Use the exchange rate dialog to specify conversion symbols for forex or other instruments that are not quoted in your home currency. Specifying an exchange rate causes the profits, drawdowns, etc. to be shown in your home currency and also correctly calculates the number of units to be traded when using certain position sizing methods.
-
To change the exchange rate for a selected ticker symbol, press the Set Exchange Rate button, choose the exchange rate category, symbol, data type and then answer whether or not your home currency is the quote currency in the exchange rate symbol.
When you have finished entering exchange rates, press the OK button.
Notes:
-
In order for exchange rates entered into this list to be utilized by a trading strategy or prediction, the check box must be selected on the Costs tab in the parameters dialog of the trading strategy or prediction.
-
Please note that some data providers do not declare a home currency in their symbols. For example, eSignal’s symbol for EUR/USD is simply EUR A0-FX, while their symbol for USD/JPY is JPY A0-FX.
-
Forex currency symbols are generally in the format CUR1/CUR2, where CUR1 is the “base” currency and CUR2 is the “quote” currency. The base currency is fixed and the quote currency is variable. The quickest way to remember this is to ask “One of base is how many of quote?”
If you are trading a currency where the quote currency is not your home currency, then you should specify an exchange rate. As a general rule, if your home currency is HOM, and you are trading CUR1/CUR2, then depending upon the data available from your data provider, you would choose an exchange rate of either CUR2/HOM or HOM/CUR2. In order for NeuroShell Trader to know which format you have chosen and thus whether to divide or multiply during conversion calculations, you will also need to specify whether or not your home currency is the quote currency in the chosen exchange rate.
Example 1: Suppose your home currency is USD, and you are trading EUR/USD. Since EUR/USD is already quoted in your home currency, you do not need to specify any exchange rate.
Example 2: Suppose your home currency is USD and you are trading USD/JPY. Since your home currency is the base currency, you would simply select the same USD/JPY symbol as the exchange rate. You would also specify that your home currency is not the quote currency in USD/JPY.
Example 3: Suppose your home currency is USD, and you are trading AUD/GBP. Since most data providers only offer GBP/USD, you would choose the symbol GBP/USD as the exchange rate. You would also specify that your home currency is the quote currency in GBP/USD.
Example 4: Suppose your home currency is USD, and you are trading AUD/CAD. Since most data providers only offer USD/CAD, you would choose the symbol USD/CAD as the exchange rate and specify that your home currency is not the quote currency in USD/CAD.
Example 5. Suppose your home currency is CHF and you are trading GBP/NZD. Your exchange rate would be NZD/CHF. Simply choose the symbol for NZD/CHF as the exchange rate and specify that your home currency is the quote currency in NZD/CHF.
-
When you specify an exchange rate in which your home currency is the quote currency (i.e. CUR2/HOM), the following are the calculations that NeuroShell Trader will make to determine profit/loss and the units to trade when using certain position sizing methods:
$ Profit = Units Traded * (Sell Price ‘ Buy Price) * Exchange Rate
Units to Trade = ($ Amount to Trade / Exchange Rate) / Price
When you specify an exchange rate in which your home currency is not the quote currency (i.e. HOM/CUR2), the following are the calculations that NeuroShell Trader will make to determine the profit/loss and units to trade when using certain position sizing methods:
$ Profit = Units Traded * (Sell Price ‘ Buy Price) / Exchange Rate
Units to Trade = ($ Amount to Trade * Exchange Rate) / Price
Note that units to trade is calculated by every position sizing method except Fixed Size and (Power User only) Fixed Ratio. For detailed information about each position sizing method, see Position Sizing Methods.
Additionally, note that these are simplified formulas for illustration purposes only and exclude the slippage, commission and margin costs that NeuroShell Trader will include in the actual calculations. Even then, the final profit is dependent on the broker. Some brokers will calculate positive or negative interest based on the position in trade. For example, if you are long on EUR/USD and the interest rate for the EUR remains higher than the USD, then positive interest will be added to your profit. The converse is true if you are short, that is, negative interest will be deducted from your profit. This interest is called the carry trade. NeuroShell does not include carry trade interest in its calculations.
-
NeuroShell Trader displays all profits, drawdowns, etc with a $ sign. However it should be noted that if your home currency is not the U.S. Dollar and you create exchange rates to convert all statistics to your home currency, NeuroShell Trader will still display a dollar sign next to the profit statistics even though the actual numeric profit values will have been converted into your home currency.