TraderMetrics Newsletter Number 4
July 2nd 2006
Hi and many apologies for the delay in getting this newsletter out. I have been busy!
I have had so many requests for a guide to the TraderMetrics Network Server system that this issue is dedicated to a help/guide for it. If you have not heard about the TMNS, it is the part of the TraderMetrics system that allows simulated trading sessions where traders, logged onto a network session, can trade against each other.
If you are at a school, college or just have some friends who want to challenge each other to trading, it is a great way of learning the psychology of the forex market as well as being a great source of entertainment. The software itself is available for just $250. Each trader who wishes to log on to a session must have the TraderMetrics Full or Pro client software. (The Pro allows more enhanced market making possibilities)
Sessions take place over the Internet, so there are no limitations on where you are. Some traders are forming clubs, where they challenge each other over the weekends when there is otherwise no market to trade. It really is excellent and educative fun.
TraderMetrics Network Server v. 4.1.0015
Release Notes and User Guide
The Trader Metrics Network Server (TMNS) is a program that controls a TraderMetrics network session, both technically (by routing messages and acting as a central node for clients) and administratively, by allowing an administrator to administrate the operation of a network session.
A network trading session cannot be started without the TMNS being started and the network and ports specified. The clients (TraderMetrics) running on other machines, cannot connect without an active session in progress and the IP address of the server specified in the tm.ini file.
Clients have to have a full or a pro license to participate in a Network session. The Pro version allows enhanced functionality.
TMNS is installed on a PC that has IP access to the local network (LAN) or the Internet.
Setting up a Session
A list of IP addresses is shown on the first screen. This is usually the LAN IP address (192.168.1.xxx). If the PC is connected directly to the Internet, the IP address of the PC will be shown; however, if a firewall is present, a DMZ has to be created. Ensure that the clients, depending on whether they are connecting on the LAN or WAN, have the correct IP address in the Network section of the TM.ini file, found in the TraderMetrics application directory, thus:
;The server name, IP and port number. If set, TraderMetrics will attempt to
;to lookup the IP address of the server from the name. If this fails, the IP address
;will be used it is set.
;Establish connection time-out
The port number remains the same, unless it has been pre-configured otherwise by FTM. Normally, the server name is not used.
You may be asked if you want to recover a session, if one had not been closed down correctly. This is used in case of a PC crash or power failure. The session is fully recoverable and no data will be lost. The clients will be automatically re-connected.
Most of the session settings should be familiar to you from the TraderMetrics client set up (in stand-alone mode). Please refer to the help system of this version for more details.
The currency pair is available from a drop down list, including some hypothetical currency pairs such as the USD/XXX.
The initial session ID usually has the default value '1'.
The options are as follow:
Run Data Supplier
This is when you want to run a session using 'canned' or pre-recorded rates. Ideal for practicing scenarios.
Disable Position Stats
This stops the client user from seeing his position and p&l figures. Ideal for teaching the principles of position keeping.
Must Recover Session
(default=on) This is to stop the clients from sabotaging a bad session and starting afresh: they cannot start a new session as long as the present network session is live.
Allow Fast Prompts
(default=on) In line with actual trading room practice, shortcuts in conversational trading are allowed.
The number of open trading conversations a user may have open concurrently
Autotransact is where a virtual customers on a client's session can be set to automatically request a trade with the client, based on the current market price. A customers trade within the market spread (very aggressive), 'B' at the market price and 'C' outside the market price.
This is particularly useful when running a 'virtual market' session, as one or more robot clients can be set up and combined with the 'keep square' setting (a mechanism that squares any outstanding positions at regular intervals), can 'drive' the market.
When the parameters for the session are set, click "Accept Settings"
The clients can have banner adds displayed in their settings. Needs further setting up. Click continue.
A message box appears asking you to confirm the settings. Press 'yes' to continue
Initial Market Conditions
If the session is 'virtual', there has to be an initial 'last trade rate' as a reference to start the session.
Crawling Market Support
Crawling Support provides a self-sustaining market based on supply and demand. According to the change magnitude, the amount, the multiplier and maximum amount, the market will move according to how much is attempted on a price. For example, if the change magnitude is 1 point and the amount is 1 million, a 1 million sell order at the market will move the price down by one point.
This is like pre-setting the market liquidity and can be adjusted during a session.
With the robot clients and autotransact, a complete virtual market can be created.
The USD/Quoted rate
Because some of the calculations are based in USD for statistical comparisons, this rate is required if the currency pair does not feature the USD. For example, a EUR/JPY session requires that the USD/JPY spot rate is entered here.
Start the session
After the session is started, clients may now log on.
The Administrator Interface
Set focus on each new message. Draws the Administrator. attention to a message sent by a client, which may indicate that the client has a problem that requires adm. intervention.
Central Bank Supports market If enabled, according to the session set up, the 'central bank' (i.e. you, the Administrator) is the entity that supports the market price.
The support events may be recorded in a log
Maintain log of positions. optional, default=on
Enable Position Limiter. When enabled, automatically closes and positions above the current set position limit at the market price (i.e. if on autotransact, the user will have excess positions immediately cut on the opposite side of the market.
Enable loss limiter. Ends a user session if the loss limit has been breached.
Enable pre-preemptive error checking . For de-bugging
Check Level one users. Default=on, but irrelevant with this version.
Send News Flash
The Administrator may send a news flash, which is broadcast to all clients . e.g. "Fed raises interest rates 50 basis points"
In a live rate session, it is possible to send a link to a web site such as Reuters or Bloombergs which carries a report of the news item
The only relevant setting is 'close' setting, which terminates the session(i.e. cannot be reopened!)
Reject New Log Ons
To control the number of new clients. In the case that the session should be limited to the first 500 clients logging on.
Reject session recoveries
Checked if a session is coming to an end and you wish to prevent previously crashed clients from delaying the closing process.
Auto Transact control
This shows the sum exposure of the total clients' exposure in the market. Assuming a zero-numbers game, eventually this should be restored to 0 (or thereabouts).
The Deal Direction Bias allows you to control the market-wide general direction of customer trades. For example, if you introduce some dramatic news that would weaken your base currency, you may temporarily set the slider to the right, so that the customers start selling heavily. The bias is shown in the current bias field and the 'set new bias' button is clicked to invoke the new level.
It is also possible to deactivate auto transact on all clients, useful when winding down a session.
You may export the aggregate positions to export, for help in the post-session analysis.
Normally, the central bank's position is in balance with the aggregate
If there is a session problem, for example, a mismatch between to clients due to a network problem or a trade done on a wrong 'big figure', that is acknowledged as a mistake by both parties, the central bank can make compensating deals either as a 'broker' or direct with one of the parties.
The central bank can 'intervene' in the market by placing bids and offers in the electronic broker, or by hitting the market price. For example, to follow the actions of say, the Japanese National Bank, the Central Bank may want to enter the market and by $500 million 'at the market'. In this case, all market orders will be executed up to a price where all $5000 has been executed. This must be used with care, otherwise there will be some extreme movements!
These orders are executed by clicking the "Execute Hit" button.
The Administrator may also 'broker' a deal. In this case, the administrator can take on the role of 'voice broker' if all players are linked to the administrator by voice link. Otherwise, this function is useful in the case of genuine trading mistakes, to reverse trades done on a wrong big figure, for example.
Locked Out Users
Users who are intent on sabotaging a session or if they have breached a loss limit for a certain number of times, can be disqualified from entering or re-entering a session.
However, they may be re-allowed at any time.
It is perhaps human nature to try and find weaknesses in a system and in trading, collusion, or collaboration between two or more traders is the easiest way to do this. However, TMNS has comprehensive logging which uncovers many of the attempted scams.
Stop Loss Orders and Support Account
Stop loss orders executed are not automatically 'turned' by the central bank in the market. The central bank is the counter party to all stop loss (and limit) orders, so it is at the discretion of the central bank whether to execute the stop balances in the marketplace. This is because very often the stops and limits are in balance.
A complex mechanism to allow a virtual market to follow a completely unrelated live market. For example, it is possible to cause the virtual TM session to follow the NASDAQ, the US dollar index or oil market. Not within the scope of these notes.
Crawling Support Control
A mechanism for varying the crawling support parameters dynamically. Can be immediately invoked, or invoked on the next transaction.
A list of users and an interface for the control of such. This is used mainly in connection with problems that may come up in a session. For example, if IT connections go down mid-conversation, the conversation window may 'freeze'. After getting a message from the client, the Administrator may force the conversation to clear. This may cause a mismatch position that can be addressed via the Central Bank tab.
Square all users. This mechanism square all the user positions at a preset rate and does not move the market in a crawling rate session. Ideal for ending a session.
Request statistics. If an analysis is to be made mid- or post- session, it is possible to download the current session statistics from the client.
Clear electronic broker. Sometimes and order will be shown as active on the client's EB interface when it is not. Clicking here clears all orders, real or nit, form the client and the electronic broker for that client.
Check User Responding. Checks to see if there is a connection between the client and the server.
Check all users and update all users are powerful commands and can impact system performance if there are many clients. Use with care.
Log user off. A client can be forced off the system.
All the current information may be exported to Excel.
TMNS features a chat service, where a message may be received and replied to.
It is possible for the Administrator to see all electronic broker orders currently in the market, in a rate and time order (i.e. the oldest orders at the best price)
All session events, including client log on sequences/attempts, may be logged here.
Network TCP/IP Message Log
Advanced de-bugging and trouble shooting
A log of all the transactions, including transactions traded directly between clients. Anomalies can be alerted using Flex Alert (a separate software package)
To close down a session, ensure that all clients are 'square' and logged off. (Be patient as this can take some time; it is best to warn the clients 30 minutes before the close of a session that they had better square up and log off) From the Server menu, select 'close session' and click 'Yes' on the message box.
Note: There is no 'statistics viewer' as with the TraderMetrics client, so either export the data you need to Excel, or go through the logs while the session is still active, having first blocked all new log ons.
This is a basic description of the system. It is advisable to get experience with the TraderMetrics client software before administrating a network session.
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