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A beginners guide to forex trading

Course overview

Description

Many people participate in the foreign exchange market to try and profit from movements in currency values. But how does one become successful in this ever-changing market?

This course will delve deep into forex trading – from the early stages of currency trading to the different methods you can use to participate in one of the world’s most popular financial markets.

Time

38 min

Level

Intermediate

Example lesson: The history of forex

We spoke briefly about the Bretton Woods agreement earlier, but the history of forex trading is believed to originate centuries before that period. The act of exchanging currencies could be centuries old, dating back to the Babylonian period.

Today, the forex market is liquid and accessible, and it has been shaped by several important global events – including Bretton Woods and the gold standard.

While it seems that the industry rules are already established, nothing is ever set in stone, and similar events could occur again in the future, thus impacting the trading landscape. After all, history tends to repeat itself.

This lesson will help you understand the key historic events which have shaped this market.

Timeline of key events that shaped the forex market

Throughout history, we’ve seen major events that have greatly influenced the forex trading environment. Here are some highlights:

  • 6th century BC: first gold coins are created
  • 1819: England formally adopts the gold standard
  • 1834: America begins using the gold standard
  • 1870s: major countries like France, Germany and Japan join the gold standard
  • 1914-1971: the Bretton Woods agreement comes into play
  • 1973: countries officially switch to the free-floating financial system
  • 1985: the Plaza Accord is established by finance ministers from major countries, and the US dollar is depreciated
  • 1992: the Maastricht Treaty is signed, ultimately leading to the development of the eurozone
  • 1996: online trading begins
  • Today: forex trades in large volumes of around $6.6 trillion a day; the majority of this volume is in the interbank market inaccessible to everyday people, though retail trading accounts for a decent amount of the volume as well

*majority of volume today is in interbank market not directly accessible to retail trader