Trading Forex With TradeStation

Trading Forex
with
TradeStation
michael burke and jesus nava
Trading Forex
with
TradeStation
c on tents
The Forex Market........................................................................1

Who Trades Forex......................................................................1
Benefits of Trading Forex.............................................................2
Risks Associated with Forex Trading. .............................................3
Why TradeStation?......................................................................5
When Does Forex Trade?.............................................................6
Worldwide Forex Trading............................................................6
Forex Trading Specifications.........................................................7
Forex Quotes............................................................................8
Available Forex Pairs and Historical Data in TradeStation...................9
Bid-Ask Spread. ..................................................................... 10
Charting Bid and Ask.............................................................. 10
Costs of Trading Forex............................................................. 11
Forex Margin Calculations. ...................................................... 13
Carry Trade and Roll Over. ...................................................... 14
Calculating Forex Trading Profit and Loss.................................... 15
TradeStation Platform.............................................................. 17
Trading Forex in TradeStation. .................................................. 17
Advanced Order Options......................................................... 19
OCO and OSO Orders........................................................... 19
Tracking Orders and Positions................................................... 20
Rollover Adjustments in TradeStation......................................... 22
Strategy Back-Testing and Automation........................................ 23
Forex Analysis in TradeStation.................................................. 25
Chart Analysis. ...................................................................... 25
Analysis Techniques and Drawing Tools. ..................................... 26
Appendix.................................................................................. 27
Charting Indicators................................................................. 28
RadarScreen Indicators............................................................ 30
Forex Glossary.......................................................................... 38
Forex Risk Disclosure

OFF-EXCHANGE FOREIGN CURRENCY TRANSACTIONS INVOLVE THE
LEVERAGED TRADING OF CONTRACTS DENOMINATED IN FOREIGN
CURRENCY CONDUCTED WITH A FUTURES COMMISSION MERCHANT OR
A RETAIL FOREIGN EXCHANGE DEALER AS YOUR COUNTERPARTY.
BECAUSE OF THE LEVERAGE AND THE OTHER RISKS DISCLOSED HERE, YOU
CAN RAPIDLY LOSE ALL OF THE FUNDS YOU DEPOSIT FOR SUCH TRADING
AND YOU MAY LOSE MORE THAN YOU DEPOSIT.
YOU SHOULD BE AWARE OF AND CAREFULLY CONSIDER THE FOLLOWING
POINTS BEFORE DETERMINING WHETHER SUCH TRADING IS APPROPRIATE
FOR YOU.
(1) TRADING IS NOT ON A REGULATED MARKET OR EXCHANGEYOUR
DEALER IS YOUR TRADING PARTNER WHICH IS A DIRECT CONFLICT OF
INTEREST. BEFORE YOU ENGAGE IN ANY RETAIL FOREIGN EXCHANGE
TRADING, YOU SHOULD CONFIRM THE REGISTRATION STATUS OF YOUR
COUNTERPARTY.
The off-exchange foreign currency trading you are entering
into is not conducted on an interbank market, nor is it
conducted on a futures exchange subject to regulation as
a designated contract market by the Commodity Futures
Trading Commission. The foreign currency trades you transact
are trades with the futures commission merchant or retail
foreign exchange dealer as your counterparty. WHEN YOU SELL,
THE DEALER IS THE BUYER. WHEN YOU BUY, THE DEALER IS THE SELLER.
As a result, when you lose money trading, your dealer is making
money on such trades, in addition to any fees, commission, or
spreads the dealer may charge.
(2) AN ELECTRONIC TRADING PLATFORM FOR RETAIL FOREIGN CURRENCY
TRANSACTIONS IS NOT AN EXCHANGE. IT IS AN ELECTRONIC CONNECTION
FOR ACCESSING YOUR DEALER. THE TERMS OF AVAILABILITY OF SUCH A
PLATFORM ARE GOVERNED ONLY BY YOUR CONTRACT WITH YOUR DEALER.
Any trading platform that you may use to enter off-exchange foreign currency transactions is
only connected to your futures commission merchant or retail foreign exchange dealer. You
are accessing that trading platform only to transact with your dealer. You are not trading with
any other entities or customers of the dealer by accessing such platform. The availability and
operation of any such platform, including the consequences of the unavailability of the trading
platform for any reason, is governed only by the terms of your account agreement with the
dealer.
(3) YOUR DEPOSITS WITH THE DEALER HAVE NO REGULATORY PROTECTIONS.
All of your rights associated with your retail forex trading, including the manner and
denomination of any payments made to you, are governed by the contract terms established in
your account agreement with the futures commission merchant or retail foreign exchange dealer.
Funds deposited by you with a futures commission or retail foreign exchange dealer for trading
off-exchange foreign currency transactions are not subject to the customer funds protections
provided to customers trading on a contract market that is designated by the Commodity
Futures Trading Commission. Your dealer may commingle your funds with its own operating
funds or use them for other purposes. In the event your dealer becomes bankrupt, any funds
the dealer is holding for you in addition to any amounts owed to you resulting from trading,
whether or not any assets are maintained in separate deposit accounts by the dealer, may be
treated as an unsecured creditors claim.
(4) YOU ARE LIMITED TO YOUR DEALER TO OFFSET OR LIQUIDATE ANY

TRADING POSITIONS SINCE THE TRANSACTIONS ARE NOT MADE ON AN
EXCHANGE OR MARKET AND, AND YOUR DEALER MAY SET ITS OWN PRICES.
Your ability to close your transactions or offset positions is limited to what your dealer will offer
to you, as there is no other market for these transactions. Your dealer may offer any prices it
wishes, and it may offer prices derived from outside sources or not in its discretion. Your dealer
may establish its prices by offering spreads from third party prices, but it is under no obligation
to do so or to continue to do so. Your dealer may offer different prices to different customers
at any point in time on its own terms. The terms of your account agreement alone govern the
obligations your dealer has to you to offer prices and offer offset or liquidating transactions in
your account and make any payments to you. The prices offered by your dealer may or may
not reflect prices available elsewhere at any exchange, interbank, or other market for foreign
currency.
(5) PAID SOLICITORS MAY HAVE UNDISCLOSED CONFLICTS The futures
commission merchant or retail foreign exchange dealer may compensate introducing brokers
for introducing your account in ways which are not disclosed to you. Such paid solicitors are
not required to have, and may not have, any special expertise in trading, and may have conflicts
of interest based on the method by which they are compensated. Solicitors working on behalf of
futures commission merchants and retail foreign exchange dealers are required to register. You
should confirm that they are, in fact registered. You should thoroughly investigate the manner
in which all such solicitors are compensated and be very cautious in granting any person or
entity authority to trade on your behalf. You should always consider obtaining dated written
confirmation of any information you are relying on from your dealer or a solicitor in making
any trading or account decisions.
FINALLY, YOU SHOULD THOROUGHLY INVESTIGATE ANY STATEMENTS BY ANY
DEALERS OR SALES REPRESENTATIVES WHICH MINIMIZE THE IMPORTANCE
OF, OR CONTRADICT, ANY OF THE TERMS OF THIS RISK DISCLOSURE. SUCH
STATEMENTS MAY INDICATE POTENTIAL SALES FRAUD.
THIS BRIEF STATEMENT CANNOT, OF COURSE, DISCLOSE ALL THE RISKS
AND OTHER ASPECTS OF TRADING OFF-EXCHANGE FOREIGN CURRENCY
TRANSACTIONS WITH A FUTURES COMMISSION MERCHANT OR RETAIL
FOREIGN EXCHANGE DEALER.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Important Information and Disclosure

TradeStation Forex, Inc. seeks to serve institutional and active traders. Please be advised that
active trading is generally not appropriate for someone of limited resources, limited investment
or trading experience, or low risk tolerance, or who is not willing to risk at least $50,000 of
capital.
This book may discuss in detail how TradeStation is designed to help you develop, test and
implement trading strategies. However, TradeStation Forex does not provide or suggest trading
strategies. We offer you unique tools to help you design your own strategies and look at how
they could have performed in the past. While we believe this is very valuable information,
we caution you that simulated past performance of a trading strategy is no guarantee of its
future performance or success. We also do not recommend or solicit the purchase or sale of
any particular foreign currencies, commodities, securities or derivative products. Any symbols
referenced in this book are used only for the purposes of demonstration, as an example, not a
recommendation.
Finally, this book may discuss automated buy and sell alerts and/or electronic order placement
and execution. Please note that even though TradeStation has been designed to automate your
trading strategies and deliver timely order placement, routing and execution, these things, as
well as access to the system itself, may at times be delayed or even fail due to market volatility,
quote delays, system and software errors, Internet traffic, outages and other factors.
All proprietary technology in TradeStation is owned by TradeStation Technologies, Inc.,
an affiliate of TradeStation Forex, Inc. The order execution services accessible from within
TradeStation are provided by TradeStation Forex, Inc. pursuant to a technology license from
its affiliate and its authority as a registered broker-dealer and introducing broker. All other
features and functions of TradeStation are provided directly by TradeStation Technologies.
TradeStation and EasyLanguage are registered trademarks of TradeStation Technologies, Inc.
TradeStation, as used in this document, should be understood in the foregoing context.
The price charts presented in this book are for demonstration purposes only and are not a
recommendation or endorsement of the symbols or analysis displayed within the charts.
the forex market

Forex, or FX, is an abbreviation for foreign exchange. It is the mechanism of exchanging
one currency for another. This exchange rate is the basis of Forex trading and you can take a
position in expectation of the exchange rate increasing or decreasing.
The off-exchange international cash Forex markets are the biggest trading markets in the
world, with billions of dollars in transactions daily. These transactions are conducted from
Sunday to Friday through various financial institutions around the world in a global 24hour marketplace. The largest of these marketplaces include financial institutions in New
York, London, Zurich, Frankfurt, Singapore, Hong Kong and Tokyo. Off-exchange foreign
currency trading is not conducted of a futures exchange subject to regulation as a designated
contract market by the CFTC.
Almost all international currencies are traded against the U.S. dollar (USD). The next-mosttraded currencies are the euro (EUR), Japanese yen (JPY), pound sterling (GBP) and Swiss
franc (CHF). There are literally dozens of Forex currency-pair combinations that can be
traded.
Many different factors affecting supply and demand can drive the price and volatility of a
currency, including interest rates, domestic and international news, government actions,
economic indicators, and monetary policy, just to name a few.
Market access through Internet technology makes it very easy to trade these dynamic
currency markets online from anywhere in the world. But as with all trading, it is critical to
fully understand the Forex markets, risks and procedures before starting to trade.
Who Trades Forex?
There are three primary groups that utilize and influence the Forex markets:
Speculators This group accounts for the majority of all currency transactions; it
includes small-, medium- and large-sized hedge funds, along with smaller individual
traders from all around the world.
International Business The transfer of goods from one country to another is paid
in the local countrys currency. This type of trade occurs all around the world every
day. Hedgers may need to safeguard an investment or business transaction against the
potential depreciation of a currency.
Tourists To a lesser extent, people that are traveling from one country to another may
require an exchange of currency for the countries that they are visiting.
Trading off-exchange foreign currencies carries a high level of risk and may not be suitable for all investors. There is a possibility that you
may sustain a loss equal to or greater than your investment, so you should not invest or risk money that you cannot afford to lose.
Benefits of Trading Forex
Cash Forex trading offers many unique advantages compared to trading other financial instruments:
24-Hour Market Action
The Forex currency markets are a 24-hour marketplace, starting from 5 p.m. ET Sunday
to 5 p.m. ET on Friday. This gives you the flexibility to trade the Forex markets fulltime or part-time, whenever your schedule or lifestyle permits.
Liquidity
As the largest markets in the world, the cash Forex markets offer excellent liquidity at all
hours of the trading day, unlike many other 24-hour markets. This means you can trade
large amounts of currency into and out of foreign currency markets with little market
impact.
Leverage
Cash Forex trading allows you to leverage up to 50 times your account value on most
major forex pairs, minor pairs offer 20 to 1 margin. These leverage amounts may
change or may not be available at all times. For example, with 50:1 leverage, you
maycontrol100,000 units of the Euro quoted at $1.3000, using only $2,600. Remember
that while leverage can help build profits quickly, it can also produce large catastrophic
losses quickly.
Trading Opportunities
In addition to technical trading, the Forex markets offer unique opportunities to trade
foreign currency exchange rates to take advantage of international news, economic
indicators, and interest rate changes and differentials.
Risks Associated with Forex Trading
As with all financial trading instruments, there are risks you must consider before trading
cash Forex:
Leverage Risk
Leverage is the mechanism by which a trader can control a large market position with
a much smaller initial investment. TradeStation enables you to take positions of up
to 50 times greater than the value of the initial investment for major cash Forex pairs.
However, professional traders will often recommend that your open Forex positions not
exceed more than 10 times your total account value at any one time. In addition, sound
money-management techniques suggest not risking any more than 2-3 percent of your
total account value on any one trade.
Even when market conditions are relatively calm, leverage can create large gains or losses
very quickly. This may cause your broker to take action to avoid a negative account
balance or to avoid your account exceeding that maximum allowed margin. In either
case, your broker, without prior notification, may close any or all open positions in
the account to remedy the situation. You are responsible for the risks you take and the
consequences of those risks, positive and negative, on every trade you make. Because of
the highly leveraged risk inherent to cash Forex, Forex trading may not be suitable for all
traders.
Price Risk
Forex prices are quoted and charted using only the current bid price stream; there is no
concept of a last price in Forex. TradeStation offers analysis and trading tools that allow
you to visualize and measure the bid-ask spread.
Since the transactional cost of trading Forex is tied to the bid-ask spread, it is important
to understand what the normal bid-ask spread is for any pair, and what that spread
means in the actual cost per trade. The bid-ask spread can also fluctuate throughout
the trading day and is often a function of the liquidity of the Forex pair; you may also
see slightly wider bid-ask spreads in quiet market situations, especially on lightly traded
Forex pairs. Just like any trading market, Forex prices are driven by short- and longterm supply and demand, which can cause prices to move rapidly and often erratically.
Traders need to employ sound risk-management techniques on each and every trade.
Interest Rate Risk
Traditionally, if a countrys interest rates rise, its currency will normally strengthen
because investors will shift their assets to that country to gain higher returns. Conversely,
if a countrys interest rates fall, its currency will normally weaken as investors shift
money away looking for higher returns.
Consequently, if the interest rate differential of one currency versus another increases
or decreases dramatically, the exchange rate and thus Forex prices may also dramatically
change.

News and Economic Risk

In our global economy, news from anywhere in the world can affect the Forex markets
in many ways. These effects can manifest as rapid price movements or changes in trend
direction or long-term outlooks. It is prudent when trading either long term or short
term to keep your eye on news and other factors like government reports that can affect
your profitability.
Governments gather economic activity statistics and release reports almost every day.
The challenge is figuring out which reports may have an effect on Forex prices. Below
is a short list of the most widely followed reports. Remember that not all countries offer
every report, and it is a good idea to monitor how certain reports affect Forex prices
before trying to trade based on news and government reports.
Gross Domestic Product (GDP) The sum of all goods and services produced
in a country by both domestic and foreign companies. Increasing GDP indicates a
growing economy.
Industrial Production The change in production or capacity of the nations
factories, mines and utilities. Increasing production generally indicates a growing
economy.
Consumer Price Index (CPI) A measure of the average price level paid by
consumers. Increasing CPI may indicate a growing economy. Changes in CPI can
also affect nominal interest rates.
Non-Farm Payrolls The number of new jobs created by the economy during the
previous month and the percentage of workers seeking employment who remain
unemployed. Increasing employment generally indicates a growing economy.
Operational Risk
Brokers face operational risk as they transact their daily business activities. Some of these
risks arise as internal procedures, human resources, organizational structure, technology,
etc. Although they do not impose a risk to the market system as a whole, they could
prevent you from monitoring positions or placing orders. Forex traders should always
maintain backup procedures in case the Internet, the trading platform, or the broker
fails.
Settlement Risk
In a foreign exchange trade, one party delivers currency while the other takes delivery of
the currency. Settlement risk is the possibility that one of the parties in the transaction
fails to fulfill their responsibility.
why tradestation?
There are many Forex brokers out there to choose from, but what ultimately sets one Forex
broker apart from the others is the ability to provide a complete Forex trading solution
with all the resources clients need to accomplish their trading goals.
Advanced Multi-Asset Trading, Data and Analysis Platform
The award-winning TradeStation trading platform offers unlimited analysis potential for
every level of trader, driven by world-class data and the ability to back-test ideas before
risking your money.*
Regulated Industry Leader
Unlike stocks and futures, there are no exchanges or clearing houses that guarantee all Forex
transactions, which makes it critical to know who you are dealing with when you trade Forex
and who the trustee of your assets is. TradeStation has been in business since 2002.
Financial Strength
TradeStations management team has a proven record of innovation and success. The
company is financially sound with a strong balance sheet.
Lower Trading Costs
When trading cash Forex with TradeStation, you pay NO commissions. TradeStation
makes the same amount of money on each forex trade from a markup embedded in the
spread, which is the difference between the bid price and the ask price. There are no
real-time data fees; all real-time and historical Forex price data is free. And there are no
monthly service fees for Forex-only accounts.
Competitive Spreads
TradeStation brings together multiple competing banks to provide greater liquidity and
better access to competitive Forex market spreads. And TradeStation DOES NOT trade
against any client position.
Hold Multiple Currencies in Your Account
To allow for more flexibility in your Forex trading, TradeStation will allow you to hold
multiple currencies in your account in addition to your native currency.
Educational Resources
To get you up and running quickly with TradeStation, we offer an extensive set of
FREE online educational tools that include online courses and seminars, video tutorials,
archived videos, QuickTips, and PDF books.
*Ratings and awards are based on; (1) for Stocks & Commodities, in each award category, the company that receives the highest number of votes cast by the
magazines subscribers over a fixed time period that ends shortly before announcement of the awards; (2) for TraderPlanet.com, individual reviews of products
and services by the TraderPlanet editorial staff to determine the finalists, followed by voting by the full TraderPlanet membership to choose the winners during a
two-month voting process that ends shortly before the announcement of the awards. You may contact TradeStation if you are interested in learning more about
these ratings and awards. (3) for Barrons, a hands-on review of each companys online brokerage products and services by a Barrons journalist, in several
categories, after which numerical scores are assigned per category and aggregated to determine overall numerical score and star rating. You may contact the
company if you are interested in learning more about these ratings and awards. Barrons is a registered trademark of Dow Jones.
When Does Forex Trade?

Forex trading takes place in all major financial centers across the globe. The Forex trading
market is open 24 hours a day, from Sunday at 5 p.m. ET through Friday at 5 p.m. ET.
Although the Forex markets are open almost all of the time, some trading hours may present
better opportunities for traders based on market activity and price action.
Worldwide Forex Trading
Forex trading opens in Asia with Japan, New Zealand, and Australia (with Japan being the
biggest player), then in the Middle East, followed by Europe (primarily London) and the
U.S.
Approximate Worldwide Forex Trading Hours:
Asia: 6 p.m. 3 a.m. ET
Europe: 2 10 a.m. ET
USA: 9 a.m. 3 p.m. ET
These hours are usually the time when the Forex markets are the most active, have the
largest volume of trades and the biggest price movements. Notice that these market
hours will overlap and trading activity can increase during these overlapping periods.
Quiet market conditions typically occur from 4p.m. to 6p.m. ET when no major
financial centers are active.
Note: The FX_Trading Time Zones indicator, displayed on the chart above, is part of the
Forex Trader Pack of indicators available as a download with the book.
Forex Trading Specifications
Just like any other trading instrument, cash Forex has product specifications and trading
characteristics that the trader needs to understand thoroughly before trading.
What are you trading when you trade cash Forex?
When you buy or sell in the cash Forex market, you are anticipating that the value or exchange
rate of a specific currency is going to increase or decrease in relation to that of a different
currency. There are dozens of unique currency pairs that you can trade. In order to fully
appreciate this concept, it is important to understand the nature of cash Forex pair symbols.
Base Currency (EURUSD)
The base currency in a Forex symbol is the first symbol notated. In the case of
EURUSD, the base currency is EUR (euro). This is the currency you are buying or
selling. For example, if your trade size is 100,000, you are buying or selling 100,000
Euros against U.S. dollars.
Quote Currency (EURUSD)
The quote currency, sometimes called the secondary or terms currency, is the second
symbol notated in a Forex symbol. In the case of EURUSD, the quote currency is USD
(U.S. dollars). This is the currency price being quoted. For example, if EURUSD is
currently quoted at 1.2510 Bid/1.2512 Ask, then you would pay $1.2512 U.S. dollars
to buy 1 euro and receive $1.2510 U.S. dollars to sell 1 euro. The realized profit or
loss of a trade is always based on the quote currency, and is automatically converted
into your native account currency at the end of the session, based on the current
conversion rate.
Forex Quotes
Most Forex symbols are quoted out to four decimal places, with the primary exception of
the Japanese yen, which is quoted out to two decimals. TradeStation quotes out all pairs to
another decimal place, creating fractional pips, which allows for greater quote precision and
tighter bid-ask spreads.
Pip
A pip is the smallest price/rate change movement.
Example 1 (EURUSD)
1 pip in EURUSD is quoted as .0001 U.S. dollars; if you are trading 100,000 units
that would make one pip worth 10 U.S. dollars. (100,000 X .0001) = $10.
Example 2 (USDJPY)
1 pip in USDJPY is quoted as .01 Japanese yen; if you are trading 100,000 units
that would make one pip worth 1,000 Japanese yen. (100,000 X .01) = 1,000 yen.
Note: If the quote currency of the trading symbol is not in your native account currency (e.g.,
U.S. dollars), a balance in this quote currency is generated in your account. This balance is
automatically exchanged into your native account currency at the end of the trading session
using a conversion factor. In example 2 above, any realized profit or loss trading USDJPY
would be in yen. However, this profit or loss is automatically exchanged or converted back
into U.S. dollars and placed in your account at the end of the trading session.
Available Forex Pairs and Historical Data in TradeStation

Although there are many available currency pairs to trade, the major pairs primarily traded
include U.S. Dollar, Japanese Yen, Euro, Swiss Franc, and British Pound. Many of the major
currencies or pairs have trader nicknames: Aussie = Australian dollar, Cable = GBPUSD pair,
and Sterling = British Pound.
Symbol
Description
Daily Data
Start Date
Minute Data
Start Date
AUDCAD
Australian Dollar / Canadian Dollar
10/22/2007
10/22/2007
AUDCHF
Australian Dollar / Swiss Franc
10/29/2002
07/02/2007
AUDJPY
Australian Dollar / Japanese Yen
04/09/1998
10/21/2002
AUDNZD
Australian Dollar / New Zealand Dollar
10/22/2007
10/22/2007
AUDUSD
Australian Dollar / U.S. Dollar
01/04/1971
10/21/2002
CADCHF
Canadian Dollar / Swiss Franc
06/01/1999
11/28/2007
CADJPY
Canadian Dollar / Japanese Yen
03/14/2007
03/14/2007
CHFJPY
Swiss Franc / Japanese Yen
04/09/1998
10/21/2002
EURAUD
Euro / Australian Dollar
12/03/2000
10/21/2002
EURCAD
Euro / Canadian Dollar
03/14/2007
03/14/2007
EURCHF
Euro / Swiss Franc
01/03/1999
10/21/2002
EURGBP
Euro / British Pound
01/03/1999
10/21/2002
EURJPY
Euro / Japanese Yen
01/03/1999
10/21/2002
EURNOK
Euro / Norwegian Kroner
09/05/2008
09/04/2008
EURNZD
Euro / New Zealand Dollar
10/29/2002
08/16/2007
EURSEK
Euro / Swedish Krona
09/05/2008
09/04/2008
EURUSD
Euro / U.S. Dollar
01/05/1998
10/21/2002
GBPAUD
British Pound / Australian Dollar
10/22/2007
10/22/2007
GBPCAD
British Pound / Canadian Dollar
10/22/2007
10/22/2007
GBPCHF
British Pound / Swiss Franc
04/09/1998
10/21/2002
GBPJPY
British Pound / Japanese Yen
04/09/1998
10/21/2002
GBPNZD
British Pound / New Zealand Dollar
10/29/2002
08/16/2007
GBPUSD
British Pound / U.S. Dollar
01/04/1971
10/21/2002
USDCAD
US Dollar / Canadian Dollar
01/04/1971
10/21/2002
USDCHF
US Dollar / Swiss Franc
01/04/1971
10/21/2002
USDJPY
US Dollar / Japanese Yen
01/04/1971
10/21/2002
Most-Active Forex Pairs:

EURUSD, USDJPY, EURJPY, GBPUSD and USDCHF
Note: TradeStation may offer or add additional currency pairs to trade that are not listed
here. You can view all available Forex symbols within the TradeStation platform from the
Symbol Lookup dialog.
Bid-Ask Spread
The bid and ask prices/rates determine the entry and exit prices for each trade. Entering a
new long BUY order or closing an existing short position with a BUY order is executed at the
ASK price. A new short SELL order or closing a long position with a SELL order is executed
at the BID price. The difference between the bid and ask prices is called the spread, and is
the transactional cost of a Forex trade.
TradeStation, like all other Forex dealers, makes money on the difference in the bid-ask
spread for each completed trade. It is important to fully understand this transactional spread
cost concept and to be fully aware of the costs associated with every Forex trade you make.
Note: The values under the BA Sprd$ column above are based on 10,000-unit trades in a
U.S. dollar-based account, but the values can be based on the quote currency of the symbol
by formatting the Indicator and selecting Currency Based on: Symbol in the General tab.
Charting Bid and Ask

In TradeStation, historical and
real-time Forex data is based on
the BID data stream only. There is
no concept of a trade tick in cash
Forex.
Since ASK prices are not displayed

as part of the bar, you may see
BUY orders filled above the bar.
Note: In the chart above, the BID
and ASK spread is displayed on the
last bar as a thicker bar, with the
spread in pips below.
Note: The FX_BidAsk Charting and FX_BidAsk Pip Spread indicators are part of the
Forex Trader Pack of indicators available as a download with the book.
10
Costs of Trading Forex
Experienced Forex traders know that the major costs to initiate any trade are the spread
between the bid and ask prices, plus any commission costs. The spread and commission costs
will put your position immediately into the negative when entering a trade. This negative
amount must be overcome before the position can become profitable.
Pip Spread Trade Cost
Although there are no commissions when trading Forex with TradeStation, the bid-ask
spread can be a significant trading cost to overcome if you trade frequently or trade less
active Forex pairs. The following examples show you how to calculate these costs.
Pip Spread Trade Cost Example 1: Long Trade EURUSD
Symbol = EURUSD, Units Traded = 100,000, Buy at the Ask @ 1.27410

Pip Spread Trade Cost = $14.00 USD
(1.27410 - 1.27396 = 0.00014* 100,000 Units)
Pip Spread Trade Cost Example 2: Short Trade EURUSD
Symbol = EURUSD, Units Traded = 100,000, Sell at the Bid @ 1.27396
(1.27410 - 1.27396 = 0.00014* 100,000 Units)
Pip Spread Trade Cost Example 3: Long Trade USDJPY
Symbol = USDJPY, Units Traded = 100,000, Buy at the Ask @ 88.351
(88.351 88.339 = 0.012* 100,000 Units * .01132 Conversion Factor)
Pip Spread Trade Cost Example 4: Short Trade EURCHF
Symbol = EURCHF, Units Traded = 100,000, Sell at the Bid @ 1.34000
(1.34041 1.34000 = 0.00041 * 100,000 Units * .95024 Conversion Factor)
Note: Conversion factors are based on U.S. dollars.
11
Costs of Trading Forex
Generally, the more active and liquid a currency pair is, the smaller the transactional bid-ask
spread costs tend to be.
Sample (as low as) Bid-Ask Pip Spreads
Note: Pip spreads will fluctuate under different market

conditions and will often exceed these minimum spreads
throughout the day. Always be aware of the actual bid-ask
spread costs before making any Forex trade.
Sample Conversion Factors
Conversion factors are used to convert the profit or loss
of a non-U.S. dollar-based Forex trade into your accounts
native currency. These factors are based on the exchange
rate at the time the conversion is made.
Remember that the profit or loss of a Forex trade is always realized in the symbol quote
currency, then this profit or loss is automatically converted into your native account currency.
Lets say your native account currency is the U.S. dollar and you have a profit in a
EURJPY trade. That profit is in YEN; so your YEN would have to be sold at the bid into
dollars in order to sweep it into your account currency. If you have a loss, then you need
to buy YEN at the ask to cover the loss.
Note: This requires two different conversion factors for either profitable trades or for losing
trades, depending on which currency needs to be bought or sold for the final conversion into
your native account currency.
12
Forex Margin Calculations
In order to place a Forex trade, your broker will set aside a portion of your account funds to
guarantee payment for any potential loss of the position. Margin can be thought of as a good
faith deposit required to maintain an open position. This is not a fee or a transaction cost.
Calculating Forex Margin
The initial margin to trade a major Forex pair is 2% of the trade value (50 to 1)
converted to your native account currency. Margin rates are subject to change. Minor
Forex pairs offer 20 to 1 margin rates or 5% of the trade value. However, most
commonly traded Forex pairs are considered majors. Note: Examples below use U.S.
Dollars as the native account currency.
Example 1: USD Base Currency
Based on a 2% margin requirement, the margin for each dollar-based currency pair,
where USD is the base currency (first part) of the symbol, is generally 2%, or $200 for
every $10,000 U.S. dollars traded.
In this example, if 100,000 units are traded, since USD is the
base currency the trade value equals $100,000 U.S. dollars. So
USDJPY
101.569
with a 2% initial margin requirement, this trade would require
approximately $2,000 of margin.
Symbol
Last
Example 2: USD Quote Currency

The margin required for each non-dollar based currency pair, where USD is NOT the
base currency (first part) but is the quote currency (second part) of the symbol, is 2% of
the value of the base currency times the current price.
In this example, if 100,000 units are traded, the trade value
equals 100,000 X 1.33003 = $133,003 U.S. dollars, so with
EURUSD 1.33003
a 2% initial margin requirement, this trade would require
approximately $2,660 of margin.
Symbol
Last
Example 3: Cross-Currency Pairs

The margin required for a non-dollar cross-currency pair is the same calculation as in
Example 2 above, which is 2% of the value of the base currency times the base currencys
exchange rate to U.S. dollars, or to your native account currency.
In this example, if 100,000 units are traded, the trade value
equals 100,000 X 135.161(EURJPY) = 13,516,100yen.
EURJPY
135.161
Then converted back to U.S. Dollars, 13,516,100 /
101.569(USDJPY) = 133,073 U.S. dollars. So with a 2% initial margin requirement,
this trade would require approximately $2,661 of margin.
Symbol
Last
Note: Margin trading involves risks and you should understand those risks before trading:
You can lose more money than you deposit in your margin account
Your brokerage firm can sell your assets without contacting you.
13
Carry Trade and Roll Over
In the Forex market, interest rate differential adjustments happen at the end of every trading
day for all open positions. At the end of each session (5p.m. ET), all positions are closed and
then reopened (rolled over) automatically for the next trading day, which begins just a few
minutes later, except on Friday.
At the end-of-session rollover time each day, the interest rate differential between the two
currencies is either credited or debited to your account in a cash transaction. Over the
weekend, you are credited or debited with three days worth of interest rate differential.
Forex Carry Trade
The Forex carry trade involves trading a cash Forex pair in which you are selling the
base currency with a lower interest rate and buying the quote currency with a higher
interest rate, or buying the base currency with a higher interest rate and selling the quote
currency with a lower interest rate. The idea is to pay the low interest rate and collect the
higher interest rate, creating a profit from the interest rate differential.
The leverage available in Forex can make this a very attractive trade, since your Forex
trade allows you to control a large amount of currency for a small amount of margin.
The carry trade is normally a long-term strategy that can generate income and profits.
However, you are still at risk for price moves against your position in the underlying
currencies, so market direction is also critical to the carry trade. You need the currency
prices to remain stable or move in your direction during the life of the carry trade.
Sample Roll Rates in U.S. Dollars:
Notes: The actual Forex prices/rates for each pair are adjusted by the roll amount on the
open of the next session. Interest rate differential roll values may change on a daily basis and
are based on the native account currency which at this time only supports the U.S. dollar.
Example:
Lets say you are long 100,000 AUDJPY in a U.S. dollar-based account, and you carry
the position into the next trading session. Using the table above, AUDJPY shows that
$7.02 would be credited to your account as of the open of the next session. If you were
short 100,000 AUDJPY, $18.72 would be debited from your account as of the open of
the next session.
14
Calculating Forex Trading Profit and Loss
Although the TradeStation trading platform automatically does the estimated profit and loss
calculations for you in real time, it is important to understand how these P&L equations are derived.
Forex Profit and Loss Long Trade = (Closing Price - Opening Price) * Conversion Factor * Trade Size
Forex Profit and Loss Short Trade = (Opening Price - Closing Price) * Conversion Factor * Trade Size
Sample P&L Scenarios:
Example 1: Long 100,000 EURUSD at 1.23200 U.S. Dollar Native Account Currency
The above position is closed at: 1.24350
(Closing Price - Opening Price): 1.24350 - 1.23200 = .01150 (Profit)
(Profit X Conversion Factor): .01150 X 1.0 = .01150 (Conversion Profit)
(Conversion Profit * Trade Size): .01150 X 100,000 = $1,150.00 (Total Profit)
Example 2: Short 100,000 USDJPY at 89.200 U.S. Dollar Native Account Currency
(Opening Price - Closing Price): 89.200 - 89.550 = - .350 (Loss)
(Loss X Conversion Factor): -.350 X .01145 = -0.0040075 (Conversion Loss)
(Conversion Loss * Trade Size): -0.0040075 X 100,000 = -$400.75 (Total Loss)
Example 3: Long 100,000 EURJPY at 88.200 U.S. Dollar Native Account Currency
(Closing Price - Opening Price): 88.350 - 88.200 = .150 (Profit)
(Profit X Conversion Factor): .150 X .01145 = 0.0017175 (Conversion Profit)
(Conversion Profit * Trade Size): 0.0017175 X 100,000 = $171.75 (Total Profit)
Example 4: Short 100,000 GBPCHF at 1.60400 U.S. Dollar Native Account Currency
(Opening Price - Closing Price): 1.60400 - 1.61050= - .00650 (Loss)
(Loss X Conversion Factor): -.00650 X .95963 = -0.006237595 (Conversion Loss)
(Conversion Loss * Trade Size): -0.006237595 X 100,000 = -$623.76 (Total Loss)
Note: All examples are hypothetical trades that use sample prices and conversion rates.
15
Important Disclosure
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF
WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT
WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT,
THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE
RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR
TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE
GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL
TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD
CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING.
FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR
TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO
ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS
RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC
TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF
HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT
ACTUAL TRADING RESULTS.
16
tradestation platform
For traders, todays unpredictable financial markets present unprecedented challenges. Yet the
keys to successful trading focus, discipline, consistency remain constant. And thats where
TradeStation comes in. With TradeStation, you can develop and execute trading strategies
that are based on informed analysis, rather than on emotion, impulse or guesswork.
TradeStation offers a complete trading solution, allowing you to:
Create custom strategies and back-test them against our extensive historical database
Trade your strategies in live simulated trading before risking your money in the market
Identify trading opportunities with superior charting and analytical tools
Use your computer to fully automate and execute your strategies in real time.
Since the June 2001 release of the TradeStation electronic platform, TradeStation Forex Inc.s
affiliate, TradeStation Securities, has been repeatedly rated the best online brokerage firm
for active traders.* TradeStations award-winning combination of advanced technology and
brokerage services can help you take your trading to the next level.
Trading Forex in TradeStation

TradeStation Quick Trade Bar
The Quick Trade Bar is a dynamic tool that simplifies the placing of market and limit orders
and the monitoring of price quotes for different Forex currency pairs. It offers an enhanced
*Ratings and awards are based on; (1) for Stocks & Commodities, in each award category, the company that receives the highest number of votes cast by the
magazines subscribers over a fixed time period that ends shortly before announcement of the awards; (2) for TraderPlanet.com, individual reviews of products
and services by the TraderPlanet editorial staff to determine the finalists, followed by voting by the full TraderPlanet membership to choose the winners during a
two-month voting process that ends shortly before the announcement of the awards. You may contact TradeStation if you are interested in learning more about
these ratings and awards. (3) for Barrons, a hands-on review of each companys online brokerage products and services by a Barrons journalist, in several
categories, after which numerical scores are assigned per category and aggregated to determine overall numerical score and star rating. You may contact the
company if you are interested in learning more about these ratings and awards. Barrons is a registered trademark of Dow Jones.
17
display of real-time prices by highlighting the decimal places representing the pip value of a
quote. Single clicking on the Bid to sell and on the Ask to buy provides a better perception of
the inherent transactional cost. You may also place market orders, close positions, and adjust
the quantity with single-click buttons.
Forex Market Depth
Since TradeStation brings banks together to compete and offer you the best spread, the
Market Depth window is able to display three levels of bid and ask prices with the size of
currency at each price level. This information allows you to gauge the strength and size of
markets. At a glance you will know the price that an order may get filled based on liquidity.
You may also compare the amount of liquidity between the bid and the ask and use this as an
indicator of market pressure or sentiment. Having greater liquidity on any side of the bid-ask
spread could indicate that prices may move in that direction.
TradeStation Order Bar
The TradeStation Order Bar is the order-entry facility for discretionary trades. Its design
emphasizes simplicity and speed. With a click of your mouse, you can easily select the route,
order type and duration for your order. Order types include Limit, Market, Stop Market and
Stop Limit. The durations include Day, Good till Cancel (GTC), Good till Day (GTD),
Immediate or Cancel (IOC) and Fill or Kill (FOK). Multiple accounts can be managed
from the convenient drop-down list, and default settings for most choices can easily be set or
changed at any time. By using the Buy and Sell buttons, you may open and close currency
positions.
18
Advanced Order Options
The TradeStation order entry tools provide additional advanced functionality. Some of these
advanced order features are:
Activation Rules: Place an order only when your predefined time- and/or price-based
conditions are met. With activation rules, your order is held on the TradeStation Order
Execution servers until the specified conditions are true, at which time the order is sent
to the market.
Trailing Stops: Profit from a currency pairs movement and limit your downside risk
without the need to constantly monitor the stock. With trailing stops, your stop price
moves along with the price of the stock, as the TradeStation Order Execution servers
constantly monitor your order, protecting you in case of loss of connectivity.*
If Touched: Market-if-Touched (MIT) orders are the opposite of stop orders. Buy MIT
orders are placed below the market and Sell MIT orders are placed above the market.
MIT orders are usually used to enter the market or initiate a trade. They are similar to
limit orders in that a specific price is placed on the order. However, MIT orders become
market orders once the limit price is touched or passed through.
OCO and OSO Orders
The ability to send multiple orders simultaneously adds efficiency to your trading. OCO and
OSO functionality is available via the TradeStation Order Bar and Matrix.
Order Cancels Order (OCO) An OCO order consists of a group of two or more
parallel orders that are linked together in such a way that if one of the orders is filled,
then all of the other parallel orders are cancelled.
Bracket OCO A Bracket OCO consists of two exit orders with the same symbol,
quantity and order action (Buy or Sell). When one of the orders is partially filled, the
other orders quantity is automatically decremented by the same amount.
Order Sends Order (OSO) An OSO order consists of a primary order that will send
one or more secondary orders when the primary order is filled. OSO orders can be used
in combination with Bracket OCO orders when you want to have a Bracket OCO
Order (stop loss and profit target) sent once the initial order is filled.
To expedite the creation of OCO, Bracket OCO and OSO orders, TradeStation includes a
set of order templates that may be selected right from the OCO/OSO menus.
*The placing of certain orders (e.g. stop-loss orders or stop-limit order), which are intended to limit losses to certain amounts, may not be effective
because market conditions may make it impossible to execute such orders.
19
Tracking Orders and Positions
TradeStations TradeManager is an advanced order-management system that allows you

to easily view and manage your orders and positions on a real-time basis. All it takes is a
single glance at your screen to see the real-time status of all your open, cancelled and filled
orders, open positions, real-time profit/loss and much more. Multiple accounts can be easily
managed from a convenient drop-down list.
Orders Tab
The Orders tab displays all your orders for the day, color-coded based on the order status
(i.e., open, filled, cancelled, etc.). The colors change automatically as the order status
changes. You can easily filter the view based on order status (open, filled, etc.) and/or account
number, and sort on any column to quickly find a desired order. To cancel an order, simply
right-click on the displayed order and choose Cancel/Close. The TradeManager window
also allows you retrieve historical orders and trading activity.
Position Tab
The Positions tab displays your current long and/or short open positions, color-coded so you
can see them at a glance. Winning positions are highlighted in green and losing positions are
highlighted in red. Flat positions are shown in a darker shade of color to differentiate them
from open positions. In addition, you may format the TradeManager window to display
other helpful information such as cumulative profit and loss, and conversion factors.
Balances Tab
20
The Balances tab of the TradeManager window provides extensive information on the funds
in your account. You have access to information such as Beginning Day Cash Balance,
Real-time Purchasing Power, Conversion Factors for each of the currency pairs traded, and
a detailed breakdown of realized and unrealized profit and loss for each of the positions
transacted during the trading day. The Native (USD) column displays an estimated U.S.
dollar value of your real-time profit and loss for your convenience.
Position Graphs
Once youve placed an order, TradeStations unique PositionGraphs allow you to track your
positions with a glance at your Position Graph Bar. PositionGraphs graphically display each
positions drawdown, current profit/loss and run-up in percentage or the account currency
amounts. Advanced color coding allows you to easily identify profitable positions displayed
in green and losing positions displayed in red. PositionGraphs also enable you to quickly
close or reverse a current position by simply right-clicking your mouse on the appropriate
PositionGraph and selecting the close position or reverse position option. Enabling
cumulative profit and loss allows you to keep track of how much a particular currency pair
has affected your accounts overall performance.
21
Rollover Adjustments in TradeStation

At 5 p.m. ET, any open Forex
position in TradeStation is
exchanged for a new position to
expire the following settlement
date. The interest rate differential
between the two currencies is
either credited or debited to your
account in a cash transaction. If
you are long the currency bearing
the higher interest rate, then you
should receive a credit in your
account. On the other hand, if
you are short the currency bearing
the higher interest rate, then you
should receive a debit in your account.
This information is accessible via the TradeStation Support Center at

www.TradeStation.com. These credits and debits are applied on a daily basis and are clearly
identified as part of your daily trades and other transactions.
You may view rollover rates and the adjustment amounts for currency pairs by using two
TradeStation built-in indicators called FX Roll Acct Value and FX Roll Rates. These two
indicators can be used in RadarScreen and Chart Analysis windows, and they display the
rollover rates that are applied each day and the amounts that are debited and credited for
both long and short positions.
22
Strategy Back-Testing and Automation
One of TradeStations most significant advantages is that it enables you to design, historically
test and optimize your own custom trading strategies before you risk a penny of trading
capital. With hundreds of technical indicators to choose from along with TradeStations
proprietary EasyLanguage technology you can create strategies ranging from simple to
complex. You can design strategies with multiple entry and exit signals, order types, money
management rules and more. TradeStation gives you the power to translate your trading ideas
into a multitude of custom strategies.
The chart below contains a TradeStation built-in strategy based on a 2-Line Moving Average
crossover. The rules of this strategy are tested against historical data and the Chart Analysis
window displays a signal wherever the strategy would have bought or sold based on the
moving average crossover. TradeStation enables you to test your strategies using one of the
industrys most extensive historical databases. You may test your trading ideas and strategies
against days, weeks or even years of historical data.
With TradeStation Simulator, you can do more than back-test your strategies against
historical market data. Just like a live TradeStation brokerage account, TradeStation
Simulator allows you to trade your strategies in todays markets and see the results in real
time but without risking a penny of your own money. TradeStation Simulator also gives
you the opportunity to gain hands-on experience with all the advanced features of the
TradeStation platform.
23
Strategy Performance
TradeStations Strategy Performance Report allows you to analyze how your strategy could
have performed historically. You are able to see your net profit or loss, annual rate of return,
number of winning and losing trades and much more. The report not only shows how
your strategy could have performed in the past, but may also provide insights into potential
opportunities in todays markets.
The Strategy Performance Report may be formatted to display values in the foreign currency
or the account currency. By default, a strategy uses the currency of the quote symbol in a
currency pair. For example, if a strategy is applied to USDJPY, all calculations will be done
based on the Japanese yen. You may change this behavior by adjusting the strategy properties
and changing the base currency. Values such as commissions, slippage and initial capital will
display based on the selected currency. In addition, built-in stops, analysis techniques, and
other strategy calculations will be affected by the currency selected.
With TradeStation, you
can automate virtually any
trading strategy imaginable,
with multiple conditional
entries and exits, profit
targets, protective and
trailing stops and much
more.* While TradeStation
allows you to execute trades
manually at your discretion, automated trading gives you a host of powerful advantages:
TradeStation continuously monitors the markets, identifies trading opportunities based

on your rules and sends your orders within fractions of a second for execution
TradeStation allows you to monitor dozens or even hundreds of symbols at once

TradeStation helps you combat the urge to trade based on emotion or impulse, by
getting you in and out of the market based on your pre-determined strategy.
*The placing of certain orders (e.g. stop-loss orders or stop-limit order), which are intended to limit losses to certain amounts, may not be effective
because market conditions may make it impossible to execute such orders.
24
Forex Analysis in TradeStation

Chart Analysis
In addition to offering conventional time-based charts such as Open-High-Low-Close bar

charts and candlestick charts, TradeStation also provides market-driven chart types that
concentrate on price movement. These price-based charts reduce the typical noise associated
with the market, allowing users to more clearly discern the actual market trend. The pictures
below display a sample of these charts based strictly on price activity.
25
Analysis Techniques and Drawing Tools

TradeStation includes an extensive
library of over 100 of the most popular
indicators. You are able to apply a
Moving Average, Stochastic or a host of
other common indicators to your Chart
Analysis or RadarScreen windows. All
indicators have standard alerts built in,
which you can use as is or modify.
A TradeStation ShowMe Study is one

type of analysis technique that marks
every point on a chart that meets the
criteria you specify. For instance, you
can mark gap-up bars on your chart
instantly, or you can automatically mark every bar where volume was 30% greater than the
average volume of the previous 20 bars. You may enable alerts in any ShowMe Study so that
TradeStation monitors these rules on a real-time basis and notifies you as soon as they are met.
PaintBar Studies will paint a series of bars
on your chart a different color to highlight
specific market activity. For example,
you can scan your chart to see when
momentum has increased or decreased.
With a PaintBar study, TradeStation will
automatically display those bars on your
chart in a different color. As with any
study in TradeStation, simply enable the
alert feature and TradeStation will let you
know the instant it occurs in real time.
TradeStation also allows you to
measure, mark and highlight your price
charts with an arsenal of drawing tools.
You may use Trendlines, Gann Fans,
Support and Resistance lines and other
objects on your chart.
Your drawing tools even have preset and customizable alerts; so, for
instance, youll know when a trendline
is penetrated, either on an intra-bar
basis or on the close if you choose.
26
Appendix
Forex Trader Pack Indicators for Charting and RadarScreen
The TradeStation Forex Trader Pack is a collection of useful Forex utilities that provide easy
access to Forex trading-related data, information and calculations. Most of the indicators
are designed to be used with TradeStations RadarScreen, but many can also be used in
TradeStations charting to view historical values.
The Trader Pack is provided as an ELD file that contains all of the indicators. There is also a
sample workspace that includes all of the indicators inserted into RadarScreen and charting.
Important Information
All analysis techniques provided in this Trader Pack are for informational purposes and to
help customers learn more about how to use the power of TradeStation software and services.
Any symbols referenced are used only for the purposes of the demonstration, as an example,
and not a recommendation.
All profit and loss values, conversion factors and spread calculations performed by the
analysis techniques herein are approximations and solely used for educational purposes.
Use the link and follow the instructions below to download and access the Forex Trader
Indicator Pack: https://www.tradestation.com/support/books/files/forex_trader_pack.zip
1. Save and extract the contents of the ZIP file onto your computer. A Workspace
(TSW file) and EasyLanguage Document (ELD file) are included. Before using
the workspace, all analysis techniques must be imported using the EasyLanguage
document file.
2. From TradeStation, click File Import/Export EasyLanguage menu sequence.
3. In the Import/Export wizard select Import EasyLanguage file (ELD, ELS or ELA).
4. Click Next
5. Click Browse and find the ELD file you saved in your computer.
6. Continue to click Next until all Analysis Techniques have been successfully imported.
7. To open the workspace, click File Open Workspace menu sequence and locate
the TSW file you saved in your computer.
27
Charting Indicators
There are three exclusive charting indicators that come with the Forex Trader Pack:
FX_BidAsk Charting (Charting Indicator) (For Any Interval)

This useful utility plots the real-time bid-ask spread on the last bar on the chart and will
also draw a text object for the number of pips of the spread. The text object can either
display the spread in pips or in account currency based on the AccountCurrencyOn
input switch. When AccountCurrencyOn = TRUE, the pip spread in account currency
is based on a trade size that is set with the TradeSize input. This allows you to see the
approximate transactional cost of your Forex trade in real time.
The indicator can be set to display in any desired color based on the Color input.
Input
Value
Description
AccountCurrencyOn
FALSE
Display the pip spread in

TRUE = account currency, FALSE = pips
TradeSize
10,000
Trade size for display in account currency
Color
YELLOW
Display color in the chart
FX_Trading Time Zones (Charting PaintBar) (For Intraday Intervals Only)

This indicator paints the bars in the chart based on which international market is most or
primarily active during the Forex session. There are three primary markets (Asia, Europe,
and USA) that trade during the Forex session. There is no exact time that each of these
markets starts or finishes, so you can control the start time and end time for each market
with an input. A consistent color scheme is used for painting the bars: Red = Asia, Blue
= Europe, Green = USA; overlapping sessions use a different color (Asia and Europe =
28
Purple, Europe and USA = Cyan, and USA and Asia = Yellow); and quiet markets are
colored gray. There is a light and bright version of the color scheme that can be set with
an input. A text object can be drawn on the chart to notate the start of each session. This
can be turned on or off with an input.
Input
Value Description
AsiaTimeStart
2000 Asia market start time
AsiaTimeEnd
400 Asia market end time
EuropeTimeStart
200 Europe market start time
EuropeTimeEnd
1000 Europe market end time
USATimeStart
800 USA market start time
USATimeEnd
1600 USA market end time
TextOn
BrightColors
TRUE Draw text object at start of session

TRUE = On, FALSE = Off
FALSE
Bright or light color scheme

TRUE = Bright, FALSE = Light
Note: Initial default start and end times are provided only as a guideline.
FX_ATRTrading Time Zones (Charting Indicator) (For Intraday Intervals Only)
This indicator is based on the standard ATR (Average True Range) indicator and plots
the ATR value as a histogram, with each bar colored based on the international market
that is currently most active. As with the FX_Trading Time Zones above, you can
also control the start time and end time for each market with the inputs. The same
consistent color scheme is used in this indicator as in the FX_Trading Time Zones
indicator above. A text object can also be drawn on the chart to notate the start of each
session. This can be turned on or off with an input.
Input
ATR Length
Value Description
14 Number of bars used to calculate the average true range
AsiaTimeStart
AsiaTimeEnd
EuropeTimeStart
EuropeTimeEnd
USATimeStart
USATimeEnd
TextOn
BrightColors
TRUE
FALSE
Draw text object at start of session TRUE = On, FALSE = Off

Bright or light color scheme TRUE = Bright, FALSE = Light
29
RadarScreen Indicators
There are eight exclusive RadarScreen indicators that come with the Forex Trader Pack:
FX_Trading Time Zones RS (RadarScreen Indicator) (For Intraday Intervals Only)
This indicator is based on the charting indicator with the same name above. It displays
a text message in the RadarScreen cell based on which international market is most or
primarily active during the Forex session. There are three primary markets (Asia, Europe,
and USA) that trade during the Forex session. There is no exact time that each of these
markets starts or finishes, so you can control the start time and end time for each market
with an input.
A consistent color scheme is used for painting the bars: Red = Asia, Blue = Europe,
Green = USA; overlapping sessions use a different color (Asia and Europe = Purple,
Europe and USA = Cyan, and USA and Asia = Yellow); and quiet markets are colored
gray.
Input
Value Description
AsiaTimeStart
AsiaTimeEnd
EuropeTimeStart
EuropeTimeEnd
USATimeStart
USATimeEnd
Note: Initial default start and end times are provided only as a guideline.
30
FX_BidAsk Pip Spreads (Indicator) (Any Interval)

This indicator allows you to track real-time bid-ask spreads across all Forex pairs. It
displays the bid-ask spread in three forms: the raw bid-ask spread, the bid-ask spread in
pips and the account value of the bid-ask spread for a given trade size. This allows you to
see the approximate transactional cost of trading any Forex pair.
By double-clicking on the BA Sprd Pips or Acct BA Sprd column, you can sort and
rank the list of Forex symbols by the smallest and largest pip spread values.
Input
Value Description
TradeSize
10,000 Trade size to base account bid-ask spread value
Note: Remember that the column Acct BA Sprd displays values based on the native
account currency which at this time only supports the U.S. dollar.
31
FX_MarginReq (Indicator) (Any Interval)

This indicator allows you to track the approximate margin requirement in your account
currency across all Forex pairs, in real time, for a set trade size. The trade size is set with
an input.
Generally, the leverage on cash Forex positions is 50 to 1, but market policy and
regulatory conditions may change and the amount of leverage currently allowed may be
adjusted. To accommodate any leverage changes, this indicator also includes an input
that allows you to change the amount of leverage for the margin calculation.
Input
Value Description
TradeSize
10,000 Trade size to base margin requirements
MarginRateToOne
100 Margin rate to one:50 = 50 to 1, or 2% 100 = 100 to 1, or 1%
Note: Remember the column Margin Req displays values based on the native account
currency which at this time only supports the U.S. dollar.
Minor Pairs That Require a Higher 20 to 1 or 5%Margin Requirement:
USD/SGD, USD/HKD, SGD/JPY.
32
FX_Position Profit and Loss (Indicator) (Any Interval)

This indicator allows you to calculate and track real-time Forex positions profit and
loss (P&L). The indicator displays the current-day profit and loss conversion factors,
position parameters, position P&L in the quote symbol and the conversion of the P&L
into the native account currency which at this time only supports the U.S. dollar.
The plots are colored to organize the indicator values. The Profit Rate and Loss Rate
columns are the real-time conversion rates/factors needed to convert the position P&L
into the native account currency which at this time only supports the U.S. dollar.
The EntryPx, ExitPx, and TradeSize columns display the manually set input values
for entry price, exit price and trade size.
The SymTrdPL column displays the P&L for the position in the quote currency of
the symbol. This P&L needs to be converted into your native account currency using
the profit or loss conversion factors. The final P&L conversion into your native account
currency is displayed in the Acct Profit or Acct Loss columns, with profitable trades in
green and losses in red.
The indicator also has the ability to calculate P&L on a historical Forex position by
overriding the conversion rate/factor with an input.
Input
Value Description
TradeSize
100,000 Trade size of position, use negative values for

short trades
EntryPx
Close[1] Entry price of position
ExitPx_InsideBid_or_InsideAsk_or_Other
OverRideConversionRate
InsideBid
Exit price of position
0 OverRideConversionRate(0) Set a historical

conversion rate
Note: If you are tracking real-time positions, make sure to set the ExitPx to insidebid for long
positions and insideask for short positions in order to calculate the most accurate real-time P&L.
33
FX_Conversion Factors (Indicator) (Any Interval)

This indicator allows you to display and track real-time Forex position conversion
factors/rates. Conversion factors are used to calculate and convert the profit or loss from
a Forex position back into the native account currency.
No Inputs.
Historical Forex P&L
In order to model the P&L for a historical Forex position, the calculation requires that
you know the correct conversion factor at the time and date the position was closed.
You can apply this same indicator in charting to get the conversion factor for the exact
time and date a position was closed.
34
FX_Carry Roll Rates (Indicator) (Any Interval)

This indicator allows you to display and track a Forex positions overnight carry roll
rates. Carry roll rates are a credit or debit to your account for each position you hold
from this session into the next session. This credit or debit is based on the interest rate
differential between the government bonds of the two currencies you are trading.
The carry roll rates displayed are multiplied by the trade size input, to allow you to more
accurately model the overnight carry roll debit or credit for a position.
This indicator can also look back and display the carry roll rate for any day historically
by setting the RollRateOn_YYMMDD input.
Input
RollRateOn_YYMMDD
TradeSize
Value Description
0 Display Carry Roll Rate for this date 0 = Current
10,000 Trade size to multiply by roll rate
You can apply this same indicator in charting to get the carry roll rates historically.
35
FX_Carry Roll Rates Cumulative (Indicator) (Any Interval)

This indicator also allows you to display and track a Forex positions overnight carry roll
rates; in addition, it allows you to accumulate daily roll rates starting from a specified
date. This allows you to calculate the overall cumulative debit or credit to your account
for a long-term position.
Input
AccumRollStartData_
YYMMDD
TradeSize
Value Description
0 Date to start accumulating roll rates 0 = display current
roll rate only
10,000 Trade size to multiply by roll rate
36
FX_BidAsk Spread Stats (Indicator) (1-Minute Bar Interval)

This indicator calculates and displays the average bid-ask pip spread for a Forex symbol
based on one of two averaging methods: running average or rolling average over a
specific number of minutes set with an input.
It also displays the minimum fractional movement of the Forex pair and the
maximum pip spread over the averaging period. Bid-ask spreads are displayed as raw
values, values in pips and values in account currency.
A running average means that the average is calculated ongoing from the point at which
the indicator is inserted into RadarScreen as every tick comes in. Rolling average means
that every n minutes, 75% of the data points are removed and the average rebuilds. If
the indicator gets refreshed or reset, the average starts over again from that point.
Input
Value Description
TradeSize
10,000 Trade size to multiply pip spread for position value
Run1_Roll2
RollMinutes
2 Choose an average spread calculation method

1 = Running from insertion
2 = Rolling average over RollMinutes
180 Used only for the average roll method
37
Forex Glossary
Ask
The price at which an instrument is offered
and can be purchased.
Good Until Cancelled

A type of order that will not expire at the
end of a trading session but will continue
to be active until the customer instructs
otherwise. These orders typically will be
automatically cancelled by your broker at the
end of 90 days.
Base Currency
The first currency in any Forex pair symbol
(e.g., EUR in EURUSD). This is the
currency you are buying or selling. (See
Quote Currency)
Hedging
A means of offsetting or reducing a possible
loss by buying and selling other instruments
that are likely to rise and fall in opposite
directions under the same conditions.
Bid
The price at which an instrument is bid and
can be sold.
Bid-Ask Spread
The difference in price between the current
bid and current ask of a currency pair or
other financial instrument.
Inflation
A state of rising prices caused by
intensive consumer buying and usually
proportionately lesser increases in industrial
output, the latter usually associated with
full utilization of a countrys plant and
equipment.
Central Bank
A central bank provides financial and
banking services for a countrys government
and commercial banks. It implements the
governments monetary policy as well, by
changing interest rates.
Interbank
Trading between banks and large
institutions.
Counterparty
The person or entity on the other side of
your trade.
Limit Order
An order to buy or sell a specified amount of
a specific instrument at a specified price or
better.
Cross-Rate
The exchange rate between two currencies
that does not involve the traders native
currency.
Liquidation
A transaction that will offset or close out
any open position that a customer may have.
Foreign Exchange
The rate for converting one currency into
another.
Long position
To buy.
Margin
A good-faith deposit that must be in your
margin account in order to open and
maintain a position in a financial instrument.
38
Margin Call
A demand for additional funds to be
deposited in a margin account to meet
margin requirements because of adverse price
movements.
Quote Currency
The second currency in any Forex pair
symbol (USD for EURUSD). This is the
currency in which the prices are quoted. (See
Base Currency)
Market Order
An order to buy or sell a financial instrument
immediately at the best possible price.
Range
The difference between the highest and
lowest price of a security recorded during a
given trading session.
Mark-to-Market
A term that means a security is to be valued
at its current market price.
Retail Price Index

Measurement of the monthly change in the
average level of prices at retail, normally of a
defined group of goods.
Offer
The price at which an instrument is offered
and can be purchased. (Also See Ask)
Selling rate
The rate at which a bank is willing to sell
foreign currency.
Native Currency
The currency held in your account.
Short Position
To sell.
Pip
The full minimum price fluctuation
for a currency pair in the Forex market.
TradeStation quotes Forex in fractional pips
(1/10 pips).
Stop-Loss Order
An order placed to prevent a loss or limit an
existing loss on any open position.
39
about the authors

michael burke
Michael Burke is Vice President of Institutional Training at TradeStation

Securities, and has been part of the TradeStation team since 1997.
During this time at TradeStation, he has been instrumental in developing
innovative trading tools, platform features, and educational programs.
As a TradeStation educator, he has shown thousands of traders, novice
and professional alike, how to better utilize the power of strategy
back-testing, options trading, and the TradeStation platform, including
EasyLanguage programming.
With over 25 years of experience analyzing and trading stocks, futures,
options, and forex, he is often a featured speaker at industry events and
conferences, sharing his practical knowledge of market analysis, trading,
and TradeStation. Mr. Burke holds Series 7, 63, 3, and 34 registrations
with TradeStation and is an active associate of the Market Technicians
Association.
jesus nava
Jesus Nava is Client Training Manager for TradeStation. He was

hired by TradeStation Securities in 1999 as an account manager for
its international resellers division. In 2003, he started managing the
TradeStation Client Services Department, where he trained brokerage
and technical support representatives in topics including stocks, futures,
options and advanced platform features.
His interaction with thousands of clients has broadened his
understanding of how traders invest in the markets and use the
TradeStation platform to their advantage. He is currently involved
in developing learning materials and delivering platform training to
TradeStation users nationwide. Mr. Nava holds Series 24, 7, 63, 3,
and 34 registrations with TradeStation and is an active associate of the
Market Technicians Association.
TradeStation.com 800.808.9336 or 954.652.7677

Trading Forex With TradeStation

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Trading Forex With TradeStation

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Trading Forex

michael burke and jesus nava

The Forex Market........................................................................1

Forex Risk Disclosure

(4) YOU ARE LIMITED TO YOUR DEALER TO OFFSET OR LIQUIDATE ANY

Important Information and Disclosure

the forex market

Who Trades Forex?

Benefits of Trading Forex

Risks Associated with Forex Trading

News and Economic Risk

When Does Forex Trade?

Worldwide Forex Trading

Forex Trading Specifications

Available Forex Pairs and Historical Data in TradeStation

Australian Dollar / Canadian Dollar

Australian Dollar / Swiss Franc

Australian Dollar / Japanese Yen

Australian Dollar / New Zealand Dollar

Australian Dollar / U.S. Dollar

Canadian Dollar / Swiss Franc

Canadian Dollar / Japanese Yen

Swiss Franc / Japanese Yen

Euro / Australian Dollar

Euro / Canadian Dollar

Euro / Swiss Franc

Euro / British Pound

Euro / Japanese Yen

Euro / Norwegian Kroner

Euro / New Zealand Dollar

Euro / Swedish Krona

Euro / U.S. Dollar

British Pound / Australian Dollar

British Pound / Canadian Dollar

British Pound / Swiss Franc

British Pound / Japanese Yen

British Pound / New Zealand Dollar

British Pound / U.S. Dollar

US Dollar / Canadian Dollar

US Dollar / Swiss Franc

US Dollar / Japanese Yen

Most-Active Forex Pairs:

Charting Bid and Ask

Since ASK prices are not displayed

Costs of Trading Forex

Symbol = EURUSD, Units Traded = 100,000, Buy at the Ask @ 1.27410

Costs of Trading Forex

Note: Pip spreads will fluctuate under different market

Forex Margin Calculations

Example 2: USD Quote Currency

Example 3: Cross-Currency Pairs

Carry Trade and Roll Over

Calculating Forex Trading Profit and Loss

Trading Forex in TradeStation

Advanced Order Options

OCO and OSO Orders

Tracking Orders and Positions

TradeStations TradeManager is an advanced order-management system that allows you

Rollover Adjustments in TradeStation

This information is accessible via the TradeStation Support Center at

Strategy Back-Testing and Automation

TradeStation continuously monitors the markets, identifies trading opportunities based

TradeStation allows you to monitor dozens or even hundreds of symbols at once

Forex Analysis in TradeStation