FXCM Trading Station II And GFT DealBook 360

Transcription

1 And GFT DealBook 360 FXCM.COM Global Forex Trading GFTForex.com by David Penn T hey say that success has many fathers. If so, then it is understandably difficult to point to a single reason why foreign exchange trading has become so popular in recent years. The collapse of the US dollar that began early in 2002 gave new life to a number of international currencies. Given the incredible run many of these currencies have seen in recent years, it is often hard to recall that the euro, for example, was once worth only 85 cents and the object of ridicule by many financial observers. Or that the Canadian dollar, which until recently was moving swiftly toward parity with the US dollar, not so long ago traded as low as 62 cents. But technology has definitely played a role. In the same way that technology helped stock trading become increasingly accessible to everyday retail traders during the latter half of the 1990s, so has technology brought a market like forex to the trading attention of those who never could have participated as little as 10 years ago. A big part of this technological offensive has been in designing order entry platforms that are both compatible with the needs of retail traders while still allowing those traders (and their trades) to scale, as their level of trading expertise and, hopefully, the size of their trading accounts grew. Unlike the revolution in stock trading in the latter half of the 1990s, much of the progress in developing and adapting trading software for retail forex traders has come from the brokers themselves. After all, unlike the world of stock trading, forex trading is still driven in many ways by the brokers. Most people who begin trading forex technically, for example, do not start off with third-party software and a separate broker who has no relation to the software with which the trader is using to analyze and trade markets. Many stockbrokers do not even have much relation to the order entry platforms used by their clients allowing many thirdparty software developers to come in and build platforms that are then made compatible with various stock brokerages. Forex trading, at this point and in contrast, remains pretty much a one-stop shop. While there are plenty of thirdparty software products, especially for technical charting, many retail forex traders not only do their charting based on charts provided by their forex broker, but also prepare and send their buy and sell orders using the order entry platform provided by their forex broker. There is nothing wrong with this, of course. And it remains to be seen whether the trend will involve more third-party charting and order entry software developers trying to work their way into the forex business (there is already evidence of this), or whether forex brokerages will maintain and expand the sort of tools from charts to order entry platforms to research to traders forums and chatrooms that retail forex traders increasingly rely on. But what is clear is that at least for the time being, a heavy burden will be on forex brokerages to provide retail traders with, if not everything, then just about everything they need to get up and running in a market that really is just beginning to grow for the retail trader. With this in mind, STOCKS & COM- MODITIES forex issue will take a look at two trading platforms currently available to retail forex traders: FXCM s Trading Station II and GFT s DealBook 360. Both platforms and all features are free with a fully funded forex account, unless noted otherwise. FXCM: PULL INTO THE TRADING STATION FXCM is one of the major forex dealers that many retail traders have flocked to in order to fulfill their forex trading dreams. Like most of the larger forex dealers, FXCM offers both regular and mini-sized accounts, the latter being an especially attractive option for those new to trading and those who are veterans of trading but new to the foreign exchange markets. The main platform for traders using FXCM as their broker is called the FXCM Trading Station II. Trading Station II is modular in design, consisting of a number of floating windows that allow traders to customize the appearance of the dealing screen. These windows are accessible either by selecting the Windows pulldown menu at the upper toolbar, or by clicking on one of the tabs below (there are three rows at the top of the dealing screen: a toolbar, a row of buttons, and then the row of tabs just mentioned). These windows/tabs contain functions and features such as dealing rates, orders, accounts, summary, open positions, closed positions, and messages. The dealing rates feature contains 25 different currency pairs, and traders can place buy and sell orders directly from this window. Each currency pair is contained in a small box with the name of the pair (for example, EUR/USD), the time per 24-hour clock, the low price accompanying the bid and the high price accompanying the offer, with the actual bid and offer also provided. In what I think is a nice touch, rather than say bid and ask, FXCM s Trading Station II uses a sell button for the bid and a buy button for the ask. This likely cuts down on the confusion that new traders in particular might feel when trying to remember which is which (Figure 1). The orders window lists the basic information about individual orders that have been processed. This includes order and account numbers, order type and status, name of the currency pair and the amount of the order (in thousands), the sell and buy rates, stop and limit levels, and a time stamp for the order. The accounts window is also a table with valuable information for the forex trader. Listed are the account number, balance, equity, daily profit/loss, used margin, usable margin expressed both in dollars and as a percentage, and gross profit/loss. The last two columns of the table include MC, which alerts the trader as to the existence of any trading limitations and Hedging, which reminds the trader whether he has enabled

2 FIGURE 1: FXCM TRADING STATION II, DEALING SPACE. FXCM s Trading Station II consists of a set of configurable windows in which traders can read price quotes, place orders, and track positions. FIGURE 2: FXCM TRADING STATION II, DEALING RATES. Forex traders with FXCM have more than 24 currency pairs and crosses to choose from when making their trades. the hedging feature. Any of these categories can be removed with a simple rightclick on the window, which provides a pop-up menu where traders can click on and off the data columns they choose. The summary window provides a good, at-a-glance review of open positions. Also constructed as a table, the summary window lists the name of the currency pair, the profit/loss for any sell/short positions, the selling amount in thousands, the average sell, and the price at which the pair was sold. Right beside this is buy side information the rate at which the pair was bought, the average buy price, the total amount of dollars long (in thousands), and the profit/loss on the long positions. Finally, a gross profit/loss and a net profit/ loss are listed. See Figure 2. The open and closed positions windows are similar in terms of what they display, although the open positions window includes categories to account for stop and limit levels and the closed positions window includes both an open time and close time data field. Beyond this, both windows list ticket and account numbers, currency pair name, amount traded and whether the position is a buy or a sell. Both the opening price and the price to close out the position are listed, as are gross profit/loss, commission, and amount of rollover for overnight positions. The last window, messages, is largely a way for FXCM to get in touch with its clients. With a simple time, form, and text format, the messages window lets traders know about system status, upcoming educational/analysis opportunities, as well as other changes that traders need to know. I mentioned earlier a string of buttons that runs across the top of the dealing screen between the toolbar and the set of tabs. These buttons allow traders to create market orders simply with a single mouse-click, or to set stop/limit orders or even close out positions. The entry button allows traders to create a limit entry order rather than simply the market order allowed by the sell and buy buttons. Next in line is the report button that allows traders to specify account, duration, and report output type in order to create a fairly extensive account summary statement. This combined account statement includes a list of closed trades, outstanding orders, open/floating positions, account activity, and a detailed account summary that notes not only the ending balance, equity, and floating profit/loss, but also the total spent (or gained) on commissions and rollover as well. See Figure 3. How does FXCM fare in terms of analytics, meaning research and charts? In large part, FXCM farms out its analytical offerings to a sister site, DailyFX, in terms of research, with a number of different charting options from various third-party vendors. Clicking on the research button in the row of buttons will bring up the home page of DailyFX, a top-notch website for news and information on the foreign exchange markets. DailyFX is a news source that is available directly to anyone interested in the foreign exchange markets, but clients of FXCM get free access to DailyFX Plus, a service that provides FIGURE 3: FXCM TRADING STATION II, CREATE AN ENTRY ORDER. This entry order ticket is one of many ways that traders can initiate orders using FXCM Trading Station II. The Advanced feature allows traders to create limit and other conditional orders. live, real-time commentary on the forex markets in addition to the rest of the commentary provided. With regard to charting, FXCM has little problem delegating the heavy lifting to others. Trading Station II provides some basic charting features, primarily through its MarketScope feature. Accessible by way of the plug-in pulldown menu, MarketScope allows traders to select a currency pair, a periodicity (monthly, weekly, daily, hourly, and a number of smaller periods), and a date range. Press enter and Trading Station II will create a price chart line, bar or candlestick to your specifications. The MarketScope chart will even allow traders to add basic technical indicators. Moving average, stochastics, and Bollinger Bands are among the numerous technical indicators that can be added to the MarketScope chart, in addition to drawing tools such as lines, Both platforms and all features are free with a fully funded forex account, unless noted otherwise.

3 FIGURE 4: FXCM TRAD- ING STATION II, CHART. The charts for FXCM Trading Station II are basic and functional, and provide a solid reference especially for traders who may use other charting services beyond what is provided by FXCM. dow. Even the little things like using sell and buy rather than bid and ask on the buttons, and making the last two digits of the price larger than the rest of the numbers and boldfaced, show how important user interface issues were to the platform s designers. The entry order tickets that appear when orders are placed are clean and simple to read, with traders being able to make more advanced trades from the same basic entry order ticket. FXCM is a solid trading platform for beginning, intermediate or even advanced foreign exchange traders. With features that allow traders to quickly close out positions, as well as an interesting hedging feature and the ability to create your own shortcut or hot keys, those with some experience in FX trading will not find FXCM s Trading Station II to be dumbed down in the least. And, most important, those who are new to the forex markets will be able to get up and running fairly quickly with FXCM s trading platform without feeling overwhelmed or lost. GFT HAS A DEAL FOR YOU GFT DealBook 360, GFT s flagship, downloadable software for the desktop (though there s also a web-based version, DealBook WEB, for beginners), comes with a number of preset layouts, FIGURE 5: GFT DEALBOOK 360, WORKSPACE. The workspace for GFT DealBook 360 comes with a few prearranged layouts including the Advanced layout shown here. All the windows are customizable, movable, and can be docked and undocked from the main workspace. labels, and Fibonacci retracements. FXCM from its webpage offers a number of different charting options. These include basic or beginner-oriented packages such as Powercharts, Net Dania, FXTrek, and Market Scope, as well as more advanced options. Some of these more advanced options include features such as automated strategy execution or the ability to backtest or do order execution directly from the price charts. And some of them, such as Ensign Windows, Aspen Graphics, and Track n Trade Forex, also offer free trials for traders to figure out which charting package best suits them. See Figure 4. What do I like most about FXCM Trading Station II? One of the things that stands out is how easy it is to see everything you need to know about your positions from even the default layout of the dealing screen. I have been frustrated with other forex platforms when I ve felt almost as if they are hiding my stop-loss level, or what my gross profit/ loss is, simply because the design makes it harder to see. I like being able to see my open positions and barely have to shift my gaze to double-check where my stops are, and my profit limit level, as well as how far ahead (or behind) I am in the trade. I also like the way FXCM displays its dealing rates in its dealing rates winand it took me a click or two until I found a layout that presented trading information in a way that seemed most accessible for me. The layout for DealBook 360 is very modular, as much so as any of the forex trading platforms I have seen in the past few years. This means that traders have a great deal of control over how the workspace looks and where the various windows are placed. For me, most important are account information, real-time profit and loss, and dealing rates. Although GFT DealBook 360 s layout proved to be an ideal configuration for me based on what I wanted most out of a workspace, it is nice to know that traders have a lot of flexibility to design DealBook 360 to their own specifications. Let s look at DealBook 360 through the view of the Advanced layout (Figure 5). Across the top of the workspace is a toolbar with seven different pulldown menus: file, view, trades, statements, analytic pages, window, and help. Below this toolbar the contents of which I will list and explain shortly is a status bar. The status bar notes the most recent trade transaction, as well as margin required for any current trades, unrealized profit/loss, cash on hand, floating profit/ loss, and total equity. A small meter in the upper right-hand corner of the status bar lets traders know the quality of their connection to the GFT servers. The status bar is completely configurable, with traders being able to add or subtract features as they choose. Below this (or, actually, behind it) is the QuoteBoard. The GFT QuoteBoard features up to 64 different currency pairs and crosses in tabular form (120 are being added in late 2007). Symbol, bid/ask, floating profit/loss (if there is an open trade in that currency pair), time of last trade, standard deviation, volatility, daily high and low, 52-week high and low, net change profit/loss in pips, and a brief description of the pair (that is, GB pound/ Japanese yen ). Traders can select which currency pairs they want to be displayed in the QuoteBoard, which itself features sortable columns that can display data in ascending or descending order. Right-clicking anywhere on the QuoteBoard allows traders to access a number of different features. For one, this allows traders to add or subtract

4 currency pairs from the listing in the QuoteBoard, a helpful feature given the currency pairs offered through DealBook 360. Right-clicking also is one way to open up a chart of a given currency pair, review price activity, or create an entry order ticket (Figure 6). Below the QuoteBoard in the Advanced layout are the open positions/ working positions and order history windows. The open position/working positions window is a table that notes the account ID number, symbol of the currency pair or cross, operation (sell/buy), position size, traded (which refers to the price of entry), last price, profit/loss, value date, profit/loss in pips, and a brief description of the pair (for example, AUD/ CAD is Australian dollar/canadian dollar). The working positions part of the open positions window is located directly below the open positions window, and while it includes similar cells, the working positions table also notes the status of the given order, type of order, order identification numbers, and so on. On the subject of orders, I should point out one feature of GFT DealBook 360 that is particularly nifty. Many times, there are features of trading software that remind us of what we are supposed to be doing as traders, whether or not that particular feature is there to do the work for us. In this case, I m referring to DealBook 360 s protect position feature. Right-clicking on an open order gives you the opportunity to protect position by setting a stop level and a limit level at the same time with the same ticket. Not only is this a handy feature in and of itself, but it is also a good reminder for traders to protect themselves from an adverse price move as well as set a level where he or she will feel comfortable taking profits should the market unexpectedly move in the trader s favor. Last of these main windows is the order history window. Here, GFT DealBook 360 tracks order numbers and times, operation (buy/sell), size and currency pair symbol, the price at which the position was taken, and the status of the order. It is a small, scalable window with sortable columns and a handy view to have in the corner of the workspace where it is out of the way and readily available. In the mood for quick moves? DealBook 360 also has a Dashboard feature (Figure 7), which allows traders to trade directly from a quoteboard-type window with a single click. Call up the Dashboard and click on either the ask or bid button of the currency pair you are interested in trading and DealBook 360 will generate a market order instantaneously. Click yes on the order confirm window that pops up and your order is en route. How are DealBook 360 s research and analytics? Traders using GFT DealBook 360 have access to newsfeeds from services such as Dow Jones News and Informa Global Markets. From the GFT website there are additional news resources including a trading blog, an economic calendar, and daily and weekly market commentary. In addition, traders can add any RSS feed to their news windows to create a custom newsfeed. But the truly impressive analytics in DealBook 360 have to do with the platform s charting. While some forex brokers have relied on the kindness and talent of others to create charting packages for them, it is clear that GFT believes that a superior charting package can be a dealmaker, if you ll forgive the pun, when trying to attract forex traders to DealBook 360. First of all, DealBook 360 provides plenty of periodicities (from tick, five-, FIGURE 7: GFT DEALBOOK 360, DASHBOARD. The fastest way to place orders in GFT DealBook 360 is often by way of the Dashboard, which graphically represents bid and ask prices for the different currency pairs as buttons for quick, one-click trading. FIGURE 6: GFT DEALBOOK 360, ENTRY ORDER TICKET. Traders can use GFT DealBook 360 s entry order system to specify order type, enter in buy or sell levels and lots, as well as create single-click order parameters for common or frequently made types of trades. 10-, and 15-minute intraday charts to the invaluable four- and eight-hour charts) that are so helpful for those who trade the 24-hour forex markets (being trapped somewhere between an hourly chart and a daily chart in forex is as unpleasant a situation as you can find when trying to chart the currency markets). DealBook 360 even has a chart view that lets traders set up multiple charts on a separate page within the workspace that can be accessed with a single click. This feature makes it easy to look at more than one periodicity at a time. The charts in DealBook 360 feature a number of excellent drawing tools, from trendlines and trend channels to Fibonacci retracements and Gann fans. DiNapoli expansion and retracement is also included, along with more Fibonacci tools such as arcs and time replacement bars. Text/labeling tools, horizontal lines, and directional arrows up and down are also a part of the DealBook 360 drawing package. Indicators referred to as studies by DealBook 360 are also present in abundance, with more than 85 different technical indicators that can be added to price charts. Average true range and Bollinger Bands, directional movement and intraday momentum, MACD and moving average, relative strength and stochastics it would be hard to top the number of technical tools DealBook 360 provides. And having these tools readily at hand rather than with a third party is another plus for DealBook 360 s charting package. But perhaps what is especially attrac-

5 ports, and account summaries. Traders can select the date range of the data they are interesting in documenting and the various reports are produced automatically afterward. GFT mentions the alarms are a favorite among their customers; they can be set up using price alone, indicators, or a combination of both. These allow traders to be notified either audibly or via text message sent to their , cell phone or PDA. Another feature offered through the platform are DealBook ATS and Chart Studio, which allow traders to build technical studies, backtest strategies, and automatically execute their trades. What impresses the most about GFT DealBook 360 is its attempt to be a onestop shop for forex traders. Clearly it accomplishes this in its highly configurable order entry platform, its adherence to what must be the 11th commandment of forex platforms ( Thou shalt have more than one way to FIGURE 8: GFT DEALBOOK 360, CHARTING/ MODIFY ORDER. Charting is one of the outstanding qualities of GFT DealBook 360. From its wealth of indicators and technical studies to the ability to see and modify stop and limit levels directly from the price chart, DealBook 360 s charts go where few forex charting platforms have yet gone. tive about DealBook 360 s charts is how interactive they are (Figure 8). Not only do the price charts show where your position is, but DealBook 360 s charts also show you where your stop and limit levels are, and allow traders to set up alerts in the event that prices intersect these various levels. Using yellow lines to show the entry level and red lines to show the stop and limit levels, DealBook 360 makes it that much easier for traders to see and understand where their positions are vis-à-vis an evolving market. What is especially cool is that traders can take this information and make adjustments to stop and limit levels directly on the price chart. All a trader need do is right-click on a stop or limit line and drag it to the preferred location. There are a number of handy features in GFT DealBook 360 from the pip calculator to indicator alarms to being able to trade almost exclusive from the price chart if preferred to the ability to add secondary symbols to price charts for comparative purposes. The reporting features of the platform are thorough and straightforward. Accessible with the statements menu in the toolbar, these reports include account histories, session histories, detail transaction-by-transaction reopen or close a trade ), and its very well-done charting package. With its studies and strategies and alertable indicators and tools, GFT DealBook 360 s charts are as sophisticated as any I ve seen offered by any other forex broker. For forex traders who are somewhat less concerned with what everybody else thinks about the markets and more concerned with being able to analyze and act upon the markets as he or she sees them, GFT DealBook 360 which comes in mobile and web-based versions as well is more than worth a free, 30-day spin around the block. David Penn is Technical Writer for STOCKS & COMMODITIES. GFT DealBook 360 S&C