Retail exchange trading may be a segment of the exchange market where investors aim to take advantage of exchange rates between different currencies. It’s also referred to as ‘retail Forex trading’, and currencies are often bought and sold in seconds.
Before the First World War, there was much less control over international trade, and therefore the consequences of the war caused countries to abandon the gold standard by this point.
In the period of 1899 to 1913 exchange holdings increased by 10.8%, while holdings of gold increased by only 6.3%, marking the importance of the emerging Forex market.
By the top of 1913 nearly half the world’s exchange was conducted using the British pound , but there have been only two exchange brokers operating in London. The most active trading centers instead were Paris, New York and Berlin. But by 1928, exchange trading was integral to the financial functioning of the town, and trade London began to resemble its modern status.
In 1944, the famous Bretton Woods Accord was signed, which allowed currencies to fluctuate within a range of ±1% from the currency’s par exchange rate.
During President Nixon’s tenure the Bretton Woods Accord was scrapped along side fixed rates of exchange, leading to a free-floating currency system.
Retail exchange trading hit the news in 2015 when Swiss Commercial Bank (SNB) removed its €1.200 capital on the Euro all of sudden. The value of Swiss Franc rose 30% causing volatility within the market and large losses for investors, brokers and banks.