History of Forex Trading - There is a long history before you can finally trade forex as easily as today. Long before people knew about online trading, most Indonesians traded manually. Where in the transaction you must include a transaction that involves services from a banking institution first so that trading transactions require a long process.

But now, you can access the forex market from an application on your smartphone or an online platform. This innovation allows you to trade comfortably, anytime, and anywhere. If you are curious about the history of how forex trading developed, or how forex trading became a reliable trading system, here is a complete review.

Table of Contents

Forex Trading in the World

The history of forex trading began with the gold standard system. The gold standard system is a system of exchanging a certain amount of currency value for a certain amount of gold. The system that first appeared in 1875 is considered an important momentum for the birth of the world money market. The gold standard system made many countries prepare gold reserves to exchange currencies.

Before the gold standard system was implemented, gold and silver were used as a medium of exchange for international payments. However, this exchange system did not last long because the value of gold and silver was unstable. Unfortunately, just like the previous gold and silver exchange system, the gold standard system also did not last long. This system had to falter at the beginning of World War I because the bloc countries were at odds.

This feud then led to inflation in various countries. The gold standard system continued to falter until it did not work at all until World War I ended. Before World War II, this system was tried to be fixed, but failed.

Then, towards the end of World War II, several countries that were part of the Western Bloc, such as the United States, Canada, Australia, and Japan, started an alliance to create a more solid monetary system, considering that the gold standard system could no longer be saved.

In 1944, the Bretton Woods System was finally created, representing the international monetary management system. The Bretton Woods System regulates important things, such as the method of using fixed foreign exchange rates, the application of the USD as the main currency to replace the gold standard system, and at the same time forming three bodies monitoring international economic activity.

Namely the International Monetary Fund, the International Bank for Reconstruction and Development, and the General Agreement on Tariffs and Trade. Over time, the Bretton Wood System had to collapse again because it tried too hard to protect the USD which was the main currency. The momentum of the biggest problem with this system was faced in 1970 when the United States' gold reserves became very low.

This made the US Treasury Department not have enough gold to cover the USD at the world's Central Bank. Finally, in 1971, the USD was officially no longer the main exchange rate, which also marked the collapse of the Bretton Wood System. Instead, the World Trade Organization was created, which later became the forerunner of today's trading world.

First Trading in Indonesia

Forex trading in Indonesia first appeared at the Jakarta Futures Exchange (BBJ) in 1999. BBJ became the main place for controlling foreign currency trading as well as a place for conventional forex trading. So if you wanted to trade at that time, you had to come directly to BBJ.

Meanwhile, official regulations governing new trading were issued in 2000. BBJ is a combination of several companies from 19 commodity sectors and 10 capital market companies. BBJ handles all types of futures trading, including palm oil, coffee, crude oil, and also gold.

These commodity trading transactions are carried out under the strict supervision of the Commodity Futures Trading Supervisory Agency (Bappebti). Bappebti is an agency that has officially regulated finance in Indonesia since 1997. At that time, forex trading was not allowed.

The trading system at that time still used the Open Outcry system with offers and bids. This Open Outcry system is similar to an auction, where trading is carried out in a special trading room and traders are there. Traders make offers and purchases openly, the process is carried out by calling (shouting) and demonstrating special hand movements. That's why it must be done directly.

Also Read :  What is Forex Trading: Definition, How it Works and its Advantages

Because the decision to take the offer or not must be made directly on the spot. Some traders are allowed to trade with electronic devices only if they have obtained permission first. The history of online trading in Indonesia before forex was trading the Hangseng, Nikkei, and Kospi indices.

The initial asset sold here was the Dollar Yen or known as Dex which had not very good volatility. Some Indonesians who traded forex had to use the services of foreign brokers because brokers in Indonesia had not officially traded forex. Even at that time, there were no regulations.

From here, people began to get to know forex trading. Forex trading is considered much more practical than commodity trading. This is also the reason why several brokerage companies began to pioneer the forex trading trend in Indonesia. Finally, in 2011, a regulation was formed to regulate foreign exchange trading and indices categorized as commodities in the futures market. That is why forex trading remains under the supervision of Bappebti and the Ministry of Trade to this day.

Forex Trading Indonesia Today

Forex trading has now become a simple and easy trading activity. Especially after there are regulations governing this, forex trading is growing rapidly in Indonesia. The number of forex traders from Indonesia also continues to increase throughout the year.

Initially, forex trading in Indonesia was only considered a promising investment effort. However, over time, forex trading is not only considered a way to invest, but also a way of doing business to obtain large profits. Some traders even make forex trading their main job in earning income.

Forex trading is now widely known and accepted by the public. It is no wonder that many people are starting to be interested in learning more about forex trading, from how to trade to tips and tricks so that someone can get profit from forex trading. You also don't need to doubt the security of online trading because forex trading activities in Indonesia are under the supervision of Bappebti.

You can also use the services of a broker with a guaranteed reputation, especially if you are still new to forex trading or do not have time to trade for hours. Bappebti has provided a list of credible brokers or brokers that are widely relied on by novice and professional traders to trade forex in the world's foreign exchange market.

Now you know the history of online trading in Indonesia, starting from how forex trading was born, developed, and finally can be accessed online as it is today. You also understand that forex trading is completely legal, supervised by a special supervisory body, and has a clear legal umbrella. So are you ready to dive into the world of forex trading?


FAQ About Forex Trading History

Here are some frequently asked questions (FAQs) about the history of forex trading:

What is forex trading?

Forex trading is the activity of buying and selling currencies in the global financial markets for profit. It involves speculating on changes in currency exchange rates over time.

When did forex trading start?

The history of forex trading can be traced back to ancient times, but the modern forex market began to take shape in the 1970s when the international monetary system changed and currency exchange rates began to fluctuate.

What is the basis of forex trading?

The basis of forex trading is currency exchange. Every time you exchange one country's currency for another country's currency, you are participating in forex trading.

What drives changes in currency exchange rates?

Many factors can influence changes in currency exchange rates, including interest rates, inflation, political stability, economic conditions, and global news. These changes create opportunities for forex trading.

What is meant by the forex market?

The forex market is a decentralized market where the world's currencies are traded. It is the largest and most liquid market in the world, with trillions of dollars worth of transactions taking place every day.

What is the role of a forex broker?

A forex broker acts as an intermediary between a trader and the forex market. They provide a trading platform, analytical tools, and market access to enable traders to participate in forex trading.

How do technological advances affect forex trading?

The advancement of technology has changed the way forex trading is done. Electronic trading platforms and easy internet access have made it possible for individuals and financial institutions to trade forex online.

What is leverage in forex trading?

Leverage is a loan given by a broker to traders to increase their purchasing power. In forex trading, leverage allows traders to control amounts greater than the capital they have.

What is meant by a currency pair?

A currency pair is two currencies that are traded against each other in forex trading. Examples of popular currency pairs are EUR/USD (euro against the US dollar) and USD/JPY (US dollar against the Japanese yen).

What is the difference between forex trading and traditional investing?

Forex trading generally involves short-term trading and speculation on changes in currency exchange rates, while traditional investing tends to be more long-term and focuses on the growth of the investment value over time.

Please note that the information in this FAQ may not cover the entire history of forex trading in detail, but it provides a general overview that can help you understand the important aspects of forex trading.

Visit GIC Indonesia to get information about the world of trading. You can also join us in the Telegram Community GIC Trade and Telegram Channel GIC Trade. Don't forget to check the Youtube account GIC Indonesia which is full of interesting information, and follow our Instagram account to get information about various interesting webinars that you can follow.