Does MFGtrader allow hedging?
In the cash commodity markets, over-the-counter speculation is allowed on foreign exchange rates. In all other commodities it has to be done on the futures exchange like the Chicago Mercantile Exchange (CME).
The rules for off-exchange transactions, like trading cash commodities, is that it requires delivery of product. Foreign exchange has an exemption from delivery but it is still a cash commodity, and therefore you are actually buying and selling actual barrels of oil, or lots of Euro, etc.
Since traders are buying or selling currencies in the cash (spot) market without delivery, and there is no variable delivery date, then to buy and sell the same currencies at the same time, would mean the client has no position at all.
So, MFGtrader enables a Hedge Account where a trader can keep an equal and opposite position open in the same currency pair. He does not need to open another account, but can do so by selecting the "Hedge" option
while placing an order.
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Why are your prices different than other brokers/charts?
Equity and Futures traders are used to prices being the same at any given time regardless of which firm they are trading through or charting provider they are using. Because the spot FX market is decentralised - meaning it lacks a single exchange where all transactions are conducted - each FX dealer (market maker) may quote slightly different prices on their markets. Therefore, any prices displayed by a third party charting provider, which does not employ the market maker's data feed, will reflect "indicative" prices and not necessarily "dealing" prices at which trades are executed.
It is important to make a distinction between indicative prices and dealable prices.
All quotes shown on the MFGtrader system are dealable prices, where MFGtrader as the market maker is willing to buy/sell the currency pair. MFGtrader feeds real-time executable quotes through our own proprietary dealing platform, which updates instantly on the slightest market move. Therefore, viewing the prices in the dealing rates window of the MFGtrader Trading Station will give traders the most accurate picture of where the market is.
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Can I place a trade/stop/entry on the weekend?
At 16:00 EST (4:00PM New York) each FRIDAY, the last trading desks in all major financial centres across the globe close for the week. Please note that although new stop/limit/entry orders can be opened/placed/modified over the weekend, none will get executed. Existing positions can be held over the weekend.
Should the market move while trading desks are closed as the result of economic developments, geopolitical events or natural disasters, all stops, limits, and entry orders that would have been triggered over the weekend get executed on Sunday as the market reopens for trading at 17:00 EST (5:00PM New York).
Please note: MFGtrader
trading hours are from Sunday 17:10 EST (5:00PM New
York time), to Friday 16:00 EST (4:00PM New York
time).
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What are the minimum system requirements?
For MFGtrader to function properly the following requirements should be fulfilled:
Internet Access:
A fast Internet connection is vital for currency trading. We recommend that you install DSL (Digital Subscriber Line) or a CABLE MODEM.
CPU:
Pentium IV or Celeron class running at least 1Ghz or higher
Disk Space:
50 MB
RAM:
1 GB
Monitor Settings:
Monitor that supports 1024 X 768
resolution with a colour depth of 32 bits (16,777,216 colours) or higher resolution.
OS:
Windows / 2000 / XP / VISTA (NOT COMPATIBLE with MAC)
Browser Type:
Internet Explorer
6.0+ or Netscape v7.x
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Does MFGtrader pay interest on unused funds?
MFGtrader clients do not receive interest on unused funds. Foreign exchange is one of the most popular markets for speculation due to the high degree of leverage that is available. This is exactly
the reason why FX brokerage houses do not pay interest on unused funds. Leverage enables traders to take positions much larger than their investment size. Funds deposited into your MFGtrader trading account are treated as collateral, which are used to securitise much larger notional value positions. MFGtrader does not pay interest on collateral that securitises the loan. In equities, funds held in cash at stock brokerage houses are actually invested in money market funds. When a client purchases stock those money market funds are sold and a stock certificate is bought. This transaction is an exchange of cash for an equal amount of the security. If leverage is used then the cash in the account becomes collateral for the loan (leverage) that the client is taking, in this case interest is not paid on the unused funds.
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What is leverage ?
Leverage is a means of enhancing returns or value without increasing the investment size. The currency market is one of the most popular markets for speculation because of the high degree of leverage available. Leverage allows you to magnify your potential returns and is a powerful tool for generating meaningful profits while trading in the foreign exchange market. MFGtrader allows greater leverage than the equities, futures or options market. MFGtrader's trading platform was designed to effectively monitor and control risk exposure in real-time, with an extreme degree of precision. Traders can utilise up to 100:1 leverage without risking a margin call situation. This means with a $1,000 margin deposit you can place a $100,000 base currency position in the market. A 1% margin can make the value of your entire investment 100 times. The margin level for each account is programmed into the system. Based on each client's margin requirement, the system calculates both the funds needed for current positions and the funds available for taking new positions. This information is displayed to clients in real-time. In the event funds in the account fall below margin requirements, the system automatically closes open positions
till the margin requirements are fulfilled. This prevents clients' accounts from falling below the actual available equity particularly in a highly volatile, fast moving market. Leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.
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How do I calculate the value of PIP?
In the FX market, currencies are always priced in pairs. The quoted price is the level where we, acting as the market maker, are willing to buy/sell the currency pair. In the wholesale market, currencies are quoted out to four decimal places, with the last placeholder called a point or a pip. A pip in most currencies is
1/10,000th of an exchange rate (in USD/JPY,
it is 1/100th).
MFGtrader does not charge commissions or any other fees to trade or maintain a Trading Account. This arrangement is available to ALL accounts regardless of account balance or trade volume. In foreign exchange, there is an immediate cost in establishing a position. For example, USD/JPY may bid at 125.40 and ask at 125.45, this five-pip spread defines the trader's cost, which can be recovered with a favourable currency move in the market. The value of a pip is determined by the pair of currencies being traded, the rate at which the currency pair is trading and the size of the position being traded.
For example:
JPY is a two-decimal-place currency. Here is how to calculate the value of 1 pip.
Currency: USD/JPY
Pair Price: 125.00
Lot Size: $100,000
To find the value of one pip with this exchange rate use 0.01 x $100,000/125.00 per pip. Each pip is worth $8.00.
CHF and CAD are four-decimal-place currency. Here is how to calculate the value of 1 pip.
Currency: USD/CHF
Pair Price: 1.2005
Lot Size: $100,000
To find the value of one pip with this exchange rate use 0.0001 x $100,000/1.2005 = $8.33
Currency: USD/CAD
Pair Price: 1.0574
Lot Size: $100,000
To find the value of one pip on this exchange rate us 0.0001 x $100,000/1.0574 = $9.46
*Note that these three currency pairs are USD based.
Please note that one of the key features of the MFGtrader is live P/L tracking. The key information for every account is re-calculated and updated every time the exchange rates change. Upon logging into the account, clients have immediate access to key information. The Account Balance and floating P/L in dollars are displayed in the Account Information window. In addition, detailed information about every open position, open order, and a summary of account holdings can be seen on the main page of the Trading Platform.
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What are the advantages of trading with MFGtrader vs the competition?
There are numerous advantages to trading with MFGtrader. When you trade on the MFGtrader trading platform a MFGtrader line of credit is behind every single trade. As a member of MF Global, MFGtrader offers its customers the reliability and financial stability, which most other forex firms can't come close to.
In addition to providing the highest quality FX order execution, MFGtrader clients enjoy more value-added services than any other forex firm in the world including:
- Trade directly on the Charts.
- Trading Systems.
- Customer Support 24 hours a day 5 days a week.
- Numerous charting applications.
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Do people actually make money doing this?
Currency trading is very similar to other forms of trading in that the basic rules of money management, and trading discipline are the same. If your money management and discipline are not sound then you will lose money as in any investment. The same pitfalls of trading, such as over-leveraging your account, or trading on "noise", will foil investors in every market and unfortunately many traders continuously make these mistakes. On the other hand, if your trading skills are sharp then you stand to make better money trading currencies then in any other market. As currency trading is actually trading "country" movements, they are quite orderly and fairly predictable. In general we have found that disciplined swing traders who have a sufficient account size to withstand short-term volatility do much better in this market.
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What is your rollover policy?
In the spot foreign exchange market, trades must be settled in two business days. For example, if a trader sells 100,000 euros on Tuesday, the trader must deliver 100,000 euros on Thursday, unless the position is rolled over. As a service to our traders, MFGtrader automatically rolls over all open positions i.e. swaps the trade forward to the next settlement date (two business days) at 5:00 PM Eastern Standard Time.
The swap rates are determined at the Interbank level and are tradable instruments. In any spot rollover transaction there is a difference in interest rates between the two currencies that will be reflected in the overnight "loan". If the trader is long dollars and the short currency, which has a lower interest rate, the trader should gain on the spot rollover through the premium relationship of the dollar to that short currency. The amount varies based on the interest rate differential between the two currencies, and fluctuates day to day with the movement of prices. Rollover fees are shown in dollars and are posted in the "interest column" every day at 3:00 PM EST on the trading platform. For day traders that never hold a position overnight, rollover will not affect trading.
The following is a simple example of how interest rollover is calculated:
No. of Lots x No. of Units per lot x Yearly Interest Rate Differential / 360 x No. of Days
Example:
Transaction: Sell 1 lot of USD/JPY on Monday and settle on the next day.
Lot Value: USD 100,000 or JPY12,200,000
Opening Price: 122.00
Yearly Interest Rate Differential, USD 5.25% - JP .0.5% = 4.75%
Calculation: USD 100,000 x 1 x (-4.75%/360) x 1 = $ -13.20 approx.
This example is approximate and only serves as a guide. Real interest rate charges will differ from these calculations because like the FX market, these interest rates are also quoted as a spread
and may differ based on various reasons.
At 5:00 PM (EST), funds are automatically subtracted or added to accounts with open positions because of the automatic rollover. Funds are added to the account for positions in which the client is long the currency bearing the higher interest rate. Funds are deducted in the opposite circumstance.
Note: For positions that are open on Wednesday and held overnight, the amount added or subtracted to an account as a result of rolling over a position tends to be around three times the usual amount. This "3-Day" rollover accounts for settlement of trades through the weekend period.
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What do I do if I have an office/other firewall?
MFGtrader designed the FX Trading Station to operate in almost any network environment. If your computer is behind a firewall or a proxy server, however, there is a possibility that you may have difficulty running the FX Trading Station.
If this is the case, please notify your network administrator that you require ports to be open in order to use MFGtrader's
trading software.
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What do I do if I have an XP firewall?
MFGtrader designed its trading platform to operate in almost any network environment. However, if a computer is operating behind a firewall, this may cause some difficulty in running the FX Trade Station. For Microsoft Windows XP users, please note that there is a built-in firewall, known as the Internet Connection Firewall, in the Windows XP operating system that can be disabled.
The Internet connection firewall is for use ONLY on a direct connection to the Internet. Examples of direct connections are dial-up, DSL, or cable modem. If your computer gets its Internet connection through a software router (like Internet Connection Sharing) or a hardware router, you do not have a direct connection and therefore must contact your network administrator.
In order to disable the Internet connection firewall:
- In Windows XP, go to Start -> Settings -> Control Panel.
- Next, double-click Networking and Internet Connections, and then click Network Connections.
- Right-click the connection on which you would like to disable the firewall for (the connection you are using to run the FX Trade Station), and then click Properties.
- On the Advanced tab of the Properties window, uncheck the option to "Protect my computer and network by limiting or preventing access to this computer from the Internet".
- Windows XP will ask you to confirm your decision to turn off the Internet Connection Firewall. Click 'Yes' to confirm this setting.
- Click 'OK' to close the Properties window.
This will disable the Windows XP Internet Connection Firewall.
After you have completed these steps, try to log in to the Trading Station again. If you still experience difficulties, please contact the MFGtrader tech support team by telephone, email or live chat.
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How effective are your charts?
Complete professional charting solutions for traders requiring back-testing of trading strategies can be accessed on the MFGtrader platform.
No need to keep going back to the dealing rates to place orders. In our platform, all of the tools you need are just a click away on the charts - whether it's a new order, an indicator or Limit/Stop orders. The integrated advance charting gives you a wide range of analysis tools for spotting trend direction and price activity. You can view the charts to see past pricing information and find the information you need to make well-informed trading decisions.
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