaction volume, and it continues to rise each year. 

With the ongoing expansion and exponential increase of the cryptocurrency sector, there is a good likelihood that the FX markets will be challenged in years to come.

Forex Is Here To Stay

Even if traditional currencies are no longer available or no longer in existence, there will always be some type of currency transaction. There will never be a single currency in the world because of the varied environments and the different natures of the member state of the global economy.

The demand for currency exchange will persist even if there are no formal currencies. As a result, the foreign exchange market will always exist, providing traders with a variety of trading options.

The US Market Is Not The Biggest In Forex

A common misconception regarding forex trading is that it takes place mostly in the United States, thanks in part to Hollywood and other major motion pictures depicting the subject. Instead of being centered in the United States, where only about 19 percent of deals and trade volume take place, London is anticipated to account for 43 percent of all forex trading transactions, making it the primary core for forex trading.

You Don’t Need Millions To Trade Anymore

It used to be that in order to trade Forex you had to be an institution with a minimum of $40 million in order to be allowed to trade, which is something that not many individuals could do many years ago before the development of retail trading brokers. As low as $10 can be traded today, making it accessible to anyone from all over the world and virtually any location with an Internet connection.

You may already be familiar with some of these facts regarding the forex market, but there are others you may not have known. Things are always changing in the world, but one thing is certain: markets will be around for a long time.

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