We don’t really want to bore you to death, however, it is crucial for your
a personal forex knowledge base that you are aware of the history of forex; how
far it has come and how rapidly it is growing! The Art Of Technical Analysis –
In historical literature, the great depression appears like an earthquake or
plague alongside the removal of the gold standard back in 1931, which left a
the bleak atmosphere within the foreign exchange market activity.
The gold standard was used to describe any currency that was pegged to the amount of re-served gold, for instance, if you had one US Dollar, you could take it to the government and trade it for a fixed amount of gold!
In the U.S. on average $20.67 yielded you 1 ounce of gold year after year.
From 1931 up until 1945 there was a 14-year period where fiat,
non–backed paper money was dominant, which lead to huge economic from country to country and was a major contributing factor towards the beginning of World War I. (The Art Of Technical Analysis )
The market experienced fast-paced evolutionary changes from 1931 up until 1970, which at the time had a great impact on the global economies. The forex market was fully established in 1971 but from its infantile stages during the middle ages up to World War I, it was relatively stable and did not attract
much speculative activity or the interest of investors.
It was only after World War II, however, that the markets started to pick up in volatility, and speculative activity increased tenfold! A government change in policy was introduced around 1963 when the new
federal reserve notes (with no promise to pay in ‘lawful money) were released
with no guarantees and no value! Two years later, in 1965 silver was completely
eliminated from all coins. (The Art Of Technical Analysis )
Lyndon Johnson signed the coinage act of 1965, which
terminated all previous legislation set up by George Washington 173 years earlier.
Currencies of the major industrialized nations became free-floating and
therefore became subject to the prices set for them in the actively traded
forex market. As speculators and investors gained a greater interest, the liquidity began to steadily increase and prices fluctuated each day. (The Art Of Technical Analysis )