How Has the Forex Market Changed Over the Years?

The history of the forex market can be traced back hundreds and thousands of years, even to the Babylonian period. 

Today, this modernised market continues to see exponential growth, with its average daily trading volume having increased from $5.1 trillion in 2016 to $6.6 trillion by the end of 2020 (we’ll touch a little more on this later in the piece).

But how exactly has the market changed over the years, and what tools are available now to help create a more even playing field for retail investors?

A Brief History of Modern Internet Forex Trading

The modern history of modern forex trading can be traced back to 1990, when the dawn of the Internet helped to create a more structured, systematic and accessible marketplace.

The deployment of Wi-Fi and Internet connections also increased the speed with which transactions could take place, creating the potential for enhanced profits and making lucrative strategies such as scalping available to novice and retail traders.

Most importantly, the Internet age enabled investors to speculate and trade a raft of international currencies from their desktop or (more recently) mobile devices, even in a 24-hour marketplace where a range of different factors can impact prices in real-time.

Thanks to Internet trading, new markets and opportunities emerged in developing economies such as Southeast Asia, enabling such regions to join the likes of the UK and the US in attracting increased levels of capital and speculation.

The newly competitive and interconnected market has also seen reduced spreads and increased participation across the board, while the typical leverage has also soared (with reputable brokers now providing enhanced leverage of up to 200:1 to some retail clients).

The Rise of Online Trading Platforms

Over the course of the last decade, we’ve seen an even more pronounced rate of change in the forex market, thanks largely to the continued emergence and sophistication of online trading platforms such as the MT4 online.

These platforms not only provide real-time access to the forex market, but they also offer a diverse range of analytical tools and technical indicators that can lead to informed decisions and optimal trading activity (even when executing a high volume of orders).

Above all else, this evolution has dramatically increased the number of active retail traders, even in developing economies across the globe.

To this end, the market now covers more than 150 countries and includes a total in excess of 170 international currencies, while daily trading volumes peaked at $6.6 trillion at the end of last year. 

As a result of this and the rising prevalence of high-frequency trading (HFT), we’ve also seen a considerable number of new regulatory measures and frameworks introduced in the marketplace.

This is essentially good news and a positive development for retail traders, particularly as it prevents large corporations and institutional investors from manipulating the market to their own advantage.

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