At the top, there are five menus: Edit, Options, Support, History, and Help. These are explained below. Once FTS Market program sends information to the traders, the market is displayed. The following is the opening screen taken from the case B03, which teaches students how to value forward contracts on zero-coupon bonds.

You will also see the time remaining in the trading period when the instructor starts the market.

In the market display, the first column has the names of the securities, the second the current bid, the third the ask, and the fourth (marked Units) your holding or position in each security.

The fifth column usually is only used at the end of a trial, and shows you the value at which the security ended; for a stock, this could be the value at the end of the trading session; for an option, the expiration value, and for a bond, a face value. In general, it is the value at which your position is liquidated at the end of the trial. This column is also used to display the cash value of your exposure in a futures trade; if you buy a futures contract, it tells you how much you will have to pay when the contract is settled. Your holding of the contract tell you how many units of the underlying security you will receive.

The Trade Input Window

If you click once on the name of a security, this window will appear. Here, you can submit bids and asks, or submit market orders.

Bids and asks must be entered in the form "ppp.pp/qq", where ppp.pp is a positive number with at most two decimal places and qq is an integer between 1 and 99. After typing in your bid or ask, click the Bid or Ask button.

If you want to accept a bid or an ask, simply enter a quantity in the form qq and click either Buy or Sell. If you click Buy, you will be accepting the best Ask on the market. If you click Sell, you will be selling at the best bid in the market.

If there is any private information about the security (as in the market efficiency cases), it is also displayed in this window (though you can also see all the information available in the Information window described previously).

The Enhanced Input Window, described below, provides a convenient way to submit multiple bids, asks, and buy/sell orders.

The Menus

The Edit Menu

The Edit menu lets the trader link the market to an Excel spreadsheet. You can create an automatic link or a manual link. You can also convert a manual link into an automatic link. The last item in this menu lets you exit the program.

The main purpose of the spreadsheet link is to let instructors and students create their own decision support system.

The following steps are required to create a spreadsheet link.

1. Run Excel , and load the spreadsheet file that you want to link to.
2. In the trader program, click on the Edit menu item and choose Auto Link. When you first try to link, the program will ask you for the name of the spreadsheet that you have loaded:

Click the Find button to locate all the Excel spreadsheets that are loaded. The names will be entered into the drop-down list:

Select the spreadsheet you want to link to, and click OK to start the link. If you only want to periodically update your spreadsheet then you should choose manual link. This will save resources on your local computer. Similarly, you can choose to break the link at any point in time by selecting the sub-menu item Unlink.

In an automatic link, all market activity is shipped to the spreadsheet in the following order.

The last four items are only linked if you use the option support system.

The information starts in row 3 for the first security, and then is repeated for every security.

In a manual link, the same information is transferred, but only when the link is created.

The Options menu lets you choose between the enhanced input window and the default input window. You can also set the font and color for the display.

The enhanced input window appears as follows for case B03:

After typing in the various bids/asks and buy/sell orders, they can all be submitted by clicking the button marked Submit All.

The Support Menu

Summary

Summary brings up a window that tells the trader their login name, trader number, the period number (which is useful in a multi-period trial), the grade cash received in the current trial, the cumulative grade cash of the trader, and the state of the market.

The Limit Order Book

The first lets you see the limit-order book. Select it and you will see a display such as this one taken from case B03. (All prices are zero until someone enters a bid or ask; in this example, someone has entered a bid of 53.75 for 99 units of the coupon bond).

This is a "static" book, which means that to see the latest book, you have to click the Update button.

The book display is also where a trader can withdraw a limit order. In the display above, the * next to the bid of 53.75for security Cp Bnd means that this bid was submitted by the trader looking at the display. To withdraw it, simply click on the bid and click the Withdraw button (the bid or ask you are trying to withdraw will appear in the display to the left of the withdraw button).

Information

If you select Information from the Support menu, the following window will appear, for example with case RE2:

The interpretation of the information is described in the case. While the FTS markets handle information by defining states of the world (such as the x, y, and z in the display here), you have the option of replacing these with phrases reflecting the same information.

Portfolio Weights

For some cases, such as the CA series, it is important to know the portfolio composition, i.e. the weight of each security in the trader’s portfolio. Selecting Portfolio Weights in the Support menu brings up the following display, shown here for case CA0:

You can see that security AXP.N makes up just under 10% of the positions market value of 99300.

The column marked Target Weight lets you enter the weights you desire; if you the press the Calculate button, the program will calculate the number of units you need to hold to make you portfolio weights match the target weights.

The Option Support

The Option Support item is used to initialize the options support system; this is used only in the "continuous time option cases", such as ST1 and XR1. This is described under Options and Futures.

The History Menu

The History menu lets a trader view their personal trading history. You can choose to see your entire history, the history for the current trial, or for the current period. You can sort the history by security or by time. The edit menu lets you copy your trading history, and paste it into other applications.

Students can review their personal trading history after a trading session by cutting and pasting it to their own spreadsheet. It is important that this step is completed before the FTS Market program quits the entire market. Otherwise the trading data will have to be recovered using the method described in section 9.

The Help Menu

The Help menu has three items. The first, Help on Trading, invokes the on-line help system which shows traders how to use the system to trade. The second lets them see all the cases. The third takes them straight to the case currently being traded.

Graphs

If you double click on a security name, another window opens; this one shows you a real-time graph of bids, asks, and last traded prices. The graph is only updated when the bid/ask/last changes. The View menu lets you decide what you want plotted.

You can adjust the scale as follows. Click directly on the scale number you want to change; type in the new scale and press <enter>.

You can re-size the graph by dragging the border of the window displaying the graph.

The View menu lets you choose what you view, any combination of the bid, ask, and last traded price.

Options and Futures

Options

In trading options, you can submit bids and asks or accept bid and asks as described above. In addition, if you are trading an American option, you can exercise the option. This is done by entering a quantity and clicking on "Exercise" in the trade window. You can only exercise an option if you have a long position in the option. You can enter any amount up to the number of units you hold. The options will then be exercised against a trader who has a short position in the options. For example, if you are exercising an American put option on a stock, then you will gain the strike price and give up one unit of the underlying stock for every option you exercise. If you are exercising an option on a futures contract, then you will assume either a short position or a long position in the underlying futures contract depending on whether you are exercising a put or call; in this case, the strike price is the futures price, and no cash changes hands.

Futures

A bid in the futures market is an offer to buy a futures contract with a price equal to the bid. Similarly, an ask is an offer to sell a futures contract with that price. When you accept an ask (buy a futures), no cash changes hands; you simply assume the obligation to receive the underlying security at the time the contract expires at the futures price. The FTS market does "mark to market"; you will see the effect of this on your main window, where you will receive a margin call. If you trade a futures contract, the value of your position will be displayed on your screen to the right of the "units" column.

The Options and Futures Support

In the ST- and XR- cases (stock options and currency options/futures), you can use the option support system. This support comes up automatically when the market opens. To modify he support parameters, select Option Support to bring up the window where you will see the Option Support Parameters:

You can change any of the values in this matrix. To do so, simply click on the item you want to change, use the backspace or delete key to erase what is there, type in the new value, and press <enter>. The values you enter here are used by the option support system.

Once the market open, your options support window will appear (if it does not, click the Show button in the support parameters window). This will show you the "greeks" for each security, the portfolio "greeks", and the market value of your portfolio.

Once the Option Support window is displayed, you can close the Support Parameter window.

If you click on the name of an option in the Option Support window, an option calculator will appear:

Here, you can calculate prices and implied volatilities of the options, and can also change the parameters used in the options support system.

Every time you click on the name of the option in the option support window (not the main trader display), current market prices for that option are transferred to the calculator. To calculate the value or implied volatility, simply click the appropriate button. If you want to make the volatility equal to the implied volatility, click the third button.

You can also type in your own values for the dividend yield, the risk free interest rate, and the volatility. You can transfer these to the options support window by clicking the fourth button. This means that the options support (i.e., delta and gamma) will use these parameters.

End of Trading

The End of a Period

When the clock ticks down to zero, the period ends. At this time, no further trading is possible. Interest is paid on cash balances, and the payoff from every security is calculated and paid. The futures and options markets are settled if any of the contracts have expired. If options are present, they can be exercised (either manually or automatically). The settlement procedure is explained in the Appendix to section 9. This results in an end of period cash balance and holding of securities. The profitability of trading is displayed on the screens. If there is another trading period remaining, then, after a short pause, trading resumes. If not, we have reached the end of the trial.

The End of a Trial

At the end of a trial, every security is marked (or liquidated). The performance of a trader is now judged solely by the cash position of the trader. We call the cash used in the trading market cash, and one way to evaluate performance is by the total market cash of the trader.

Trader winnings are now calculated according to the case descriptions; these are transmitted to the FTS Market, which displays them graphically. Each Trader can look at their own performance by clicking on the "Summary" menu.