What Every Currency Trader Should Know
The forex market is one of the most popular markets for speculation due to
its enormous size, liquidity, and tendency for currencies to move in strong
trends. An enticing aspect of trading currencies is the high degree of
leverage available. FX Platinum allows positions to be leveraged up to
100:1. Without proper risk management, this high degree of leverage can lead
to enormous swings between profit and loss. Knowing that even seasoned
traders suffer losses, speculation in the forex market should only be
conducted with risk capital funds that if lost will not significantly affect
one's personal financial well being.

FOREX vs. EQUITIES

24-Hour Market
The Forex market is a seamless 24-hour market, open Sunday 2pm EST through
Friday 4pm EST. With the ability to trade during the U.S., Asian, and
European market hours, traders have the advantage of immediately reacting to
market news and determining their own trading hours.

Ability to Profit in Up or Down Market
Since currency trading always involves buying one currency and selling
another, there is no structural bias to the market. This means a trader has
an equal potential to profit in a rising or falling market.

Technical Analysis
The same technical strategies and tools used to analyze the equities and
futures markets can be applied to forex. The large number of buyers and
sellers in foreign exchange combined with the strong trending nature of the
market make it the ideal market for technical analysis.

Liquidity
The spot Forex market is the largest and most liquid market in the world
with a daily volume of over $1.4 trillion. Because FX Platinum has access to the
largest banks in the world, our clients consistently receive the best
prices, spreads, and execution.

Execution Quality and Speed
Currencies have the tendency to develop strong trends. Over 80% of volume is
speculative in nature and as a result, the market frequently overshoots and
then corrects itself. A technically trained trader can easily identify new
trends and breakouts, which provide multiple opportunities to enter and exit
positions.

Analyze Countries Like Stocks
Currencies are traded in pairs so if a trader "buys" one currency he is
simultaneously "selling" the other. As with a stock investment, it is better
to invest in the currency of a country that is growing faster and is in a
better economic condition. Currency prices reflect the balance of supply and
demand for currencies. Two primary factors affecting supply and demand are
interest rates and the overall strength of the economy. Economic indicators
such as GDP, foreign investment, and the trade balance reflect the general
health of an economy and are therefore responsible for the underlying shifts
in supply and demand for that currency. There is a tremendous amount of data
released at regular intervals, some of which is more important than others.
Data related to interest rates and international trade is looked at the
closest.

Equity Market: Making the Transition to Forex
Equity markets can be used as a key indicator for movement in the forex
market. As technology has enabled greater ease with respect to
transportation of capital, investing in global equity markets has become far
more feasible. Accordingly, a rallying equity market in any part of the
world serves as an ideal opportunity for all, regardless of geographic
location. The result of this has become a strong correlation between a
country's equity markets and its currency: if the equity market is rising,
investment dollars are coming in to seize the opportunity. Alternatively,
falling equity markets will have domestic investors selling their shares of
local publicly traded firms only to seize investment opportunities abroad.
To learn more about transitioning from trading equity markets to trading
forex, contact the FX Platinum staff today.

FOREX vs. FUTURES

Liquidity
The spot Forex market is a $1.4 trillion daily market, making it the largest
and most liquid market in the world. This market can absorb trading volume
and transaction sizes that dwarf the capacity of any other market. The market is always liquid, meaning positions can be liquidated and stop orders executed.

24-Hour Market
The Forex market is a seamless 24-hour market. At 2 PM Sunday, New York
time, trading begins as markets open in Auckland, New Zealand, then Sydney
and Singapore. At 7 PM the Tokyo market opens, followed by London at 2 AM,
and finally New York at 8 AM. As a trader, this allows you to react to
favorable/unfavorable news by trading immediately. It also gives traders the
added flexibility of determining their trading day.

Reporting and Back Office Capabilities
In the spot Forex market, traders can see the value of their positions and
account equity move up and down with the market in real time. The key
information for every account is re-calculated and updated every time the
exchange rates change. Traders have immediate access to detailed information
regarding every open position, open order, and the generated P/L per trade.
Traders also have 24-hour access to full, real time snapshots of their
account statement since inception, or on a daily, weekly, monthly or yearly
basis. As a trader this means you never have to approximate your account
equity or be uncertain in regards to available margin.

Margin/Risk Management
For the purpose of risk management, traders must have position limits. This
number is set relative to the money in a trader's account. Risk is minimized
in the Spot FX market because the online capabilities of the trading
platform will automatically generate a margin call if the required margin
amount exceeds the dollar value of the account as a result of trading
losses. All open positions will be closed immediately regardless of the size
or the nature of positions held within the account. If the futures market
moves against you, your position may be liquidated at a loss and you will be
liable for any resulting deficit in the account.

Futures Market: Making the Transition to the Forex Market
Regardless of which market you are trading - be it the futures market ,
forex market, or any of the countless others - the attributes that determine
the viability of a market as an investment opportunity remain the same. Good
investment markets include: liquidity, market transparency, low transaction
costs and trending markets. All of these attributes describe the forex
market and it is exactly these characteristics that have compelled thousands
of traders to switch from trading the futures market to the forex market.
The transition from the futures market is easiest for the technical trader,
but regardless of whether you trade on technical or fundamentals, once you
become familiar with the basics of the forex market the transition should be
quite simple. For a smoother transition from the futures market to the forex
market consider taking the FX Power Course. Click here for more information
on the FX Power Course.