Making Deals (terminology)

Contents • Mini forex trading from $100 • TradingDesk Pro 5 - best forex software

Dealing principles and terminology.

To find out how to make deals and place orders please read next topic of this help .

Order: instruction to a dealer to buy, sell one specified amount of currency against another at the specified price.

There are two main types of orders market and pending in the TradingDesk Pro 5 system. A Market Order is an order to buy or sell specified amount of a chosen currency pair at the current market price (bid price for sell and ask price for buy). A Pending Order is a general term for Stop Loss, Limit Profit and GTC (Good Till Cancel) orders. Execution of this type of order is "pending" until the market reaches or goes through a set pending order price level.

Deal - the purchase or sale of one currency against sale or purchase of another currency. Deal always is triggered by an order. Processing of deal results either in opening new trade (position) or fully/partly closing of present trade. When new trade is opened commissions are charged from the trader's account depending on type of trading program (mini forex, real forex and so on). Please note: from July 1 2005 High Street Networking takes no commission for making a deal. After opening new trade appears on the client's trading platform in Open Trades table . When trade is closed fully or partly, then profit or loss of this trade is reflected on trader's account and this position appears in Settled Trades table. If position is closed fully, then corresponding line disappears from Open Trades table . If position is closed partly, then trading volume is decreasing in corresponding line of Open Trades table .

Open Position (open trade) is any deal that has not been closed out by a corresponding equal opposite transaction. Thus, Open Position means some amount of instrument in trader's property (if position is long, i.e. resulted from buy deal), or a dept value (if position is short, i.e. resulted from sell deal). So, in every open position, a trader is long one currency and short the other. From an economic standpoint in this case property of dept is trader's right to sell currency contract to his dealer at current market rate in any time or to pay off a debt. Trader has also right of ownership of margin and profit that was generated as a result of currency rate changing between moments of opening and closing of position. Trader must pay off a debt, if margin is negative due to generated loss.

Each open position has it's own value that is profit or loss amount that trader will get if closes this position at current price. Current open position value in TradingDesk Pro 5 system is displayed in Total P/L$ column of the Opened Trades table . Current summarized value of all open positions is displayed in Unrealized Profit / Loss column of the Account Status table . Current summarized value of all open positions on given side (buy or sell) and instrument (currency pair) is displayed in Unrealized Profit / Loss column of Position Review table .

Trader can make new position via all types of orders except Stop Loss and Take Profit orders.

Closed position (Closed trade, Settled trade) - is a position that was closed by deal opposite in the direction and magnitude to a previous position and resulted in realizing some gain or loss. Closed positions are displayed in Settled Trades table.

It is possible to have two trades on one instrument but in opposite directions In TradingDesk Pro 5 system. Such strategy is called «lock» or «pseudo-hedging». In normal conditions, the opposing trades cancel each other out, closing the position. With «lock» or «pseudo-hedging» feature, both trades remain active. This feature is a very useful tool only for those traders that know how to use it properly. For example, trader bought Eur/Usd. Then he can lock his position by selling Eur/Usd. Both will remain separate opposite active positions, rather than canceling each other out. Lock or pseudo-hedging can be made by checking «open only» checkbox in New Order window while opening new trade, which has opposite one.

To make any deal trader should place an order. TradingDesk Pro 5 has the following types of orders:

1. Market order is an order to buy or sell specified amount of a chosen currency pair at the current market price (bid price for sell and ask price for buy). Market orders can both open and close positions. This order has two subtypes.

Simple Market Order is an order to buy or sell specified amount of a chosen currency pair at the current market price with prechosen side of operation (buy or sell).Trader places order to buy at the current ask price or sell at the current bid price and dealer accept this price or gives new price to a trader.

Quote Order - is a request for current firm bid and ask prices from a dealer. After filling Quote Order dealer gives to a trader bid and ask rates simultaneously. Trader can choose the side of the trade (buy or sell) right away and deal will be done at corresponding price automatically. It is important to note that it is not possible for a trader to get requoted with this type of order even during extremely fast market conditions, it is possible for a trader to get requoted.

·	Close position order - type of Simple Market Order that is used only to close concrete position (trade). This type of order can be called only form Opened Trades table .

Under normal market conditions, orders are executed automatically, within 2- 7 seconds.

2. Pending Orders. Execution of these types of orders is "pending" until the market reaches or goes through a set pending order price level as said above. This order has three subtypes.

GTC or Good Till Cancel order is an instruction left with a dealer to buy or sell predetermined amount of a chosen currency pair at trader's specified price that remains valid until it is executed or canceled by the trader. Such type of order is executed only when the price of a currency reaches or penetrates a price level specified by a trader. This type of order can both open and close positions.

There are some options for GTC orders in TradingDesk Pro 5 system that traders can set:

-	One chancels the others. Trader can set a group of interlinked orders. If one order ends up being executed, the other orders of some group are cancelled (Group can consist of GTC, Stop Loss and Limit Profit orders). How to do this is written in Making Deals section of this help.

-	Expiration. Trader can set an expiration date and time for GTC order. In this case GTC order will be erased from the TradingDesk Pro 5 system when «expiration date and time» comes.

-	Activation. Trader can set activation price for his GTC order. When market price reaches GTC order will be activated. If the price never goes to client's specified activation rate then the order will remain inactive. Do not mix up GTC order's rate with activation rate.

-	Trailing. More about trailing GTC is written here .

Stop Loss Order. A stop-loss order is always linked to a specific trade or a whole position on this currency and side (buy or sell). This order is usually placed by trader to prevent additional loss on the position (trade). Stop Loss order is executed (triggered) by dealer at the moment the market price touches or penetrates the client's specified stop rate. The executions of these orders are under the supervision of the dealer. All Stop Loss Orders are held by system's server for monitoring until the order price is hit or "passed". In the case of a Stop Loss Order linked to a Buy position (trade), this would mean that the last 3 bid prices are equal to or less than the order price. In the case of a Stop Loss Order linked to a Sell position (trade), this would mean that the last 3 ask prices are equal to or greater than the order price. Order remains in effect until the client cancels the existing order. If the price never goes to client's specified level, then the order will remain unexecuted, but it will still be a live order until trader cancel it, or position will be closed by another type of order. When Stop Loss order is executed, closing the position, the Limit Profit Order is automatically cancelled and erased. Note that "3 pips" rule acts for real accounts only . These rules for demo and contest accounts can differ.

There are some options for Stop Loss orders in TradingDesk Pro 5 system that traders can set:

-	One chancels the others. Trader can set a group of interlinked orders. If one order ends up being executed, the other orders of some group are cancelled. How to do this is written in Open Trades table .

-	Expiration. Trader can set an expiration date and time for Stop Loss order. In this case Stop Loss order will be erased from the TradingDesk Pro 5 system when «expiration date and time» comes.

-	Activation. Trader can set activation price for his Stop Loss order. When market price reaches Stop Loss order will be activated. If the price never goes to client's specified activation rate then the order will remain inactive. Do not mix up Stop Loss order's rate with activation rate.

-	Trailing. More about trailing GTC is written here .

Limit Profit. A Limit Profit is always linked to a specific trade or a whole position on this currency and side (buy or sell). This order is usually placed by trader to take profit on the position (trade). This type of order is executed (triggered) at the moment the market price touches or penetrates the client's specified rate. The executions of these orders are under the supervision of the dealer. All Limit Profit Orders are held by system's server for monitoring until the order price is hit or "passed". In the case of a Limit Profit Order linked to a Buy position (trade), this would mean that the last 3 bid prices are equal to or greater than the order price. In the case of a Limit Profit Order linked to a Sell position (trade), this would mean that the last 3 ask prices are equal to or less than the order price. Limit Profit order remains in effect until the client cancels the existing order. If the price never goes to client's specified level, then the order will remain unexecuted, but it will still be a live order until trader cancel it, or position will be closed by another type of order. When Limit Profit order is executed, closing the position, the Stop Loss order is automatically cancelled and erased.

Options for Limit Profit orders in TradingDesk Pro 5 system are equal to above-mentioned Stop Loss orders options except trailing.

Usually Limit Profit orders for already opened Buy positions and Stop Loss orders for already opened Sell positions are entered in above the current market price. Limit Profit orders for already opened Sell positions and Stop Loss orders for already opened Buy positions are entered in below the current market price. But TradingDesk Pro 5 system never checks the fulfillment of this rule.

Stop Loss and Take Profit orders for previously opened positions can be entered at any moment (during the working days) except mentioned below «locking rule» case. Please note that TradingDesk Pro 5 system prevents from placing, changing parameters or canceling of these orders inside the 10 pips range between order and current market price because these orders can be at already under the supervision of the dealer. This range called «locking rule» can be downwarded.

Please note that due to possible price gaps over the weekend, or shock market news slippage on Stop Loss, Limit Profit and GTC orders is possible. In these circumstances order can be executed not at the trader's specified price because it is extremely difficult to get such prices from our counterparties. Under normal market conditions we do our best to provide execution of order at the trader's specified price. It is the in-house policy of High Street Networking.

3. Margin order or margin call order is initiated when a trader's account dips below a certain level. This amount is usually pre-determined by the dealing rules. In TradingDesk Pro 5 system when the account dips below the product of margin requirement for one lot ($50) and amount of traded lots (1 lot is equal to 10 000 of base currency), the trader must increase the funds in his account to cover the margin, or all trades will be closed automatically.