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History of the Forex Market:
Where it all began

The barter system is the oldest method of exchange and began in 6000BC, introduced by Mesopotamia tribes. Under the barter system goods were exchanged for other goods. The system then evolved and goods like salt and spices became popular mediums of exchange.

Gold coins became widely accepted as a medium of exchange, but they were impractical because they were heavy. In the 1800s countries adopted the gold standard. The gold standard guaranteed that the government would redeem any amount of paper money for its value in gold.

The Foreign Exchange market was backed by the gold standard at this point and during the early 1900s. Countries traded with each other because they could convert the currencies they received into gold. The gold standard, however, could not hold up during the world wars.

Key events which have shaped the Foreign Exchange market.

Key events which have shaped the Forex market

Throughout history, we have seen major events that have greatly influenced
the Foreign Exchange trading environment. Here are some highlights

The History of Forex

Gold Standard
England formally
adopts gold standard

Major Countries Join
Major countries join
the gold standard
(France, Germany
and Japan)

Bretton Woods

Currency pegged
to USD

Plaza Accord
Finance ministers from
major countries meet
and reach an agreement
to depreciate the
US Dollar

Internet Trading
First online retail
brokers open

First Gold Coins
Lydia creates first
gold coins

America moves to
Gold Standard
America moves from
bimetallic standard to
gold standard

Official Switch to Free
Floating System
Currency that is not pegged
to any assets or other
currencies is known as
a ‘floating currency’

Maastricht Treaty
Maastricht treaty
signed which led to
formation of Eurozone
and the Euro

More than $5 trillion is
traded in forex each day

Forex trading today and in the future

The size and depth of the Foreign Exchange market make it an ideal trading market. Its liquidity makes it easy for traders to sell and buy currencies without delay. This creates tight spreads for favorable quotes. Low costs, large scope to various markets and flexible trading times make it the most frequently traded market in the world.

Geographical Distribution of OTC
Foreign Exchange Turnover (%)

10 Benefits of Foreign Exchange

Largest Financial Market in the word

Anyone can participate

High Volume and Liquidity

Nobody Owns the Market

Trade the Highs and the Lows

It’s open 24/5

No Commissions on Most Accounts

Low Transaction Costs


Risk-free Demo Account

1. Largest Financial Market

The Foreign Exchange (FX) market is the largest financial market in the world, and it’s not going to cede that title anytime soon. It’s not hard to see why the Foreign Exchange market is used as a snapshot of global trade and economic activity. On average, between $4 and 5 trillion (yes, that’s trillion with a T) is traded daily. That’s about $200 billion an hour, $3 billion a minute, $50 million a second. And with traders of all sorts participating from all over the world, it truly is the single most accessible and global trading market.

2. It's for Everyone.

Foreign Exchange trading is not just for the big shots. Getting started as a Foreign Exchange trader doesn’t cost a lot of money, especially when compared to trading stocks or options, and it is part of its appeal to a large number of people globally. Even without much start-up capital, FX trading is accessible to the average individual. Gallen Capital offer trading accounts with only $500 minimum deposit and leverage up to 1:500 is available*. This does not mean that you’ll be a good trader right away, it does take time and trial to learn and become skillful, so it’s advisable to take it slow and warm your way in. Read our Foreign Exchange education section to build your trading knowledge.

3. High Volume and Liquidity

The Foreign Exchange market is enormous, we have got that. But why is this such a good thing? One word – liquidity. What this means is that given the large volume being traded at any given moment, under normal market conditions you do not have to wait. With a click you can buy and sell as you please, since there will usually be someone on the other end willing to trade back. You can even automate your trading. Of course, the market does have its quiet hours, but generally there are always trades to be made, especially if trading popular pairs like USD/EUR and other majors.

4. Nobody Owns the Market

Given the sheer size of the Foreign Exchange market and the number of participants, no single institutional trader (no matter how big) can control market prices for an extended time. The market quickly calibrates itself and levels the playing field. Additionally, the Foreign Exchange market is decentralized and there are no middlemen. You trade directly with another participant in the market and a retail FX broker simply facilitates this connection. Essentially the market is influenced directly by the economy itself, not one person or a company. You cannot corner it and you cannot control it, and that means that you’re not as small a fish as you may think.

5. Trade the Highs and the Lows

No matter if the market is rising or falling, you can trade, and some Foreign Exchange trading strategies even depend on the latter. You can find opportunity in any market condition and you can trade when you believe the price of a currency pair is going up or when you anticipate it going down. Some traders even thrive on high volatility periods. Although carrying more risk, these sudden price changes can be advantageous if timed right. Whether you are following longer market trends or trading day to day movements, there is plenty of trading opportunity to be found.

6. A 24-Hour Market

The Foreign Exchange market never sleeps. Open 24 hours a day, 5 days a week, you can trade whenever you want to, not when the market dictates. There is no waiting for the opening bell or scrambling to get your order executed before a daily close. Trading begins with the opening of the Sydney session and closes with the New York session, by which time it starts all over again, round the clock. This means you can be as active or passive as you’d like, and trade on your own schedule – be it morning, noon, or night.

7. No Commissions on Most Accounts

There are generally no trade commissions, or very low ones for large volume trades. There are also no clearing or exchange fees. Most retail brokers earn their revenue through the “spread,” which is the difference between the bid and ask price. Spreads in the Foreign Exchange market also tend to be very tight (more on that below), making Foreign Exchange trading one of the most cost-effective investment tools. Gallen Capital offers no commission FX trading accounts and accounts with spreads as low as 0.4 pips**.

8. Low Transaction Costs

As mentioned above, the difference between the bid and ask price is the broker’s spread and this is the retail transaction cost. Highly capitalized brokers can offer very competitive spreads, thus minimizing your trading costs and maximizing your profits. Gallen Capital offers an average spread of 1.5 pips** for its Executive account type and 0.4 pips** for a Premiere account. It is important to understand how spreads are measured. For example, if GBP/USD has a bid price of 1.55310 and an ask price of 1.55313, the spread is 0.3 pips.

9. Leverage

A small deposit can go a long way. With leverage you can essentially “borrow money” from your broker to trade with in excess of your actual deposited funds. This is a powerful tool and one of the most attractive features of Foreign Exchange trading. Gallen Capital offers up to 1:500 leverage, which gives you increased buying power and can mean larger gains, but it also carries the risk of larger losses. Please be sure to fully understand the risks of trading with leverage before you use it.

10. Risk-free Demo Account

You can make use of a free Foreign Exchange demo account to practice Foreign Exchange trading and learn the ropes. Trading with a demo account is just like the real thing, but you’re doing it with “play money.” A demo account is great for those who want to test the waters or improve their trading skills in real market conditions without risking any actual capital. And this is all for free and without any commitment.

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