8 things about forex you may not have known

What is your definition of forex? Is it an adventure, a source of income, a challenge, or even a pastime? What does the word ‘forex’ bring to mind? Whatever it is, trading may be fascinating so long as you aren’t losing money.

Are you confident that you’re fully aware of what’s required to trade foreign currencies? Here are some facts that should have you reconsidering.

The cable is the name given to the British pound/US dollar currency pair

The Great Britain Pound and the United States Dollars are the two of the most traded and exchanged currencies in forex trading. The pair, on the other hand, is known as ‘the cable’. The term ‘cable’ comes from the fact that before satellite and fibre optic cables were invented, the London and New York Stock Exchanges were executing transatlantic currency exchanges via transporting information with a telegraph cable.

Trading goes way back

Currency trading is commonly regarded as a modern development that grew out of the introduction of technology and was accelerated via education and the internet. Currency exchange can be traced back to biblical times. It has a long history and has only grown over time.

Money-changers were mentioned in the Talmud, also known as the biblical times, which reveals their antiquity. Of course, the money exchangers changed currencies for people and received a commission or two.

The US is not the centre of forex trading

Most FX transactions, especially maximum transactions, use the US dollar. It is the most widely used currency in trade, with a usage of 87% of all deals. As a result, most traders select the US as their trading centre by default.

However, according to statistics, 41% of all forex transactions in fact occur in the United Kingdom, while only 19% occur in the United States. It’s reasonable then to assume that London is the world’s largest forex exchange, followed by New York.

The largest forex player is in Germany

Despite Germany’s status as a minor currency market, it is fascinating to note that Deutsche Bank, a German bank, is the world’s most significant single forex player, with a 14.6% share. Citibank (USA) ranks second, with 12.3%, while Barclays (UK) comes third at 11%.

Traders are known as bull and bear

The way traders are classified in forex is also fascinating. The bulls, for example, are the optimistic ones who think the market will rise at a specific moment, whereas a bear is a trader that believes the price will drop. When they strike, these titles are given to the animals’ characteristics: a bull raises its horns while striking, while a bear slashes its claws downwards.

Furthermore, a distinct kind of trader known as the Pig has no idea what they will do next. On the other hand, traders believe that Bulls and Bears make money, but Pigs get slaughtered at some point.

The FX market’s daily turnover is $5.3 trillion

On the foreign exchange market, 5.3 trillion dollars are traded every day, making it the largest financial market in the world. The number of transactions daily is about 53 times greater than that of the New York Stock Exchange and roughly 4% of global GDP. The majority of this sum, some 2.2 trillion USD, is in FX swaps, with around 2 trillion USD in spot currency.

Forex was previously only available to banks and big companies

In the mid-nineties, only banks and substantial businesses could trade on the exchange market, with a required minimum of $40 million to $60 million in liquid funds. Individuals now trade all across the world to trade for as little as $1,000 as their initial deposit. The Internet and a slew of new online sites have made the market accessible to more people, and retail traders are primarily responsible for this.

The worldwide web has made currency trading more popular and accessible

Without a doubt, the Internet has revolutionized forex trading. Traders used to execute the bulk of their forex transactions on exchange floors. Still, many current traders are unaware of this because they have never traded outside the confines of numerous online platforms. On the one hand, the market is open to everyone around the globe, regardless of where they reside; all they need is a stable Internet connection, and they are ready to go. On the other hand, due to simple accessibility, more individual traders and shops are joining the system.

The bottom line

Regardless of how long you’ve been trading forex, we hope you’ve enjoyed discovering these eight things you probably never knew about forex. The most important thing to remember about forex trading is that; you can never stop learning about trading.