The required information needed to make the calculations can be found by right-clicking on the relevant symbol in the Market Watch window and selecting the “Specification” option. At that point the contract specifications for the particular symbol will pop-up in a dialog box.
[IMAGE: Screenshot of MT4 Contract Specifications box]
Depending on whether you are viewing information on Forex and Crypto pairs, CFDs or other symbols the fields and information presented might differ slightly. This is because there are various ways symbols can be configured by the MT4 administrators. For example margin and profit calculations are typically set in a different way for Forex and Crypto pairs than they are for CFDs.

Margin Calculations

Let’s start by using an example trade on an account with a particular balance. In our example let’s say a client wants to open a buy position of 0.50 lots of EURUSD when they have a balance of 5,000 USD and an account leverage of 100:1.

The first question to answer is how much is 0.50 lots of EURUSD. If we refer to the MT4 contract specifications dialog box we can see a contract size of 100,000 and a margin currency of EUR, which means 1.00 lot is 100,000 of EUR (base currency). So, a 0.50 lot position is confirmed to be exposure of 50,000 EUR worth of USD. In this case the trader will want to know how much margin will be required in order to open that position. Assuming the account leverage is 100:1 we just take 50,000 EUR divide it by 100 then convert that EUR amount to the account currency (which is USD). So, if the EURUSD rate is 1.17 and the client wants to open 0.50 lot of EURUSD, 585 USD will be taken for margin. With an account balance of 5,000 that means 4,415 USD will be left to absorb profit/loss.

Pip Value Calculations

Another question a trader will have is how much profit and loss in USD terms will there be for every pip/point of movement. In this case we simply need to make a pip/point calculation, for which there is a simple formula. Once we have that information a client can then set their take profit or stop losses and understand exactly how much they will gain or lose in USD terms if their stops are hit.

A simple formula to calculate pips/point values can be done in 1 or 2 steps:

Step 1.
Pip/point value in quote currency = pip/point in decimal places * notional trade size, then

Step 2.
Convert pip value in quote currency to account currency (only required if account currency is different)

In the above example the quote currency refers to the currency a symbol’s price is quoted in (which is always the latter currency of a currency pair). For example the EURUSD price is quoted in USD.

If we take the example of 0.50 lot of EURUSD and we want to work out the pip value we simply take the notional order size of 50,000 currency units and multiply it by the pip definition of 0.0001 and that gives us a value of 5, which is the value in USD of a pip. Since the quote currency is the same as the account currency in the above example no further calculation is required.

If we take a different example of 0.50 lot of GBPAUD and we want to work out the pip value we take the notional order size of 50,000 currency units and multiply it by the pip definition of 0.0001 and that gives us a value of 5, which is the value in AUD of a pip. Since we want to find out the USD amount we simply multiply that value (5) by the AUDUSD rate and it gives us a pip value of 3.95 USD with an example AUDUSD rate of 0.79000

Swap Calculations

Before getting into a position traders also need to be aware of any swaps or interest that may be charged each night a position is rolled over. This information can also be found in the MT4 Contract Specification dialog windows. With Bifident we will use the example of AUDUSD as swaps are charged on that currency pair. In the contract specifications there are 4 fields we need to pay attention to, which are swap type, swap long, swap short and 3-days swap.

Let’s use an example to explain how the daily swap amount is calculated. We will use the example of a sell 0.50 lot AUDUSD position. In this example the swap type is “points”, swap long is “-1.43”, swap short is “-3.09” and the 3 days swap is Wednesday. Since we are selling the swaps that will apply are the swap short of -3.09, which as pointed out has the swaps type defined in points. In addition the 3-days swap is Wednesday. That means every Wednesday night 3x swap rate is charged to compensate for there being no swaps charged over the weekend. This means if you open on Wednesday and close on Thursday you will be charged 3 nights worth of swaps. In order to calculate how much swaps are charged each night we just need to work out the point value and multiply it by the swaps short rate of -3.09. Notice that this is calculated as “points”, which is the last decimal, not “pips” which in the case of AUDUSD is the second from last decimal.

So the calculation is 50,000 * 0.00001 * -3.09 = -1.45 USD in swaps will be deducted each day the position is open, except for Wednesday when 3 times that amount is charged and the Weekend nights when there will be no charge. Again this could be critical information if someone was planning to leave a position open over a long timeframe.

Margin Requirements of Hedged Positions

Quite often traders like to hedge a position if they are over-exposed and the direction of the market is looking like it will go against them. In these cases some traders will hedge their trades and wait until the market gives a clearer indication of the direction it is going in. They will then un-hedge their position to take advantage of the clearer direction they can see the market moving in at that time. Alternatively, some clients simply like to bet against their positions and set appropriate take profits in anticipation that there will be enough volatility in the market to trigger the take profits on both positions.

Whatever the strategy in mind some traders simply like to hedge their positions sometimes. In these cases the broker is not really exposed much as any profit and loss of both positions are exactly offset. The only time a stop-out could occur is if an unprecedented amount of widening happened in the market which would affect the P&L of the trades but the reality is a broker will not likely be affected. It is for this reason that brokers are able to reduce the margin terms when positions are fully or partially hedged.

You can check the hedged margin policy by looking at the “Margin hedge” field in the MT4 contract specifications dialog box for any symbol you are interested in. For Forex and Crypto pairs this is typically defined in relation to the contract size and with CFDs it may be related to the Margin Initial setting. Either way, most brokers will have the hedged margin set so that no additional margin is used if a client wishes to hedge a position. In fact Bifident reduces the amount of margin used if a client hedges their position. This gives traders the flexibility to open new trades while their existing positions are hedged. While this is not important pre-trade information it may be critical to know, depending on your strategy.

The post Trade calculations in MT4 appeared first on Bifident.

With the above in mind MetaQuotes came up with a really great solution, which is the MQL5 Signals service that is built directly into MT4 and MT5 platforms. The signals service allows traders to subscribe to follow other registered traders accounts (known as signal providers). Each trade the signal account makes is then duplicated on the traders MT4 platform. The beauty of the Signals service is that the complete track record of all signals traders is available to browse through and traders are able to do proper due diligence on which signals to choose from. In addition, the signals service can only be provided from a real account so signal providers have a strong incentive not to b careless as they do not want to lose their own money. There are also some security measures in place which means trades are copied using the same lot-to-equity ratio as the signal account. That means you do not need to have the same equity as the signal account but in percentage terms the risk a trader takes will be the same (although there are some exceptions). The bottom line is that if you want to trade but don’t have the time or experience to do so properly you still can do so using the MQL5 signals service. Just browse through the available signals and select the one you think is best. Try it out for some time and see how it goes. You can always switch between providers but generally you should stick with the same provider for some time as quite often certain strategies can be long term and take time to develop.

To see the available signals there are two ways, which are:
1. Click on the Signals tab in the MT4 Terminal window and browse through the signals

Signals tab in MT4

2. Go to the MQL5.com website here: https://www.mql5.com/en/signals

Signals profile page on mql5.com

Bifident fully supports the MQL5 signals service and encourages traders to experiment with the service if they feel they would rather have someone else do their trading for them.

The post Using MQL5 signals service appeared first on Bifident.

If your broker uses multiple data centers you will be able to see this as the connection icon is made up of Green and Blue lines. If your broker provides a direct connection to the server or alternative means of routing then the connection icon is made up of Green and Red lines.

Icons showing Data Center or a direct connection.

If your broker does use multiple datacentres then MT4 will attempt to automatically connect to the datacentre that is closest to you when you login, resulting in faster execution time and consequently less slippage, especially during a volatile market.

It has been known that sometimes traders experience connection issues when connecting to an MT4 server, especially if they are located far away from the main server or are using an ISP that heavily restricts network traffic (such as in China). In case issues prevail traders can change the data center they are connected to in MT4 by left clicking on the Connection Status indicator. Upon clicking, a list of available data centers will appear along with the latency to each one. This allows the trader to make sure they are connected to the best datacentre for their location and if not, switch.

Bifident uses MetaTrader Data Center and clients are therefore automatically connected to the main MT4 server through the best available data center and have full control to choose the data center they prefer.

The post Choosing the best data centre in MT4 appeared first on Bifident.