History of Forex Trading

At the end of World War II, the whole world was experience so much chaos that the major Western governments felt the need to create a system to help stabilize the universal economy.
Recognized as the “Bretton Woods System,” the agreement set the exchange rate of all currencies against gold. This steadied exchange rates for a while, but as the major economies of the world started to change and grow at diverse speeds, the rules of the system soon became obsolete and very limited.

In 1971 the Bretton Woods Agreement was eliminated and substituted by an altered currency valuation system. With the United States as the navigating country, the currency market progressed to a free-floating one, where exchange rates were determined by supply and demand.

At first, it was hard to determine reasonable exchange rates, but progresses in technology and communication ultimately made things easier.

Once the 1990s arrived, and an increase in personal computers, banks started generating their own exchange platforms. These platforms were intended to stream live quotes to their clients so that they could instantaneously implement trades themselves.
Meanwhile, internet-based trading platforms were introduced for individual traders.

These are known as “retail forex brokers”, these entities made it easy for individuals to trade by allowing smaller trade sizes. Unlike in the interbank market where the standard trade size is one million units, retail brokers allowed individuals to trade as little as 1000 units.

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