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Will Forex Trading Last Forever?
The future, according to the world’s greatest scholars, is predictable. Based on the events of the past, we can predict how things will unfold in the future. Some people think that history repeats itself in cycles, while others believe in linear patterns in which the planet and civilizations progress to a higher level of existence. So, let’s start from the beginning…
What do we know so far about the history of trading? We know that trade began in the earliest of times, when individuals exchanged commodities without the need of a middleman. The earliest coins were composed of electrum, a gold-silver alloy, and by 560 BC, the Lydians (a region in modern-day Turkey) had developed a gold-only currency. The value of a coin at the time was entirely determined by the worth of the metal it was composed of. Logic dictated that the more gold a nation had, the greater its wealth and power.
The earliest voyages to the New World were sent in quest of riches and greater global domination. European nations began printing money, resulting in a disparity between coins and paper money. This was the beginning of the gold standard as we know it today.
What is the significance of this for forex?
Well, the money we exchange now is not the same as it was in the past. Today’s currencies are fiat, which means they are not backed by the same quantity of gold as in the past. The power and supremacy of currencies would shift throughout time. Currency trading as we know it now, however, did not begin until the 1990s.
Banks started developing their trading systems with the advent of internet trading. Meanwhile, internet trading systems for individual traders were developed, and the FX market was established in 1996. The problem is, big financial organizations recognized the potential of currency swings early on, and their interest has remained.
Banks, hedge funds, and investment firms are always on the watch for what the majority of traders are up to. They are always looking for methods to get greater influence over the market so that they may manipulate pricing to their advantage. It’s a never-ending game, a Perpetuum mobile trade game. So the real issue is whether or not the banking industry will ever close.
If trading currencies became unprofitable and these large institutions chose to withdraw, this would indicate that there is another source of profit that might meet these participants’ needs. Large companies and banks would suffer a tremendous loss if this did not happen, something they would never allow to happen.
They are the ones who are driving the market.
And, although we as individuals earn from trading in this market, the market would not exist (or grow) in the first place if it weren’t for the advantage of the large banks. As a result, even if forex were to vanish, you could still utilize the principles of trading and apply your knowledge and abilities elsewhere. This is basically what occurred in every new market. Those who moved from stocks to currencies, for example, simply had to learn new trading rules.
Still, recall the previous major economic downturn in 2008. What went wrong with forex? Despite this, it continued to expand. Recessions occur in cycles as economies seek to renew themselves. Is spot FX, on the other hand, affected by market conditions? No. This market, unlike stocks, real estate, and other assets, keeps going.
Natural uptrends, downtrends, and consolidation periods exist in the spot FX market. We exchange one currency against another when we trade. And, if we ever notice that a certain currency isn’t performing as anticipated, we may just short it.
Because everyone pulled their money out of their assets
and parked it in this safe-haven currency, the USD became very strong in 2008. But, since large banks would never let it, this may never happen again in this manner. People will always look back in time, believing that they may profit from the same pattern during a downturn. The only thing you need be concerned about is your strategy, since FX is recession-proof.
As of 2019, the total daily average exchange rate in the Forex market is $5.1 trillion. It’s doubtful that it’ll go down in flames, but it’s possible that your account may. Currencies, like nations and economies, are constantly changing. What you should be concerned about is whether or not you are immune to global circumstances as an individual. Do you believe you are adequately protected if you just trade in the currency market? You only get paid in one currency, regardless of how many other currencies you trade. So, what are your plans if that currency collapses?
Consider your next step.
To ease the pain, try diversifying into other markets (for example, metals). You may also carry a variety of currencies with you to ensure that you are recession-proof. Individuals will constantly seek for methods to earn money in the currency market. People constantly demand more money when it comes to beauty and slimming goods. From a macro viewpoint, forex trading is critical as long as various countries remain in the globe, they continue to use their currencies, and international commerce is possible.
Yes, certain modifications have already occurred. The NFA, for example, prohibited US retail consumers from dealing leveraged gold and silver a few years ago. That’s how non-institutional US citizens’ XAU and XAG crossings vanished overnight. We know that just 6% of all US dollars are printed, while the rest of the world’s money is digital. The extinction of paper money has been rumored for a long time, but a far greater shock would be required to shake up the currency industry.
Before it stops,
something must replace the normal currencies, or severe steps must be taken to stifle individual and institutional profit – a new global currency/cryptocurrency, a significant restriction on banks’ profit possibilities, or something else. Spot forex is still a very profitable business for banks, brokers, and trading firms, therefore the chances of currency trading disappearing are slim.
Rather than pondering how currency might be eradicated off the face of the earth, we would be better off planning how to improve our personal financial security. With the quantity of news and worldwide developments that have occurred this year, forex has stayed relatively unaffected. As a result, currency trading is unlikely to go away very soon.
Forex has grown from a mostly inaccessible financial instrument to a global phenomenon
in the last several years. What’s more likely to happen in the future is that large banks will have more chances to benefit from this market – more liberal rules, more international trade, and definitely greater opportunities for both individuals and banks to profit.
With the increasing use of mobile trading and trading software programs and platforms, we can already see evidence of this occurring. Remember that entry to the foreign exchange market used to require a large sum of money, making it virtually difficult for individual investors to trade currencies without going via banks or financial institutions. In today’s society, we have the opportunity to exchange currencies for as little as $100—$200.
This bubble is unlikely to burst very soon since it would benefit no one, particularly the big players. Like weight reduction medications, where almost no one actually loses weight yet everyone continues to purchase. You simply have to be wise enough not to join the 90% of losers and take advantage of this growing industry.
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