The history behind forex trading

Trading, as we use the term today, has been in practice since the era of Babylonians. Yes, it’s true! Although at that time, it was referred to with a different name altogether… The Barter system!

That’s right. During earlier times, goods were exchanged in return for goods. And slowly, people started to exchange goods in return for foreign currencies of that time to make their trade a lot easier. This resulted in the increasing need of every trader to own a foreign currency as per the demands of his trade.

History of Currency or Forex trading can be traced back to the Middle Age times. It is believed that an international investment banker developed the method of using checks and bills to trade. However, starting from the middle ages, a lot has changed and evolved, creating the biggest currency trading market in the world today.
But the major changes which really shaped the trading scenario for the global currency market to make it look as we see today were the ones which occurred during the twentieth century.

By the late1930s, London was being considered as the world's foremost foreign exchange center. One of the main reasons behind this was that during that time, the British pound was regarded as the world's standard trading exchange. Also, the British pound had started to play a role of the main “Reserve” currency being held by many countries back then.

But the scenario took a dramatic turn after the Second World War, when the British economy was almost smashed resulting in the rise of the United States dollar. The USD then started to climb the path to success as it rose to become the world's major trading as well as reserve currency.
In July 1944, the Bretton Woods agreement was attained on the application of USA. The convention which was being held in Bretton Woods, New Hampshire for this accord discarded John Maynard Keynes pitch for a new world reserve trade backing an arrangement built on the US Dollar.
As a result to the Bretton Woods contract, a system of fixed exchange rates was decided, which resulted in partially re-establishing the Gold Standard and fixing the USD price at $35.00 per 1 ounce of Gold.
While the USD was priced against Gold, the other major currencies were set up against the USD itself.
The Second World War and the series of events which followed are mainly believed to have played an instrumental role in shaping today's Forex market situation.

Early 1980’s saw London becoming the key center of the Euro-dollar market, and till today, London efficiently remains the major offshore market.
Along with the USD and Euro, a number of other currencies including the Japanese Yen are also counted amongst the world’s major reserve currencies.

From back in the year 1978, when Forex trading displayed revenue of about 5 billion US dollars on per day basis, till date, the per day Forex trading turnover has now crossed the figure of a whooping 1.5 trillion US dollars.

How to become a successful Forex Trader

If you have just stepped into the big money world of Forex, planning to become a successful Forex trader, you must realize what you are getting yourself into. Forex or Foreign Exchange is one of the biggest currency markets in the world and if you have the proper knowledge and skills, trading Forex market can be an extremely successful journey.

But like every other journey, this one has its ups and downs too. Firstly, Forex trading is not for everyone. Forex experts believe that to be a Forex trader and more so, a successful Forex trader, requires a careful study of the market, analyzing ability, great financial knowledge and most importantly, the courage to take the risk. In order to be prosperous in the Forex market experts have identified five essential characteristics that the trader should possess.

Being a newcomer in the Forex trading market can be very intimidating for someone with no experience in trading currencies, especially when there are many pitfalls out there. But, by following some simple steps and techniques, you can avoid these disappointments and walk towards your goal to becoming a successful Forex trader.

The first and most important step to be taken is finding yourself an honest and right Forex broker or brokerage firm. In the big Forex market, many different options will be available to you. Always make sure that the broker or the firm you choose is a well-recognized and trustworthy company.
Also, it should be an organization which is registered with the Commodity Futures Trading Commission as such a listing adds to a brokerage firm's authenticity.

Another step towards becoming a successful Forex trader is by creating a demo account for yourself first. It is always advisable for the new Forex traders to first create a demo account for themselves and trade with fake money. This serves as an advantage for the newcomers who are yet not so trained in trading perfectly, without fishing any big losses. A demo account allows novice traders to practice their trading tactics well with the fake money, and learn to make profitable deals in this Forex trade.
Also, demo accounts generally last for a month or so, giving the new traders plenty of time to trade like real while gaining experience and also learning how to make informed and quick trade decisions.

Learning how to use a wide range of research tools like real-time quotes, charts and professional research reports, is also one of the most important steps for becoming a successful Forex trader.

Last but definitely not the least, the most important step for becoming a successful Forex trader in the foreign exchange market is by developing the ability in yourself to accept risks. Forex is an extremely risky market, so a trader should always keep in mind that while there is a high potential profit, there can also be a higher potential loss waiting with any wrong move you make.