TraderMetrics is a very sophisticated simulation of the spot forex market. This sophistication may intimidate you at first, but if you get to know how to use it, it will enhance your understanding of the workings of the market. Whether you are ever going to be a market maker, the experience of being one will give you several 'Aha!' moments. The second point to be aware of is that you will become totally absorbed with it. The only way to describe it is that it is like playing a gigantic game of poker, where you have to figure out what is happening by quoting and asking prices. This is even more apparent when you are in a network session; you don't know who has just been given or taken by a customer and therefore will have to deduce who has what position and how you can 'squeeze' them. This is what makes actual market making so much fun - the adrenalin never stops pumping.
Even if you are trading other markets, the fact that the forex market is as near perfect as it can be will give you a mega advantage in any other market. Do yourself a favor and become a real forex trader with TraderMetrics.
You can start in Network mode and trade against others (subject to availability) or start a stand-alone session, where it is you against the computer
If you are running the evaluation, you will not see this dialog. If you have a password, enter it here.
There are various settings that you can make to create the session that best suits your trading style or your training goal.
On these tabs, you can set whether you want incoming or outgoing calls, the electronic broker (only the brave would work without this!), the trading limits, the capital and ROC requirements, margin trading, time compression, the currency pair, the loss limits/profit target and many more settings!
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Autotransact is where trades are made with imaginary customers, with the prices based on how good a customer they are. They get a price relative to the current market price. This can be in the middle of the spread for high quality customers ("A"), on the spread for "B" and 50% of the spread outside the spread for "C" customers. The frequency of the hits can be controlled as well. This reflects modern practice where customers can deal on the market maker's screen. (You have the possibility to intervene in the trade if you want to)
You can even set the bias of the customer trades. This is a lot of fun in a network session, because it is the session administrator ("Central Bank") that controls this-not you!
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Here you may enter the defaults for using the electronic broker. Don't worry if you don't understand the settings at this stage, you may change them at any time during the session
To run a stand-alone session, you will need to choose a source for the rate feed. This can be live rates if you have Reuters, EBS ticker or another suitable rate source that allows DDE connection, such as FXTrek. Otherwise you can select a rate file from our extensive library or design your own rate file using the DAD editor. In a network session, the rates are created in real time by the action of traders in the market. (It doesn't get any more real than that!)
This is where the trades are made and the all other information is displayed. Trades are made through the electronic broker interface or by incoming or outgoing RFQ calls.
The price action is here. You can see what streaming price is available to you and what is being quoted to the best most creditworthy banks. You can see the amounts being quoted and where your own orders stand. Blue means that you have the best offer or bid at the current time
In the 'good old days' and still today in many markets, the only way to get a trading price was to call out on the Reuters Dealing 2000 and ask another market maker for a price. From this, you could of course trade, but you would also find out which way the price was being 'shaded'. What did he know? What is his position? What spread is he quoting. So much information....
You are not obliged to trade, but on the other hand you should not call constantly just to 'check the market'. Learning how to handle a trading conversation takes some time, so be patient.
Are you good enough to make the grade as a market maker? Can you quote prices to the best of the best? Are you a BSD (Big Swinging Dick) market maker?
This is where you find out if you could make it at a bank or a broker - by quoting 2-way (bid/ask) trading prices. Quote off of your feeling for the market and your position. Be the first to get wind of an order and start feeling the 'flow'. Warning: You will get addicted to this - any ex-interbank trader will tell you that this is the only game in town - poker played with a poker table of a 1000 players!
So, you get traded. What now? You have to close the trade. Are you going to do the amount suggested? Are you man or mouse?
This is where you can hit the electronic broker streaming price (the 'Available Price'). Or you can make a trading price or enter single or multiple price bids and offers. Only doing it this way sends a telegram on what you are doing (The others don't know your identity until you trade, but if you bid the market up and then call around looking for a cheap offer, you will be disappointed)
Your vital information. How 'long' or 'short' are you and what is your profit or loss at the moment? You will notice that there is a global average rate and a trading average rate. The latter is the average rate since you were last square. This is important for market makers to see how they are unwinding say, a large customer order in the market.
This is difficult to explain in a few words, but if you really want to apply science to see how good you really are, learn about the information being generated here.
Not the most sophisticated chart package, we admit, but there are some interesting overlays one can make on the price data. Such as here, where we track the net profit&loss against the price.
Not quite up to taking on all the customer trades? Never mind, you can elect to intervene in a trade and decide whether you want to accept the full amount or not. Real traders stand by their prices and the amounts. Are you a real trader?
The journal is a record of all your trades with other information added. To the experienced eye, it makes very interesting reading.
Just been hit for $50 million? Need to unwind the trade in a hurry? Call out to as many market makers as possible and hit them before they get they leave you 'holding the baby'. You can have 4 outgoing calls at a time.
TraderMetrics has a pretty sophisticated stop loss order system, which you can invoke when you 'pause' the session. You can set a limit (entry) order and then in anticipation, trigger stops and limits with OCO's! Something some live broker platforms STILL don't have.
How did you do? When you end the session, the Statistics Viewer opens automatically. You can save the session database for future review. Click on the icon in the bottom left corner in the main Stats viewer screen and you will see this overview. It shows you on a scale of 0-100% how you performed relative to the targets and how professional your behaviour was. Any cowboy can make money unprofessionally, but can you score 100% for both?
All statistics on calls, electronic broker, risk analysis etc, are available for review in a series of tables. From this, it can be seen whether you are any good at all as a market maker.
Do you know what a Risk/Reward Ratio is? Furthermore, can you meet the targets? Not easy, especially if you are market making at the same time.
How did you get on with the automatically transacted customer trades? Here you can see exactly how you performed.
All conversation texts are available here in these logs for review. Selecting a trade and clicking on the 'Conv. Text' button will bring the actual conversation for that deal. Be aware that these conversations are entirely input from 'prompts' in the drop-down boxes on the conversations windows.
TraderMetrics has a very sophisticated proprietary method of measuring trader statistics.
It is possible (if you have a set of compatible DAD files) to have a multi-currency session, where you can have up to 5 currency pairs arranged as 'crosses'. This means, for example, that you can get 'hit' by a customer in a currency pair where there is not a real market, say CAD/CHF (Canadian dollar vs. Swiss franc). To get out of the trade, you would have to unwind the trade in USD/CHF and USD/CHF. You have to look out for arbitrage opportunities. This is really the ultimate and fantastic practice for those who are sitting on bank trading floors. This interface controls the sessions.
After the session is over, you can store the key results in a database. You can then calculate statistics such as standard deviation of your results and even export to Excel to create log normal distributions of your performance. Heard of six sigma? You can achieve your trading efficiency using this measure, too!
Although TraderMetrics was designed for the Interbank forex market, it also has a margin trading interface. That is, the way a private investor trades. The trading takes place on a RFQ basis, meaning that you have to call your house broker/bank for a price if you want to trade. In this set up, you set your start capital, the margin rate, the warning level, the stop out level, the house bank and the brokerage.
Full stop loss possibilities are available
Fairly self-explanatory. The capital you start with in base currency terms.
Your leverage expresses as a percent. 1% = 100:1, 2%=50:1, 5%=20:1, etc.
The level where you get warned if the value of your account drops below this level as a percentage of your capital.
The level where you get your trades stopped out if the value of your account drops below this level as a percentage of your capital.
The institution that you trade with
The model assumes that the brokerage is built into the spread, therefore these points are added to either side of the quote relative to the market price.
This is the same as the normal position window with the addition of extra margin trading-related information. These include the margin available, the margin utilised, the account balance, and the buy and sell amounts available.
These are the statistics related to your margin trading, showing such items as your minimum and maximum capital and at what time, your slippage (in this case the difference between the market price and the price dealt) and how many warnings and stop outs you received.
You can export data to a chart application or Excel using Dynamic Data Exchange (DDE). This is in the format TraderMetrics|DataOut!(item), where item might be the market bid rate (MarketBid).
You need to log in using your password to use the Design-A-Day facility. If you have the market maker pro version, you may create dad files that a distributable.
You can create a file manually by entering data points or you can create a file with a synthetic rate generator. Just fill in the appropriate fields.
When you have generated rates, you can preview them to see if they match your expectations. These rates replicate market rates very well, which makes one wonder if markets are indeed a 'random walk'
When you accept the rates, you can then edit them if need be. You can extract chart patterns to a library for future inclusion in another scenario. You can extend the rates with different settings, turning a calm day into a manic day. You can also ener news alerts if you wish.
It is possible also to 'compress time', so that 1 day is pressed into say, 10 minutes. For this, you will have to set short date interest rates for the currencies.
From an educational perspective, you can enter a 'Questions and Answers' session, so that questions pop up on screen at regular intervals. You can also display a document and a graph or other picture at the beginning of a session
If you have access to live rates, via Reuters or another vendor, that has a DDE feed, you can record rates for future play back.
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Created on ... November 17, 2005