Is Forex Trading just a New Trend?

by Andrew McGuinness     Sep 03, 2019

The Forex market used to require a large capital

Though Forex trading has recently become a major investing trend, this was not always the case. The foreign exchange market came on to the investing stage in 1971. During those days, Forex trading was uncommon amongst everyday people because it was prohibitively expensive. High margins meant that sometimes, consumers couldn't enter the market with a bid under $100,000. As at this stage Forex trading wasn’t really offered to retail clients, trading activity was largely limited to governments, international corporations, and banks for about the first 35 years of its existence.

It was made available to the public in the late 1990s

The Forex market made a huge move in the late 1990's that caused it to explode in popularity. It was finally made available for use and trade to the general public and margins were significantly lowered. Forex brokers amended their capital requirement and seemingly overnight, the Forex market was flooded with people from all walks of life looking to buy and sell currencies in hopes of making a profit – a practice that was previously only manageable by massive companies and banking institutions.

It is now accessible from anywhere in the world

The Forex market we see today is significantly different from the Forex market that existed in the late 90's. With the advent of the internet, information about the Forex market and Forex trading platforms can now be accessed anywhere in the world. Information ranging from trading strategies to live updates of currency pair exchange rates are now plentiful and can be accessed by almost anyone. A ton of information about best Forex trading practices can be accessed from online courses, tell-all books that share the stories of those who hit it big through currency trading, simple and easy-to-understand guides that lay out exactly how to read a Forex chart, etc. is now widely available.

The benefit of globalism

The world’s increasing dependence on international trade benefits the Forex market. As globalism spreads throughout the world and travel becomes easier and more affordable, experts predict that international cooperation and trade between companies will continue to increase. This puts additional weight in the value of Forex trading. Trading currency pairs relies on the cooperation and communications between two nations. Without trade agreements, exports, and imports, there can be no bull and bear cycle for traders to take advantage of and make money. This is why currency pairs that ‘communicate’ with one another through trade are the most popular and the most profitable. The conversion of the United States dollar to the European euro or the Japanese yen are most common. The Forex market is also open 24 hours a day, 5 days a week due to the differences in time zones as well, which appeals to many who cannot trade on the US stock exchange because they work traditional 9 to 5 hours or they are a stay-at-home parent who is responsible for watching the kids during the day.

Get unlimited access to our Learning Center,
Broker Insights and Exclusive Promotions for Free!