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Duration: 12:58

Instructor:

Contributor: Interactive Brokers

Level: Advanced

The FXTrader combines quotes from 14 of the world’s largest interbank dealers and offers TWS users a dedicated and highly configurable forex trading resource. In this lesson you will learn about the features of TWS FXTrader and its configuration process to help streamline your currency trading experience.

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Study Notes:

In this lesson you will learn about the features of the FXTrader module and its configuration
process to help streamline your currency trading experience.

With IB’s Universal Account, you can trade foreign exchange worldwide from a single account.
The TWS FXTrader is an order management tool that has been designed specifically for Forex
traders, with a world-class competitive platform and quality of market for your Forex trades.

Access FXTrader from the blue New Window button to the top left in Mosaic and locate the
More Advanced Tools expansion menu and find FXTrader.

This completely customizable system provides an optimized trading interface that can be
modified to suit your trading preferences. The grid-like workspace can be configured to suit the
trader’s demands.

Combining quotes from 14 of the world’s largest interbank liquidity providers, we use the same
smart routing technology as for US stocks and options, and route your orders to the provider
who at that moment in time appears at the top of book. This results in substantial liquidity and
tight spreads – some as low as 1/10th of a pip wide.

Let’s learn how to enter tickers and then look at the FXTrader cell. The FXTrader does not
restrict the display to spot forex quotes, but allows any stock, currency future or stock ticker if
desired.

If you know your currency pairs, the simplest method is to type each three letters separated by
a period. For example, the British pound against the US dollar is GBP.USD. Type this ticker into a
cell and hit enter. The sterling dollar quote is displayed on screen. In another cell type EUR.USD
and hit enter. The quote immediately displays for the euro-dollar pair. The point to remember
here is the ordering of the inputs. FX market convention has the pound and euro quoted as the
base currency and the US dollar is the conversion currency.

In another cell, I’ll type GBP and hit enter. This time the display reveals British pound –
IDEALPRO – IB’s currency venue. By selecting Forex from the list the display will reveal all
possible pair combinations where the British pound is considered the Underlying. Select the
currency you wish to display the quote for – Click OK to return to the FXTrader window. Let’s
repeat but this time use the USD instead. Hit enter and now see the list of available currencies
on the left. If I click on the top currency in the list, note the display on the right of the screen. As
I tab down the list you will see that the USD is always the underlying product. Note that the
Euro currency is missing, because it is listed as the Underlying against most currencies. If I close
this selection box and enter EUR in the ticker input field, you will see that the USD appears at
the top of this list.

Populate the grid with currency quotes. The default layout displays nine cells, but this can be
expanded to a four-by-four grid to monitor 16 quotes by configuring the FXTrader at the top of
the window. Simply locate the wrench icon and click on the Configure button. Locate the Cell
Layout area and redraw the grid to your chosen size. If you notice to the left we are looking at
the Settings menu within FXTrader and there are additional configuration areas to explore
below including Hotkeys, Buttons, Quote panel and more. Click OK to close the Configuration
window.

Users may enter any type of ticker in to a cell in the FXTrader display – not just those for spot
forex currency pairs. You may, for example, want to monitor a bond future or an index. You can
also display and trade currency futures. I’m going to add the spot quote for the US/Canadian
dollar pair by entering USD.CAD. The quote shows the number of Canadian dollars each US unit
buys. In the adjoining cell I will type CAD and hit enter. From the dropdown menu choose
Futures and select the month to display. The infinity symbol is next to the continuous contract –
I’ll add this contract to the cell. This time the quote shows the number of US dollars or cents a
Canadian dollar buys, which is simply the way the CME contract is designed.

If you wish to compare the two quotes like for like, you can invert the display. For spot forex
quotes, each cell has an icon comprising two arrows, which when clicked will invert the quote.
When a quote is inverted, an asterisk appears next to the cell indicating that the price is
inverted.

If I do this to the spot quote, it will represent the existing quote in the same way the futures
contract displays the number of US dollars and cents one Canadian unit buys. Please note that
when a quote is inverted, it will not affect the default method of trading in the contract. To
return to the spot quote for the currency pair, simply click on the arrows.

Let’s now look at some of the other attributes of an individual quote cell. Anything displayed in
each cell can be configured including the font, the number of decimal places and color. To
access the display configuration menu click on the wrench icon in a specific cell. I’ll
demonstrate some changes as we go.

At the top and in the center of the cell is the ticker input field described earlier. Just click on the
input cell if you want to change the display from one contract to another. Next to the
Configuration wrench to the right are those two arrows enabling users to invert the quote.

The main focus of the cell is the price quote – on the left is the Bid price and on the right is the
Ask price with respect to the underlying currency – the base unit. Hovering your mouse above
the Bid price causes the background to turn red, indicating a SELL of the base currency. If I
hover the mouse above the ASK cell to the right, the blue background will appear indicating
that this would generate an order to BUY the base unit.

The display is color coded so that rising values are displayed in green and falling values are
shown in red font. Below the quote for the currency pair you can see associated volume, which
again displays green and red arrows to depict changes in volume associated with the changing
bid and ask prices. Should you wish to customize the display in order to enlarge or shrink a
specific value of the quote, clicking the wrench icon within a cell will offer the choice to
configure presets or the display. Choose display, and you will notice from the Configuration
directory to the left of the window how this drills down to the FX Price Display for the specified
currency pair occupying the cell.

The Price Format area in the center of the page shows a check mark next to the Default display
setting and you can confirm how that appears by reviewing the illustrated cell to the right.
Check the Custom box below Price Format to activate the eight colored boxes below. The red,
green and blue boxes correspond to three possible font sizes and can be altered by either
clicking each box or by altering the position of the overhead slider. Keep an eye on the quote
display in the adjoining box as I move the slider. This allows users to emphasize what they
consider to be the critical piece of the price display. You can compare your changed custom
display by checking back and forth with the default display. Click OK when done to return to the
cell.

Click the Bid quote to generate an order to SELL the currency pair. Click the Ask price on the
right of the individual cell to create an order to buy the pair. The order line is displayed in two
places. It appears below the quote and immediately above the grid on the Orders tab. You can
submit and change order attributes from either place. Time in Force, Quantity, Order Type and
Price Limits can each be changed before the order is submitted to IDEALPRO.
Limit Orders allow the investor to set a buy order below the market or a sell order above the
market. A Market Order is designed to execute at the price available at the moment the order is
transmitted.

Notice that at the top of the FXTrader is a box, which when checked will allow instantaneous
transmission of an order. Checking this box will display a warning to clients concerning the risks
and responsibilities of using this feature.

The Cancel Orders icon in the top left of each cell will request cancellation for open orders for
that specific contract. Should you wish to request cancellation of all open orders
simultaneously, click the Cancel All icon in the upper left of the FXTrader.

FXTrader has default amounts for order size, and in this case, my account defaults to $25,000 or
the base currency equivalent. However, you may wish to configure Order Presets to set your
own standard amount or quantity for a specific currency pair. To access Order Presets click right
in a quote cell and select Configure and then Presets. Under the Size menu, enter the Quantity
you wish to populate your order with each time you create an order for that specific pair. TWS
uses the letters K for thousand and M for million. In this example, I will set my order Quantity to
1M for US$1m. The Presets page allows other changes to your settings below. When ready,
click OK and return to the FXTrader. Now when I create an order by clicking on either Bid or Ask
cells, you will see that the Quantity field displays 1m of the base currency.

FXTrader can be configured to allow users to determine the exact quantity for either currency.
The default view is to set the quantity for the base currency only, such that if I create an order
in a cell, you will see the size and limit price displayed below the quote. However, if I access the
Configure wrench at the top of the page, under the FXTrader Settings menu I can check the
Allow numerator sizes box and click OK at the bottom of the window to return.

You can now see that a Currency column has been added to the working orders display. It
populates with the base currency next to the default amount in the adjoining Quantity field. By
clicking in the Currency field I can now choose the conversion currency or other side of the pair.
When I do so, the Quantity field calculates the quantity to be transacted at the prevailing limit
price. Users can now enter the value for the non-base currency. Without configuring this way,
the user is limited to the base currency amount only.

At the bottom of each cell position information is displayed. Once again the display can be
configured by accessing the wrench icon at the top of the page. Next to the Cell Layout Grid,
locate the Position information menu and select or deselect the values you wish to display for
position, Average Cost and unrealized profit and loss by position. When you are finished, click
OK at the bottom of the window to close and return to FXTrader.

Users can keep track of order entry, transactions and cancellations using the Log tab beneath
the Quote Panel. Use the Trades tab to view status of completed and partially completed
orders, price and commission.

The display colors for FXTrader can be changed from within the configuration menu allowing
the user to select from a variety of color schemes. From the Color Schema selection menu,
highlight each of the choices to see sample text and graphic in the window. There are several
color schemes to choose and you can see the associated text defaults against each background
for up and down ticks, etc. Choose a color scheme and click OK to change the look. Simply
return to the Configuration wrench to test another format.

To access charts from the FXTrader use the right click menu on the cell you want charted.
Follow the expansion menu for Analysis and select New Chart.

Remember, FXTrader can be displayed as a standalone module on your desktop, but you can
also access an FXTrading page from the Layout Library by clicking the + button along the bottom
of the Mosaic tab. Click Open Layout Library and use the Forex filter on the left. The FXTrading
Layout can be added as a tab to your Mosaic view and will open whenever you log in to TWS.
This template is customizable and is color linked enabling users to instantly view charts when
they click on any occupied cell in FXTrader.

That concludes this lesson on the FXTrader.

Disclosure: Interactive Brokers

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Supporting documentation for any claims and statistical information will be provided upon request.

Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

Disclosure: Forex

There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.

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