Updated: Jan 31
The forex market is highly popular and a major reason for this is that it is always open in one part of the world. So, you can trade forex either in New York or London, Tokyo or Sydney, at different times on the same day. Now you know why they call it the market that never sleeps!
Also, the size of this massive decentralised market has rapidly expanded over the years, gaining in popularity due to technological advancements. The forex market has become easily accessible ever since people have been able to participate online, with millions of traders and investors from across the world wanting a piece of the pie.
You might already know all of this but, let’s see how many more fun facts about the forex industry you know.
10 Fun Facts About the Forex Industry
Not many people are aware that forex trading dates back to ancient times. The first currency transaction can be traced back to the Talmudic writings. Money changers were people who used to help others change their currency, while taking a commission for their services.
Did you know that the GBP/USD currency pair is known as the Cable in the forex market? Amused? The reason why the pair is called the Cable is that before the advent of satellites and fibre optics, the London and New York Stock Exchanges were connected via a giant steel cable that ran under the Atlantic.
Another interesting fact about forex is the way the traders are categorised. Traders are categorised into bulls – or those who are optimistic and believe the market will go up – and bears – the downbeat ones, expecting the markets to fall. The names are derived from the fact that a bull strikes upwards and a bear swipes downwards.
The volume of trading in forex markets stands at more than $5 trillion a day, much more than the volume on the New York Stock Exchange. Also, the most traded currency is the US dollar, which features in nearly 80% of all forex trades.
Nearly 90% of forex trading is speculative trading.
Immediate exchange of currencies is called spot trading, since the exchange takes place “on the spot.”
Forex trading was once only possible for banks and institutions with at least $40 million to $60 million in liquid funds. Today, people with a much smaller sum can engage in forex trading.
Pip is a commonly used term in forex trading, referring to one-tenth of a pip or the fifth decimal in a currency’s value. So, if we say the euro is 1.17224, 4 is the pip value.
I am sure most people think that the US is the center of forex trading, since maximum transactions involve the US dollar. That is not true. In reality, 41% of all forex transactions occur in the UK, with only 19% taking place in the US. So, the London Stock Exchange is the trading hub for forex deals.
The internet has revolutionised the way forex trading is done. A majority of forex transactions take place online, rather than on the exchange floors.