Trading through the ages has seen many different forms. To begin with, it was bartering of goods as we have seen in history all over the world. This was followed by the expression of the value of goods in another distinct good. This is how basically the marketplace of trading goods came into being. Initially, the value of goods was expressed in terms of colored stones, metals, animal teeth, feathers and even spices.
This gradually gave way to precious metals such as silver and gold. Coins started to be used in many parts of the world. The standards set by silver and gold became the accepted way to trade as it also had storage value. It was during the Middle Ages that paper currency was introduced to the majority of the world markets. This was the beginning of the modern currency.
Pre-World War 1 saw most countries utilize gold support for their currencies. This meant that basically the paper money of a country was able to be converted to gold if needed. Whenever a county had more paper currency than gold reserves this resulted in inflation and as a consequence even political instability. This was the reason why foreign exchange controls were introduced in order to stem the market forces taking over.
Around 1944, John Maynard Keynes initiated the Bretton Woods Agreement where the world reserve currency was replaced by the US dollar as its base. This system also collapsed soon afterwards due to growing trade as well as budget deficits. The following decades foreign exchange trade grew to become the largest market in the world and saw many countries lifting their capital flow restrictions facilitating Forex rate adjustments according to their perceived value.
The volatility in the Forex market opened up new potential for investors and traders in the retail sector as well as larger financial institutes to trade in currency using the new technology that revolutionized the currency trade. Online currency trading had come to stay with the market that grew to the tune of trading currency at four trillion dollars a day.