Inside a Forex Platform

In the last 10 years, and especially the last five, the Forex market has evolved with amazing speed. Today, the retail trader equipped with just a basic workstation and Internet connection can trade Forex, with the pricing and execution comparable to the interbank market. What historically was the exclusive domain of banks, multinational corporations, and hedge funds is now accessible to investors from Albany to Zurich.

Banks once made sure that Forex information was closely guarded, making the price-discovery process difficult and mistakes to outsiders costly. This inefficient market kept bid/ask spreads wide and transaction costs high. With the rise of computers, however, information can be disseminated among millions of people instantaneously, making execution significantly easier, trades less costly, and the retail trader's market price of a specific currency pair highly accurate.

Despite existing for only a few short years, Forex platforms have become highly sophisticated. They provide investors with a technologically stable, Web-based trading platform, which provides a constant flow of orderly quotes in volatile periods. Figure 8.1 shows a standard, retail trading platform.

Dealing Rates

Currency

Sell

Buy

High

Low

Intr S

Intr B

Time

EURUSD

1.0425

1.0133

1.0493

1.0471

-4.50

3.00

21

13

USD/JPY

115.67

119.67

119.75

119.71

-3.80

3.50

21

13

GRP/USD

160.00

1.6051

1.6080

1.6039

10.00

8.00

21

13

USD/CHF

1.3932

1.3937

1.3947

1.3910

-7.50

1.70

21

13

AUD/USD

1.4603

1.4510

1.4611

1.4589

-7.00

5.50

21:13

ur

DEALING RATES

4.00

ED ES R1

13 13 13

EUR/GRP

0.6565

0.6536

0.6536

0.6519

-17.50

-3.00

21

13

EUR/JPY

1.1579

1.4538

125.49

125.07

-7.10

8.70

21:

13

GRP/JPY

1.25.30

1.25.03

192.73

191.61

-15.50

16.00

21:

13

CHF/JPY

191.96

197.06

85.96

85.63

1.50

1.00

21:

13

GRP/CHF

85.09

85.09

7.7399

7.7349

-2.00

13.00

21:

13

EUR/AUD

7.2355

7.7310

1.8778

1.8156

-3.00

-3.00

21:

13

EUR/CAD

1.4857

1.4867

1.6282

1.6257

-7.50

1.00

21:

13

AUD/CAD

1.3897

1.3901

0.8955

0.8924

-3.00

1.50

21:

13

AUD/JPY

68.05

65.95

68.90

68.66

-7.50

6.00

Account

Equity

Currency PL Sell Amt $ (K) Av Sell Sell Buy Av Buy Amt $ (K)PL Buy Amt (K)Net P

Open Positions

r

t

Ticket |Account |Currency |AmtK |U.S. |Open |Close |Stop |Limit |PL |GrossPL|Com |Int |Time | |

OPEN POSITIONS

Figure 8.1—A standard, retail trading platform.

Accounts

Account

Balance

Usd Mt

Usbl Mt

Gross PL Mc

Figure 8.1—A standard, retail trading platform.

The computer code that platforms use today, such as Java, can handle an enormous amount of information without crashing or knocking the user offline. In simple terms, you know that when you log on, the platform will function.

On a single platform, a trader can expect to trade leveraged positions from $10,000 to $25 million without losing execution or price quality. And although there is major room for improvement, most Forex firms today can provide streaming, tradable, two-sided quotes with constant 3-5 pip in spreads.

All these factors make trading Forex today on platforms far less risky than five years ago.

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