Lesson 5: The Trading Station

Transcription

1 Lesson 5: The Trading Station Objective To understand the basic functions of the Trading Station and become proficient with market order entry, the stop loss and limit functions, closing trades manually, and record keeping. Introduction The Trading Station is a state of the art software program. It: Dynamically displays the current prices for the major currency pairs. This platform displays the combined quotes from over 12 dealing banks representing the best prices on both sides of the quoted Buy/Sell available at that time. Allows you to execute buy and sell orders directly into the forex market. Keeps track of your trades, both those currently open and those that have closed. Displays your profit and loss and your account details. This lesson teaches the basics about using the Trading Station to place trades and record the win and loss on each trade. The lesson is about functionality, not profit or loss, and understanding how the information is displayed. Please note that the illustrations in this lesson are individual and do not form a consecutive series. Help! The Trading Station provides extensive help. Click on the menu item Help and choose either Contents or User Guide. - 1 of 12 -

2 Trading Station setup We first need some customising for consistency. On the Trading Station screen you have two tab views at the bottom of the screen labelled Messages and Actions. These are not needed during the training and you can close them by clicking on the X next to each heading. Timezone Under the Advanced Dealing Rates tab the time is displayed against each currency pair. If the time showing does not match your local time, correct it like this. From the menu at the top of the screen select System then Options. Select the View format of time field option under Trading Settings, General Trading as shown: Select Local from the drop down menu and then click Apply. - 2 of 12 -

3 Skins While in the Options dialog box, under the heading Skins select XP Style Theme and click OK. This will alter the Trading Station display from black to white. Most people find this easier on the eye, and it provides a consistent reference when reviewing the lesson material and video presentations. Markets There are many different markets you can trade. While you are learning, we will restrict your trading to those markets in which you have the best chance of success. Click on the Symbols button: The Symbol Subscription List appears. Tick the boxes for these currency pairs: EUR/USD EUR/JPY GBP/USD GBP/JPY AUD/USD AUD/JPY Untick all the other currency pairs. Don't forget to scroll the list down to update all the pairs. Then click OK. For now, trade only these currency pairs. It will improve your chances of trading success. The Advanced Dealing Rates (yellow tab in the image above) section of the screen should now look something like this: - 3 of 12 -

4 Now you have a view of the Trading Station that matches the videos and screen shots of your training lessons. Other options Please do not change any other options unless specifically requested in a lesson. This is because we refer to standard colours and other settings throughout the training material. The sections of the Trading Station Advanced Dealing Rates The Advanced Dealing Rates window shows quotes box with information for each specific currency pair. Each quote box contains both a buy price (that is an ask) on the right hand side and a sell price (that is a bid) on the left hand side. The difference between the rate at which you can sell a symbol and the rate at which you can buy a symbol is the spread. The rates show in blue when they have increased from the previous value and red when they have decreased. Beneath the symbol name and the time respectively are shown the lowest price (e.g. L: ) and the highest price (e.g. H: ) so far for the day. The day starts/ends at 5pm in New York. The RollS and RollB are the costs associated with holding trades overnight. In the centre between the low and high is the spread, which also varies as the price moves. - 4 of 12 -

5 Below the spread is the current value of a 1 pip move for a 10k position size, in $A, (e.g. 1.08). Accounts This view, next to the Advanced Dealing Rates section, displays the balance of your account. If you are in any open trades the appropriate values are updated as the market prices change. Balance: Account balance. Equity: The Balance plus or minus any open trade positions. Day P/L: Today's profit or loss amount. Used Mr: The amount of margin used ($50 per $10k position). Usbl Mr and Usbl Mr %: The usable margin amount and percentage of account left. Gross P/L: The difference between Balance and Equity. MC: If a margin call has closed positions this will be Y, or else N. This means all your margin was used up and the trading prices went against you. You should never get into this position! Orders This view, just below the Accounts section, shows entry orders placed in the system for execution in the future, when a specific price is hit. This view is not used in this lesson. Open Positions The Open Position view is where any live or open trades are displayed. The Open Positions view is tabbed with two others: the Closed Positions and the Summary. - 5 of 12 -

6 This includes the: Ticket: The unique reference number for each trade. Account: Your individual account number. Demo and Live accounts have similar numbers. Symbol: The currency pair traded. Amount: The size of your position in 1000's. 10 means 10,000, 20 means 20,000 etc. S/B: Sell or Buy order, where S = Sell and B = Buy. Open: The price at which the trade was executed. This figure never changes for the trade. Close: The price the trade would be closed at if it were closed immediately. This price changes as the market fluctuates. Stop: If there is a price in this column, the Trading Station will automatically exit the trade for you at this price or worse. This price is at a less profitable position than the current price. Limit: If there is a price in this column, the Trading Station will automatically exit the trade for you at this price or better. This price is at a less profitable position than the current price. P/L: The measure of current profit or loss in pips. A minus figure displayed means the trade is losing. All trades start off negative because of the spread. Gross P/L: This is the monetary Profit or Loss and is the amount the trade is currently winning or losing. This figure fluctuates as the currency prices changes. Roll: This is the small adjustment to a trade made at the close of the day in New York (5pm NY time). It is based on the difference in interest rates between the two countries' currencies which the trade involves. It can be a charge or a credit to the open trade depending on the currencies and whether it is a Buy or Sell order. Time: The opening time of the trade. Closed Positions This tab show closed trades. The Closed Positions tab shows a summary of today's trades only. If you want more history of your trades, there is a button labelled Report at the top of the Trading Station screen where you can specify a date range. Many of the columns are the same as the Open Positions tab. You can switch between the Open, Close and Summary tabs by clicking on the tab headings to see the trades you have already made and trades that are still open. - 6 of 12 -

7 Placing trades on the Trading Station If you hover your mouse over the Buy price on the advanced dealing rates for a currency pair, the cursor changes shape into a cross hair. Now click to open a new trade. Next, the Create a Market Order dialog box allows you to select the symbol for the currency pair, Buy or Sell, and the Amount or size of position for the selected trade. To confirm and open the trade, click on OK - you hear a noise if your speakers are on and the new order is executed and appears below in the Open Positions tab window. - 7 of 12 -

8 Stops and limits Stop loss Once your trade is opened you need to add a stop loss. This is to prevent you losing more than a specified amount. Without the stop loss the trade would remain open until closed manually, and if the market moved against the trade the result could be a very large loss. For this lesson we use the example of a -20 pip stop loss, which means the most we can lose on this trade is 20 pips. Click on the empty space below the column header Stop, shown in red below: The Stop/Limit Order dialog box opens as shown at the right hand side of the above image. Tick Stop and In pips, and change the Stop value to -20 as shown below. In normal market conditions this trade can now lose no more than 20 pips and will be closed automatically by the Trading Station if the loss gets to that level. - 8 of 12 -

9 Limit We can also attach a limit order to a trade, which sets a profit target. In this example we are putting a profit target or limit amount of 20 pips. Click on the empty space below the column header Limit, shown in red below: The Stop/Limit Order dialog box opens. We tick Limit and In pips and change the Limit value to 20 as shown above. In normal market conditions this trade can now make no more than 20 pips, and will be closed by the Trading Station automatically if the profit gets to that level. Placing the stop loss and limit at the same time as placing the trade When you have the Create Market Order dialog box open, you can click on the Advanced button: - 9 of 12 -

10 The box expands to: Now you can place your stop loss and/or limit before you click OK to open the trade. This is usually a good idea as it gives you a few extra seconds to reflect on the trade while you're entering the extra information. Also, as a precaution, it is much better to have a stop in place as soon as the order is opened. A warning We advise not entering live trades at times close to major news announcements. If you do have trades open then, consider closing them prior to the news release. The broker may not be able to honour your stop loss and/or limit order during price spikes caused by low liquidity in the market. For more information, read section 13 under Manually closing a trade You need not wait for the Trading Station to close a trade. You can close it in advance yourself. There are a number of ways. Later, when you increase the size of your trades from the minimum 10K size, you can use the Close Order entry dialog box to partially close your trade, instead of closing the whole amount at once of 12 -

11 Either... Under Open Positions, click in the price in the Close column. The Close Position dialog box shown below may then be used to close the trade at the current market price by simply clicking OK. Or... Under Open Positions, Right click anywhere in the line displaying the trade: A context menu appears as shown above. Choose Close Position. The Close Position dialog box may then be used to close the trade. Or... Use the Close button at the top of the screen. The trade you wish to close must be highlighted (click anywhere on the order line first to highlight it). Again, click OK in the Close Trade dialog box. Or... Click in the line showing the trade and type Shift-C to bring up the Close Trade box of 12 -

12 Demo account expiry Your demo account lasts for thirty days. After that, when you login you will be told you password is invalid. To renew your demo account go to and listed under the menu at the right hand side of the screen is the option FXCM Demo Account. Click on this option, and follow the prompts. You will need to enter your name, address, country and phone number, then click on Register. Click on OK in the pop-up box to get to the confirmation screen. It contains your new login and password for the Trading Station. Write them down, and use them instead of your old login and password to start up the Trading Station. Your account balance will go back to $50,000 and the charts will be back to the default layout of 12 -