Top 10 Fun Facts About Forex Trading

There is evidence of the Egyptian currency market dating back to the 4th century. Some say Forex dates back to biblical times. As we evolved, currency markets evolved.

Our more modern idea of a Forex market started 500 years ago in the Netherlands, because merchants wanted to have free trade.

Fast forward to 1875, and we had a standard Gold system. The Gold standard ended with the Bretton Woods system in 1944. In 1972, we had free-floating exchange rates, thus paving the way for a modern Forex market.

The Forex market sees transactions of over $6 trillion every day. From Monday to Friday, the money just pours in. This is an insane amount of money. It’s for this reason that Forex is considered the largest market on the planet.

To give you an idea, trillions have 12 zeros in them. If we have to compare, the stock market sees daily transactions of $25 billion.

The larger the market, the more opportunity we have when trading. Everyday traders can get a small bite of this massive market.

The USD determines the momentum of the Forex market..The Forex market trades in currency pairs. There are three types of Forex pairs; majors, minors, and exotics. Among them, majors see the most activity.

These pairs are:

• EUR/USD,
• GBP/USD,
• USD/JPY,
• USD/CAD,
• AUD/USD,
• USD/CHF,
• NZD/USD.

As you can see, all of them have USD involved. When events occur in the US, both good and bad, these major pairs can go wild.

For example, even a US president tweeting about the strength of the USD would make the demand for other currencies lower. Therefore, the USD will rise in comparison to other currencies.

The US Federal Reserve interest rates hike, inflation, consumer price index – they all affect the movement of USD, and thus impact the Forex market. Here are some quick stats:

• USD accounts for 80% of trade on the Forex market.
• Around 61% of all foreign bank reserves are in USD.
• Around 40% of the world’s debt is in USD.

So, you see why USD makes the market move.

The whole thing started in the 19th century. Back then, there were no fiber optics. Messages between London and New York were sent through physical cables.

The exchange rate between GBP and USD was done through a submarine cable. This idea was proposed in the 1840s and was implemented in 1858. Hence, GBP/USD got the nickname Cable.

The EUR/USD slang name is an upgraded version of GBP/USD. Traders just took the cable and upgraded it to Fiber.

Because fiber lines were starting to replace cable in the late 1990s. And that’s how we got the name Fiber.

If you are curious, here are some of the nicknames of other pairs:

• AUD/USD (Aussie)
• USD/CAD (Loonie)
• NZD/USD (Kiwi)
• USD/CHF (Swissy)
• EUR/JPY (Yuppy)
• GBP/JPY (Guppy)
• EUR/GBP (Chunnel)

Since the Great Britain Empire, London has always been a global trading hub. It therefore requires a larger presence of currency exchange – and thus, Forex.

The US accounts for 19% of Forex trading, while the UK accounts for 41%. Despite Brexit uncertainty, the UK remains at the top of the Forex food chain.

The Forex market comprises fiat currencies, meaning states are backing these currencies. Whenever something happens, central banks intervene and implement drastic measures to stabilize currency rates. That is why Forex tends to stay calm.

This is a great advantage for traders, since you can comfortably take positions without worrying there will be a sudden dramatic shift.

Currencies represent countries’ cultures and identities. These things don’t fade away. For instance, GBP simply won’t vanish from the scene. It represents how the UK interacts with its global trading partners.

Apart from this, when you travel to the country, you do need to buy its currency. When you buy the currency, exchange occurs.

Some say that digital currencies can also help you when traveling abroad, but many countries won’t go completely digital, since not every country has the resources to do so.

If you had started Forex trading in the 1970s, you would have needed millions to get started. Back then, financial institutions used to do most of the Forex trading. Only a handful of retail traders were involved in the market.

With the introduction of online trading, the market became accessible. Now, some Forex brokers allow you to trade with as little as $1. WIth XM you can start with $5, with Alpari you can start with as little as $20, and with MaxiMarkets you can start with $500.

You can enter the market without any hassle: all you need is a device and an internet connection, and voila! NordFX and Teletrade are good trading platforms.

According to a Warwick Business School study, women perform better in Forex trading. Women are better traders than about 1.8%. Even though women trade way less than men.

The same study suggests women handle crises better than men. Women remain calm and disciplined while placing trades.

Unlike men, who trade aggressively and suffer resulting losses, women tend to trade more methodically. The study also suggests that women are more keen admit mistakes and learn from them, which is a key to being a successful trader.

Bottom line

After all those fun facts about Forex trading, you’ll look at trading differently. We talk about complex Forex jargon every day.

It’s nice to just read an article mentioning fun facts about the market we all love. If you want to know more about Forex, read our article about the ROFX scam.