History of Trading
Today, it’s common to hear that crypto trading is a new profession — a kind of modern trend.
But is that really the case?
Yes, cryptocurrency as an asset appeared relatively recently, with its history barely spanning about 15 years. But crypto is just one of many financial instruments. The concept of trading and the profession of a trader is much broader. It’s not limited to cryptocurrency, a specific exchange, or even our current millennium!
The first and most important thing to understand about trading is that it’s a full-fledged profession, not just a hobby or an entertaining pastime. Like any profession, it has its own history and characteristics. Trading requires immense discipline and self-sacrifice. These principles were formed in the historical context in which the profession developed.
The history of trading is quite old, spanning more than 500 years. Stock and currency trading have been around far longer than most people realize.
The History of Exchanges and Their Development
We interact with exchanges every day. Simply put, an exchange is a large marketplace where sellers trade assets with buyers. These assets can be commodities, currency, or securities. Accordingly, there are commodity, stock, and currency exchanges, as well as futures markets and cryptocurrency exchanges. Obviously, the first to emerge was the commodity exchange.
The first securities appeared on exchanges in the Netherlands, thanks to “money changers” — the first brokers. Essentially, they functioned like banks: taking currency in one place and delivering it to a client in another, charging a fee for the service and ensuring financial security. Their internal ledgers were considered official documents and guaranteed transactions.
Over time, in the 14th and 15th centuries, the number of money changers grew so much that they began holding promissory fairs. This led to the creation of the promissory note — a security that allowed deferred payments on an agreed date.
A few centuries later, the center of exchange trading shifted to London. In the 16th century, Thomas Gresham, after visiting the Netherlands, decided to build a structure in London where merchants could conduct financial operations, make deals, and hold negotiations — thus, the first professional community of brokers was established.
It was on the Amsterdam and London exchanges that many of the specific terms we still use today were born. For example, “bulls” (those betting on rising prices, like a bull lifting its opponent with its horns) and “bears” (those betting on price drops, like a bear crushing with its weight).
These exchanges quickly facilitated the shift from money to securities. In 1771, the Vienna Stock Exchange was founded specifically for trading government securities.
Exchanges then spread rapidly around the world: in 1790, the first American exchange was established in Philadelphia, followed a few years later by the New York Stock Exchange. In 1878, the Tokyo Stock Exchange was created. In Russia, the first exchange appeared by decree of Peter the Great in 1703.
A Retrospective of Market Crashes: Tulips and FTX
Given the current market situation and the turmoil in the industry, crypto skeptics claim it’s the end of crypto trading and the “death” of its short-lived history.
But first, this has been said many times before. And second, if the goal of studying history is to learn from it, let’s talk about something that has accompanied all trading throughout time — crises.
In the spring of 1559, a tulip bloomed for the first time in Augsburg, Germany. It seemed like a simple event, but within 100 years, tulips nearly crashed the Dutch economy and triggered the world’s first market crash.
Yet, the Dutch economy didn’t collapse entirely. Today, the Netherlands remains a prosperous and advanced country. Likewise, the fall of FTX won’t destroy the crypto market entirely. Yes, the overall market capitalization of cryptocurrencies dropped by 11%. Yes, traders suffered massive losses. Yes, many coins plummeted in value. But history teaches us that every crisis passes, and every downturn is followed by a new upswing.
It’s also important to remember that crises present opportunities. Many professional traders not only preserved their assets during difficult times but increased them. For example, scalpers don’t care which direction the market moves. What matters is choosing the right strategy, avoiding panic, and consistently analyzing trades. The best analysis tool for crypto traders is an automated trade journal.
Speaking of crises that truly shaped the history of global trading, many occurred in the 20th century. The first major one was the “Black Thursday” crash on October 24, 1929, marking the start of the Great Depression in the U.S. Economists say it prompted the maturing of exchange trading, drawing increased attention from governments.
Then came the “Yom Kippur Crisis” on October 17, 1973, named after the Yom Kippur War between Israel and Arab nations. OPEC countries decided not to sell oil to nations supporting Israel, causing a market crash: U.S. markets fell 45%, U.K. markets dropped 73% in a single day. It devastated many companies and impacted the banking system, yet the global economy survived.
Next was the “Black Monday” crash on October 19, 1987, when the Dow Jones plunged 22.6% in a day.
Another worldwide crisis occurred on September 15, 2008, due to the U.S. housing bubble. The bubble of insurance companies, reinsurance, and derivatives — complex financial instruments sold between banks — burst. One of the main outcomes: the wealthiest 10% of companies became even richer.
Modern Traders — Who They Are and Their Role in Trading History
Although the concept of stock and currency trading has existed for a long time, the term “trader” is relatively new in Russian vocabulary. For English speakers, it’s a well-known term used to describe someone who buys and sells assets for profit. The Russian equivalent would be something like “merchant.”
Traders, alongside brokers, have always been crucial in this ecosystem. They are the ones who make the market function by executing trades and maintaining overall market balance. Trading works best when the human element is present, and traders are the key players.
It’s no secret that the foundation of market trading lies in human psychology — especially trader psychology. Trading is often described by the cliché: “everyone ran, so I ran too,” without necessarily knowing why. The market is largely driven by the emotional reactions of the crowd. Once one group of brokers starts selling, others quickly follow. This psychological dynamic powers the market as we know it.
Modern traders are constantly evolving and adapting to new technologies to stay relevant. They are far more open than in the past, and people all over the world now have the opportunity to trade independently.
Where Is It All Headed?
Exchange trading has come a long way — from small markets where the main “assets” were fish and grain. Today, nearly every major company is publicly traded, and only stocks that pass multiple levels of regulation are listed. All of their financial reports must be public.
We interact with exchanges daily: some engage in professional investing, others in crypto trading. While it all happens online, it’s carried out via brokers and the exchange as a financial institution — without which today’s economy couldn’t function.
Technological advancements have greatly benefited trading. Brokers can now relay commands and receive client instructions much faster. In the 1980s, with the advent of computers, specialized software began managing trading operations.
The system continues to improve. Now, we see trading apps on our smartphones. Even high school students understand trading concepts and can explain why some stocks are worth more than others — something an average broker couldn’t do just a few decades ago.
