Top 10 Fun Facts About Forex Trading

Top 10 Fun Facts About Forex Trading

Forex and fun facts seem an interesting combo.

Market jargon can make your head spin.

So, give your mind a relaxer.

And find out what are top fun facts about Forex trading

Ted Capwell

Content

Today, I want to discuss something fun.

No, I’m not gonna talk about The Simpsons.

I want to create a combo of Forex and fun facts.

Now, this is an interesting combo.

You read about complex Forex details every day.

So, I decided to take your mind off.

And mention the top 10 fun facts about Forex trading.

So, buckle up, as this is a fun ride.

1. Forex dates back to ancient times

1. Forex dates back to ancient times

The origins of Forex date back to ancient times.

Yeah, I’m not kidding!

Let’s go back in time and see how Forex started.

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.

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.

2. Forex sees a massive amount daily

2. Forex sees a massive amount daily

Probably, you know by now that Forex is a big market.

And I’m talking about a giant compared to other markets.

Let’s see how big the market really is.

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.

Buy or sell BTC

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.

3. USD makes the market move

3. USD makes the market move

This is a no-brainer!

As the world’s largest economy, USD is at the center of the Forex market.

Let’s dig deeper.

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.

Fluctuations of the dollar

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.

4. GBP/USD's nickname is Cable

4. GBP/USD's nickname is Cable

Do you know GBP/USD has a slang name, “Cable?”

It is one of the most traded currency pairs in the Forex market.

But what’s the story behind the name?

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.

5. EUR/USD called the Fiber

5. EUR/USD called the Fiber

We get a historical perspective behind GBP/USD’s name.

But what about EUR/USD.

I mean, EUR just came in 1999.

So, there aren’t ancient times about its name.

Let’s see its recent history.

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.

The EUR/USD slang name is an 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.

6. The UK is the center of the Forex market

6. The UK is the center of the Forex market

Wait what?

You’ll be thinking, how can this be?

USD gets the most attention.

Then how come the UK is the center of the Forex market?

Well, let’s find out.

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.

Forex plays more role in the UK

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.

7. There aren't many wild swings in Forex

7. There aren't many wild swings in Forex

As a trader, you would have seen your positions go up and down.

But did you frequently notice Forex pairs making crazy moves?

Yeah, the market can make wild swings, but very often.

Why is that?

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.

8. Forex will never see a night

8. Forex will never see a night

The beauty of the Forex market is it’ll never disappear.

One can argue traditional currencies won’t be the thing of the future.

However, it is highly unlikely.

Let’s see why.

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.

9. Forex trading used to require millions

9. Forex trading used to require millions

Now you can open a Forex account with a minimum of $1.

However, this wasn’t always the case.

Let’s see how things have changed.

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!

10. Women are better traders than men

10. Women are better traders than men

We all know the success stories of different men in the Forex industry.

But statistically, women are better traders than men.

Let’s lift the curtains.

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.

Women perform better in Forex trading

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.