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.

If we have to talk about recent times, Forex started 500 years ago in the Netherlands.

It occurred 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 creating 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.

That’s why Forex is called 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.

That’s like comparing a giant and a baby.

Hence the market provides a lot of opportunities.

Traders like me and you can get a small bite of this massive market.

The USD makes the Forex market move.

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 in them.

Whatever happens in the US, these major pairs can go wild.

For example, a US president tweeting about the strength of the USD.

This would make the demand for other currencies lower.

Therefore, the USD will rise in comparison to other currencies.

And this is just one scenario.

US Federal Reserve interest rates hike, inflation, consumer price index.

They all affect the movement of USD.

Hence impacting the Forex market.

You know I’m a data nerd.

So, 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)

Some of them have a simple explanation, others a bit complex.

Since the Great Britain Empire, London has always been a global trading hub.

It requires a larger presence of currency exchange.

Hence, Forex plays more role in the UK than anywhere else.

The US accounts for 19% of Forex trading, while the UK accounts for 41%.

Despite Brexit uncertainty, the UK remains on top of the Forex food chain.

The Forex market comprises fiat currencies.

The states are backing these currencies.

Whenever something happens, central banks intervene.

They took drastic measures to stabilize currency rates.

When this happens, the Forex market doesn’t go all yahoos.

So, that’s how Forex tends to stay calm.

This is a great advantage for traders.

You can take your positions more comfortably.

However, you can’t get away from losses.

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.

So, there is a currency exchange.

And Forex is foreign currency exchange.

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 all digital.

Because many countries don’t have the resources to do it.

So, you see, there are many reasons why the Forex market won’t see a night.

If you had started Forex trading in the 1970s, you would need millions to start.

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.

Yes, you can enter the market without any hassle.

All you need is a device and an internet connection, and voila!

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.

Also, women don’t trade often.

Unlike men, who trade aggressively.

Besides, men don’t admit they commit trading mistakes.

However, women do admit to committing trading mistakes.

Bottom line

See, I told you it’d be fun.

After all those fun facts, you’ll look at Forex 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.