Forex trading, also known as foreign exchange trading, is the buying and selling of currencies on the global market. It is the largest and most liquid financial market in the world, with an average daily trading volume of $5.3 trillion. But who created forex trading?
The origins of forex trading can be traced back to ancient times when people would exchange goods and services with each other using different forms of currency. However, the modern forex market as we know it today was created in the early 1970s.
In 1971, the United States government ended the Bretton Woods Agreement, which had tied the value of the US dollar to gold. This marked the beginning of a new era in global finance, where currencies could float freely against one another, without any fixed exchange rates.
With the removal of fixed exchange rates, international businesses and investors needed a way to hedge against currency risk. This led to the creation of the interbank foreign exchange market, where banks and other financial institutions could trade currencies with each other at market-determined exchange rates.
The interbank market was initially only accessible to large financial institutions, but with the advent of electronic trading platforms in the 1990s, retail investors were able to participate in the forex market as well.
One of the pioneers of electronic trading was the company Matchbook FX, which was founded in 1999 by Jared F. Martinez. The company’s trading platform allowed retail investors to access the interbank market and trade currencies in real-time.
Another key figure in the development of forex trading was George Soros, a billionaire investor and philanthropist. In 1992, Soros famously made a billion-dollar profit by shorting the British pound, taking advantage of the currency’s devaluation in the wake of the European Exchange Rate Mechanism crisis.
Soros’ success in forex trading brought the market to the attention of a wider audience, and his strategies and tactics are still studied and emulated by traders today.
In recent years, technology has continued to play a significant role in the evolution of forex trading. The rise of mobile trading apps and social trading platforms has made it easier for individuals to access the market and trade currencies from anywhere in the world.
In conclusion, while the concept of exchanging currencies has existed for centuries, the modern forex market was created in the early 1970s as a result of the end of the Bretton Woods Agreement. The interbank market was initially only accessible to large financial institutions, but the advent of electronic trading platforms in the 1990s allowed retail investors to participate in forex trading as well. Today, forex trading is a global phenomenon, with millions of traders and investors participating in the market every day.
