How Travel Exchange Became Forex Trading

How Travel Exchange Became Forex Trading

What Do You Know About Currency Trading?

The Nigerian Naira is a volatile currency, made even more so by rise and fall of crude oil prices. Within the country, there is also a dollar shortage, so while tourists and businessmen visiting are encouraged to use their dollars, it is very difficult if not impossible for them to be able to exchange back for dollars.

To assist in its liquidity at the end of October 2018, the Central Bank of Nigeria allocated $100 billion to authorised forex dealers. This is not the first time the bank has intervened and CBN promises it will not be their last, as part of their commitment to secure stability through liquidity.

So just what is forex trading? Do you see it as just something you leave to the banks or the big money makers?

Think again, Forex Trading, its official name, is available to anyone with access to the internet, either by a desktop computer or a mobile phone.

Since the commencement of internet trading, there has been an explosion of traders from every walk of life. Those who trade for a living alongside those who are trading for a second income or interest.

The amounts of money trader can trade in the Forex market vary in the extreme, from the hundreds of millions banks can utilise to an individual’s budget. Opening up currency market trading to everyone.

If you are a beginner interested in forex trading, you need to take the time to learn the trade and understand the skills required to be proficient. Learn how to source a trading platform and how to use the analysis available to know when to buy and when to sell. Forex, like most professions, has its own jargon that needs to be learnt to competently understand the processes and nuances of trading.

To Go Forward, Understand The Past

Trade, the exchange of goods was the lifeblood of communities throughout history. As traders began to expand the horizons of what could be traded, working out the value of that trade began to get more complex. Goods for goods not being feasible, as distances travelled limited what could be traded.

Early Day Trading

The need to exchange currencies began centuries ago, credited to the Babylonians who first created paper notes and receipts. At that time the barter system was in operation, where the value of one good was seen in the value of other goods.

As trading became more widespread this system’s limitations became obvious and a more accepted medium for goods exchange was sought. Stones, feathers, even teeth were used but increasingly precious metals and stones established themselves as the medium to use. Gold and silver became the most popular payment method and presented with a balanced storage of value.

As traders began to transverse an ever-expanding world, so to did the risks involved. Carrying large amounts of gold and silver became unfeasible not only the weight but the risk of robbery.

Moving onto IOU’s

Traders were not the only people with wanderlust. As far back as the Romans, people took ‘holidays’ visiting other places to ‘take the waters’ or get away from the crowded dusty cities.

In medieval times the travels of scholars and journeymen traders expanded and again the problems of carrying gold and silver to exchange for local goods became endemic. Stable governments began to mint their own coins out of gold and silver and governmental paper IOU was injected to ease economic trade with other lands. A method still employed today.

Changing Times

In the time leading to the first World War, governmental central banks supported currencies with convertibility to gold. However, this type of exchange could be seriously affected by the boom-bust patterns, the 1931 Great Depression in America and removal of the Gold standard are biggest examples of the devastating effect that could occur from this cycle.

During this time global economies were affected, and currency exchange activity diminished.

After the end of WWII, the winning countries looked for a way to prevent the destabilising money crisis that had contributed to the war. In this period of time, the Bretton Woods Agreement came into being.

This agreement brought decided to use the US dollar to build a new world reserve currency, this period also saw the International Monetary Fund, The World Bank and GAFF created.

Where We Are At Today

Due to different national economies moving in different directions the Bretton Wood Agreement finally collapsed in the seventies, following Nixons 1971 suspension of the gold convertibility as the US Dollar became less suitable as the sole international currency. In its place in 1979, the European Economic Community introduced a fixed rate of exchange. Then in 1991 came the Maastricht Treaty, which was not to only to fix the exchange rates but to implement the use of the Euro for many of them.

Forex Trade Open To All

From the earliest of times, money, in one form or another, has been exchanged. Facilitating trade from one area to another, the simple days of one form of travelling money has gone.

These days people have a variety of means to access another’s currency from credit card use to online banks. But for trade in currencies, the market has exploded in its own right with many forex traders and currencies entering the playing field.

1995 saw the Autonomous Foreign Exchange Market (AFEM) created that allowed the Nigerian Central bank to sell Forex at market rates. The Nigerian Naira, NGN, (₦) most popular trade is NGN to USD.

History has a lot to teach us, how we arrived at where we are for one. Forex Currency trading is not new, just more sophisticated thanks to technology.

In the same we can understand why Forex trading has been part of our history for centuries, learning about Forex analysis provides you with the history of that currency and alongside other tools, you can then decide when to buy and when to sell to make the most profit.

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Paschal Okafor is NaijaTechGuide Team Lead. The article How Travel Exchange Became Forex Trading was written by NaijaTechGuide Team. The article was last modified: October 10th, 2019
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