Charting the evolution of trading with ETFinance

Throughout history, trading has been a driver of social and economic development. Today, with the advent of digital platforms, anyone can get involved and help shape the future

Charting the evolution of trading with ETFinance
The advent of online trading has turned smartphones and other gadgets into convenient trading tools 

Trading has played a crucial role in shaping the world as we know it: commodity trading brings exotic fruits to our tables and puts fuel in our cars; we trade currencies whenever we go abroad; and some of us invest in company shares, cross-industry indices or digital coins. And that’s just the tip of the iceberg that is the world economy.

When we speak of trading in the modern sense, we usually refer to the commodity, forex, stock, index or cryptocurrency trading that occurs constantly online. Anyone who wants to become a trader need simply register with a reliable broker like ETFinance, a trading name of Magnum FX. At ETFinance, we provide educational materials that help our customers learn trading techniques and the market basics. When they’re ready, clients can make their first investments with our easy-to-use broker platform.

The advent of online trading has turned smartphones and other gadgets into convenient trading tools, but this wasn’t always the case. In fact, the impact of digital technology on the market has been seismic. Consequently, traders must quickly come to terms with new developments and understand where the industry is headed.

Traders must quickly come to terms with new developments and understand where the industry is headed

A brief history
The earliest examples of trading occurred in the ancient Mesopotamian civilisation of Sumer, situated in what is now southern Iraq. Locals used clay tokens and, later, clay tablets that represented the amount, time and date of delivery of purchased assets. These were the first futures contracts and, although they appear vastly different, are still used in investment activities to this day.

Commodity trading continued to develop in tandem with other financial markets. By 600 BC, gold and silver – previously valued for their beauty and scarcity – had become the world’s first currencies. Millennia later, countries developed monetary systems, with pound sterling holding a consistent position as one of the world’s strongest currencies. At the time, London was the centre of foreign exchange, but this did not last long once the Second World War drained European economies.

In 1944, representatives from 44 nations met at the Bretton Woods Conference and established the International Monetary Fund (IMF). At the time, currencies were fixed in an exchange rate system that tolerated one percent fluctuation against the price of gold, with the US dollar pegged at $35 per ounce. The dollar then became the de facto reserve currency for the capitalist countries rebuilding their economies after the Second World War, and all other coins were tied to it.

The gold standard was abandoned in 1971, however, with the IMF officially mandating a free-floating system of international exchange rates. This became the modern forex market. Similarly, early iterations of the stock market have been traced back to the 12th century. At the time, the first brokers managed and traded agricultural debts on behalf of French banks. Later, Venetian merchants purchased and sold government securities, initiating trading practices that were subsequently implemented by traders from other countries. The first official stock exchange was established in Antwerp, Belgium, in 1460, serving as a commodity exchange environment where bonds and promissory notes could be used.

Moving with the times
The evolution of financial services is entwined with the story of human discovery. The exploration of the Americas had European traders sending their ships east to buy and sell goods. To reduce their financial losses if a vessel failed to return, shipowners offered investors a percentage of their gains in return for an upfront fee. In turn, investors reduced their risk exposure through diversification, backing numerous voyages at any given time.

Today, the financial market is an arena for highly competitive traders and, as such, requires greater supervision and stricter regulation

The first publicly traded company, the Dutch East India Company (DEIC), was created in 1602. This development allowed investors to simply buy shares of DEIC, instead of investing in multiple ships, and receive dividends rather than a percentage of each trip’s profits. They could also sell their shares, making a profit on the assets.

In 1792, a former slave market on Wall Street became a place for traders and speculators to buy and sell securities. The Buttonwood Agreement, the origin of the New York Stock Exchange (NYSE), provided participants with commission advantages against outsiders, making such organisations attractive and fuelling their development. But even then, trades would be opened and closed through an ‘open outcry’ system, which seemed chaotic at best.

The likes of the London Stock Exchange and the NYSE supervised trading activities, regulated the companies on their respective exchanges and authorised market participants. To ensure prices were created in the most efficient and transparent way, the exchanges developed strict regulations and aimed for the lowest transaction cost, attracting more buyers and sellers. They also provided participants with up-to-date information on asset prices and a faster way to settle stock purchases and transfers.

As more participants have entered the exchange, though, the processes have become increasingly complex. By the time the stock market crashed in 1987, it was clear that a digital revolution was due. Technology brought radical changes, introducing online trading to the world, and granted the public access to the stock, forex and commodity markets. Put simply, it democratised the industry, introducing a new business model – the online trading platform – that allowed individuals to enter the trading sphere with ease and at no additional cost. More financial tools emerged, such as contracts for difference (CFD), which allow speculation on asset price movements. As CFD trading doesn’t require an investor to own an underlying asset, it is more flexible than traditional trading and has become increasingly popular among European traders.

Today, the financial market is an arena for highly competitive traders and, as such, requires greater supervision and stricter regulation. Only brokers who are ready to reform and become more transparent will survive these changes.

With ETFinance, customers can learn more about markets, trading techniques and methods

Know the market
Digital trading may be the new normal, but the industry is still developing. Change is both inevitable and inspiring, creating value for individual traders and forcing brokers to improve. At ETFinance, we pride ourselves on being a European broker with a winning attitude, ready for the challenges that the next decade of trading will present. Our team of seasoned trading and investment specialists is focused on providing a unique trading experience for ambitious clients while complying with the latest regulations brought forward by the Cyprus Securities and Exchange Commission. In addition, the latest data protection legislation ensures the transparency and security of all data processed by ETFinance.

To help investors navigate fast-paced financial markets, ETFinance offers an award-winning platform. Our MT4 terminal comes with cutting-edge analysis tools, as well as stop-loss and take-profit orders that help individuals manage their trades. To increase flexibility, the platform can be accessed via desktop, web and mobile applications. This allows traders to view and analyse data before trading instantly, regardless of their whereabouts.

The new age of trading is about customer experience above all else, which translates into user-friendly tools and superior service. For the ETFinance team, it’s an opportunity to show dedication to customers, assisting them in trading across stock, forex, commodity, indices and cryptocurrency markets via CFD trading. While 24-hour support may have become more prevalent in recent years, the team’s professionalism and commitment allows ETFinance to stand out from its competitors.

We have become a single entry point for European traders looking to invest in hundreds of assets through CFDs. Offering competitive trading conditions, such as tight spreads and no additional commission, ETFinance has become a leading broker. To achieve such results and continue to deliver improved services in the future, our focus remains on attracting the best talent and investing in the latest trading technology. Experience and knowledge allow our employees to incorporate innovation without disrupting the client experience.

Of course, investing comes with risks, but in-depth industry knowledge and a forward-thinking attitude play a crucial part in managing them. With ETFinance, customers can learn more about markets, trading techniques and methods, as well as hone their skills with a free demo account that simulates a real trading environment without any of the risk.

Throughout history, trading has helped people adjust to an evolving world. Today, traders have the opportunity to shape what comes next. With ETFinance’s support and advanced technology, clients can realise their financial potential and create a better trading future.