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Without the first US markets, trading would probably not have occurred

When students learn about colonies, Columbus, and the Netherlands, they do not learn that all this was possible thanks to stock exchanges and securities. For about 800 years, the stock market and the trading of securities have been a fundamental part of our existence and prosperity. Each of us has something directly or indirectly to do with the stock market.

But how did the stock exchange actually come about?

When the Europeans settled in Manhattan, they built a wall to protect against the indigenous Indians. Nowadays, Wall Street is known to almost everyone and is synonymous with capitalism and the financial market of our time. When referring to Wall Street, it is often synonymous with the New York Stock Exchange (NYSE). It is the largest stock exchange in the world.
 
In 1790, the then US government issued government bonds to finance the financial burden of the American Revolutionary War. These securities could be traded. As trading in these bonds steadily increased, a total of 24 brokers laid the cornerstone for the New York Stock Exchange in 1792 with the Buttonwood Agreement. These brokers committed to trading for their clients and, in return, retained a quarter of a percent of their trading commission

The birth of the bucket shops

In those days, many small cities in the US created their own small trading centers, which enabled more and more people to access trading on the stock exchange or trading. These trading venues in many places bore the name "Bucket Shops".
 
The name derives from the fact that the money of the traders at that time in a common pot or bucket, ie a "bucket" were collected. The money raised subsequently served as collateral for the purchase of stocks, commodities and other commodities - in a credit-based fashion, which is a parallel to today's leverage, such as foreign exchange and CFD transactions. Smaller investors were thus given the opportunity to participate in investment models that would not be affordable with their own budgets and without the dealer community.

Nevertheless, the term "bucket shop" is rather negatively occupied, since the transactions for customers were made very intransparent. Many bucket shops use this position to speculate against their customers. Between bucket shop and customer an indissoluble conflict of interest existed. By the way, Bucket Shops were already banned in the US in the late 1920s.

Today, FX and CFD trading providers are typically market makers and brokers of their clients. Ideally, the CFD providers will pass on the business of their clients to the capital market. If the brokers back up their business, they do not even speculate that the customer will lose their money. In this case, the FX and CFD providers earn only on the spreads, ie the difference between buying and selling price.

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