Whether it’s your main business or a side hustle, forex trading is a great source of income for many people across the world. But did you know how it started? AllStars Trader takes you back to the very beginning of forex trading.
Two and a half centuries ago, the Egyptians and Greeks started trading using molten silver and gold coins. They determined the value of each coin by its weight and size. This exchange paved the way for the minting of currency by the Roman empire 500 years later. The world’s oldest bank, Monte dei Paschi, was also established at around this time. The Roman currency minting and banking system set a precedent for other countries to develop similar systems and the centre stage for currency trading.
The First Stock Market
In fact, the stock market kicked off in Amsterdam in 1611. The Dutch capital was the first to create a capital market and start foreign exchange within its multinational corporation, The Dutch East India Trading Company, which was by then the richest company in the world. As an economic powerhouse, the Netherlands conducted massive trade, supplying raw materials and merchandise to Europe from its colonies in India and Africa. The traders started the first IPO after amassing enormous amounts of wealth from their trading ventures from their colonies to the European nations. This was as a means to obtain diverse currency to facilitate international trade and stabilize foreign exchange currency.
Gold As the Universal Forex Trading Standard
In the 1850s, gold was declared the standard universal currency and every country pegged its money to gold. Gold was therefore used as the ultimate measure of value for every foreign exchange transaction. To this end, governments had to store huge gold reserves as they could only mint money according to how much gold they had.
This was the norm until the World War period when countries were forced to print large sums of money to fund their military activities. The overprinting of currencies coupled with a scarcity of gold made it difficult to retain the metal as a measure of value. As a result, the Bretton Woods post-war meeting abolished the standard altogether. Countries agreed to replace the gold standard with the US dollar because unlike the war-ravaged European countries, the United States was enjoying economic success from its industrial revolution.
In 1971, President Richard Nixon abolished the gold standard and decreed that the US Dollar would no longer be pegged to gold. This marked the beginning of free floating currencies and volatility that drives the forex trading industry today. Traders could now speculate on the differences in fluctuation of foreign exchange rates against the dollar.
How Forex Trading Has Evolved Today
Today, technology has made it possible for brokers across the globe to engage in forex trading from anywhere in the world. This has created a bigger and more competitive market with a larger appetite for financial investments. Additionally, more alternative assets have been added into the market since the creation of the first one in 1852. These include exciting digital currencies as well as company and sports stocks that give traders a wider range of diversified portfolio options.
One of the latest and most unique and exciting additions to the game is AllStars Trader football indices. We offer you the rare opportunity to trade in your favourite footballers as a CFD product and apply your knowledge and passion for sports. Whether you love Ronaldo, Messi or Mo Salah, you can open/close positions on them in the same way that you trade your EUR/USD Forex pair. Visit AllStars Trader website to find out more about how you can turn your passion for sports into trading.