Trading Forex TradeStation - with - michael burke and jesus nava

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Trading Forex TradeStation - with - michael burke and jesus nava
Trading Forex
			 with
		 TradeStation       ®

michael burke and jesus nava
Trading Forex TradeStation - with - 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
Trading Forex TradeStation - with - michael burke and jesus nava
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 EXCHANGE—YOUR
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 creditor’s 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 24-
hour 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-most-
traded 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 country’s 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.

                                                                      1
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 full-
       time 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.

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.

                                                                      2
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 long-
       term 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 country’s interest rates rise, its currency will normally strengthen
       because investors will shift their assets to that country to gain higher returns. Conversely,
       if a country’s 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.

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.

                                                                      3
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 nation’s
              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.

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.

                                                                      4
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
        TradeStation’s 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
magazine’s 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 Barron’s, a hands-on review of each company’s online brokerage products and services by a Barron’s 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. Barron’s is a registered trademark of Dow Jones.
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.

                                                                                5
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.

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.

                                                                      6
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.

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.

                                                                      7
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.

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.

                                                                      8
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.
                                                                                                   Daily Data            Minute Data
 Symbol           Description
                                                                                                   Start Date            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.

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.

                                                                      9
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.

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.

                                                                      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
       Pip Spread Trade Cost = $14.00 USD
       (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
       Pip Spread Trade Cost = $13.58 USD
       (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
       Pip Spread Trade Cost = $38.96 USD
       (1.34041 – 1.34000 = 0.00041 * 100,000 Units * .95024 Conversion Factor)

Note: Conversion factors are based on U.S. dollars.

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.

                                                                      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 account’s
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.

Let’s 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.

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.

                                                                     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.

        Symbol           LastIn 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.

       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.

        Symbol           LastIn 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.

       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 currency’s
       exchange rate to U.S. dollars, or to your native account currency.

         Symbol           Last 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.

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.
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.

                                                                      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:
       Let’s 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.

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.

                                                                     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
       The above position is closed at: 89.550
       (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
       The above position is closed at: 88.350
       (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
       The above position is closed at: 1.61050
       (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.

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.

                                                                     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.

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.

                                                                     16
tradestation platform
For traders, today’s unpredictable financial markets present unprecedented challenges. Yet the
keys to successful trading – focus, discipline, consistency – remain constant. And that’s 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.* TradeStation’s 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
magazine’s 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 Barron’s, a hands-on review of each company’s online brokerage products and services by a Barron’s 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. Barron’s is a registered trademark of Dow Jones.
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.

                                                                               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.

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.

                                                                     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 pair’s 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 order’s 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.

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.

                                                                           19
Tracking Orders and Positions
TradeStation’s 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

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.

                                                                     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 you’ve placed an order, TradeStation’s unique PositionGraphs™ allow you to track your
positions with a glance at your Position Graph Bar. PositionGraphs graphically display each
position’s 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 account’s overall performance.

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.

                                                                     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.

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.

                                                                     22
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