MetaTrader 4 Execution Risk Disclosure
Before you select MetaTrader 4 Powered by Boston Technologies (The Program) to trade in your MF Global FX Systems Trading Account, you should perform any and all due diligence, consulting with an independent financial advisor as necessary, to determine whether the use of a third-party developed trading system to trade the over-the-counter (OTC) forex market is compatible with your financial situation, risk profile and investment goals.
In order for you to utilize The Program, you must agree to the additional terms below and authorize MF Global FX to act accordingly by signing the MT4 Systems Trading Authorization form and returning it to MF Global FX. Please review the MT4 Execution Risk Disclosure carefully, and contact MF Global FX by toll-free phone at 1.888.387.5454 or by email at admin@mfglobalfx.ca if you have any questions.
At Best Execution
All orders, including Market Execution, Pending Order, Take Profit & Stop Loss, placed on The Program will be filled using "At Best" execution. “At best”, which is short for “At Best Price”, means your order will be filled at the best available rate.
This could be at the rate you click on, or a substantial number of pips away. Essentially, your order will be quickly filled, but there is no certainty of the price. The rate is determined by the multiple banks and financial institutions providing prices to MF Global FX.
Lot Size
On the MF Global FX MT4 platform, the default minimum lot size in the “Volume” window on an order ticket is set to 0.1. This is equal to a Mini lot or 10,000 units of the primary currency in a currency pair. A lot size of 1.0 is equal to a Standard lot or 100,000 units of the primary currency.
Partial Fills
Please note that partial fills can occur on The Program. To verify the trade confirmation of an order it is important to refer to the MF Global FX Trading Station. A trader who utilizes the Program will also receive read-only access to the MF Global FX Trading Station via separate log in and password. MF Global FX recommends that all traders utilizing The Program should have both the MetaTrader 4 terminal and the MF Global FX Trading Station open when trading.
Reports
Client account statements, profit/loss, and real-time margin information* can be obtained from both the MetaTrader 4 terminal and the MF Global FX Trading Station. Please be advised there may be a slight delay in synchronization between the Trading Station and the MetaTrader 4 terminal. Reports generated via the MF Global FX Trading Station will provide the most current and accurate trading activity. If a trader is ever in doubt regarding margin status or profit/loss, the Trading Station platform should be utilized.
Important margin information relating to Initial, Maintenance and Liquidation requirements should be accessed from the [Accounts] window on the MF Global FX Trading Station II platform. In the event of a discrepancy, the information on the Trading Station shall prevail.
*Please note that the Margin displayed in the Trade Journal inside the MT4 terminal is the aggregate Liquidation Margin Requirement or 10% of total Initial/Maintenance Margin Requirement of all open positions.
Rollover
Interest rates are not displayed on the MetaTrader 4 terminal; however, traders will pay or accrue interest in accordance with the current MF Global FX rollover rates. To obtain the rollover rates traders can view them in the [Roll S] and [Roll B] columns displayed in the [Simple Dealing Rates] window on the MF Global FX Trading Station or contact MF Global FX for current rates.
Please be advised, interest rates are provided by global banks. Every effort is made to display the most current rollover rates on the MF Global FX Trading Station. Please note that during times of extreme market volatility, rollover rates may change intraday.
All open positions at 5 PM EST are considered to be held overnight, and are subject to rollover. A position opened at 5:01 PM EST is subject to the next day’s rollover, while a position opened at 4:59 PM EST is subject to rollover at 5 PM EST.
Expert Advisor
Expert Advisors (EA) are automated trading tools developed by third parties. MF Global FX does not control or vouch for the accuracy or reliability of the EA. Traders utilizing an EA do so at their own risk. Additionally, some EAs employ the use of micro lots and do not account for fractional pip pricing.
On the MetaTrader 4 terminal the smallest lot size increment is 10k and fractional pips are used. Prior to trading, please contact your EA provider to discuss the lot sizes used and any potential issues that may arise from fractional pip pricing.
Slippage
MF Global FX aims to provide clients with the best pricing available and to get all orders filled at the requested rate. However, there are times when, due to an increase in volatility or volume, orders may be subject to slippage. This most commonly occurs during fundamental news events.
The volatility in the market may create conditions where orders are difficult to execute, since the price might be many pips away due to the extreme market movement. Although the trader is looking to execute at a certain price, the market may have moved significantly and the order would be filled at the next best price or the fair market value. Similarly, increased volume may also result in slippage if sufficient liquidity does not exist to execute all trades at the requested rate.
Reset Orders
Market volatility creates conditions that make it difficult to execute orders at the given price due to an extremely high volume of orders. By the time orders are able to be executed, the bid/ask price at which a counterparty is willing to take a position may be several pips away.
Off Quotes
In general, the "Off Quotes" error message appears whenever the trader attempts an operation that is not possible on the MT4 terminal, such as trying to trade micro lots, partially closing open positions, or Expert Advisors trying to attach a stop or limit to a market execution order, etc. However, "Off Quotes" error messages most often occur when the trader attempts to place a trade without having sufficient margin in the account, or a “Margin Reset” is necessary to unlock the account.
Hanging Orders
MF Global FX provides its clients with No Dealing Desk Execution. MF Global FX utilizes an STP (straight through processing) system whereby client orders are sent through to banks and filled on bank prices in a near-instantaneous fashion. During periods of high volume, hanging orders may occur. This is a condition where an order sits in the [Orders] window after it has been executed. Generally, the order has been executed, but it is simply taking a few moments for it to be confirmed by the banks. During periods of heavy trading volume, it is possible that a queue of orders will form. That increase in incoming orders may sometimes create conditions where there is a delay from the banks in confirming certain orders.
Keep in mind that it is only necessary to enter any order once. Multiple entries for the same order may slow or lock your computer or inadvertently open unwanted positions.
Hedging
The ability to hedge allows a trader to hold both buy and sell positions in the same currency pair simultaneously. Traders have the ability to enter the market without choosing a particular direction for a currency pair. While the ability to hedge may be an appealing feature to some, traders should be aware of the factors that may affect hedged positions.
DIMINISHING MARGIN
A Maintenance Margin Warning or a Liquidation Margin Call may occur even when an account is fully hedged, since spreads may widen, causing the remaining margin in the account to diminish. Should the remaining margin be insufficient to maintain any open positions, the account may sustain a Maintenance Margin Warning or even a Liquidation Margin Call, closing out any open positions in the account. Although maintaining a long and short position may give the trader the impression that his exposure to the market's movement is limited, if spreads widen for any period of time that leads to insufficient available margin, it may certainly result in a Maintenance Margin Warning or a Liquidation Margin Call on all positions.
ROLLOVER COSTS
Rollover is the simultaneous closing and opening of a position at a particular point during the day in order to avoid the settlement and delivery of the purchased currency. This term also refers to the interest either charged or applied to a trader's account for positions held "overnight," or after 5 PM EST on the MF Global FX Trading Station. The time at which positions are closed and reopened, and the rollover fee is debited or credited, is commonly referred to as Trade Roll Over (TRO). It is important to note that rollover charges will be higher than rollover accruals. When all positions are hedged in an account, although the overall net position may be flat, the account can still sustain losses due to the spread that occurs at the time of the Trade Roll Over.
EXCHANGE RATE FLUCTUATIONS (PIP COSTS)
Exchange rate fluctuations, or Pip Costs, are defined as the value given to a pip movement for a particular currency pair. This cost is the currency amount that will be gained or lost with each pip movement of the currency pair's rate and will be denominated in the currency denomination of the account in which the pair is being traded. The MetaTrader 4 terminal does not show pip costs. On the MF Global FX Trading Station, the pip cost for all currency pairs can be found by selecting [View], followed by [Dealing Views] and then by clicking [Simple Rates] to apply the checkmark next to it. If [Simple Rates] already has a check mark next to it, viewing the dealing rates in the simple view is as easy as clicking the [Simple Dealing Rates] tab in the dealing rates window. Once visible, the simple rates view will display [Pip Cost] on the right-hand side of the window.
When a trader's position is hedged against exchange-rate risk, it is still exposed to exchange-rate volatility if the counter currency of the pair being hedged differs from the denomination of the account.
For example, if you are both long and short 10K USD/CAD with -500 pips in gross P/L, one can assume the spread will remain constant. Keep in mind that P/L is in terms of the counter currency, thus the losses are 500 CAD and are converted at the spot rate. If the hedge goes on at 1.1000, the GROSS P/L is 500/1.10 = 454.54 USD.
If the rates decrease to 1.0300, the same 500 pips of locked-in loss is now worth 500/1.03 = 485.43 USD, 30 USD more on only a 10K hedge. Though slight for this example, this is multiplied as hedged volume increases; consequently, it can create circumstances that may drain existing margin.
This can be very important for clients who have very large, hedged JPY positions: if the USD/JPY falls 1000+ pips, it can (depending on leverage, of course) have a severe impact on the gross P/L of any hedged JPY positions.
Inverted Spreads
MF Global FX maintains a predominantly agency execution model. When you trade with MF Global FX, you are trading on feeds that are being provided by multiple top-tier banks and financial institutions. Unfortunately, online trading technology is not perfect and, in rare cases, this feed can be disrupted. This may only last for a moment, but when it does, spreads often become inverted.
While it may be tempting to place a "free trade," keep in mind that the prices are not real and your actual fill may be many pips away from the displayed price. In the event that trades are executed at rates not actually offered by banks and financial institutions, MF Global FX reserves the right to reverse such trades, as they are not considered valid trades.
Holiday/Weekend Execution
TRADING DESK HOURS
The quoting hours for MF Global FX are from Sunday 5:15 PM EST through Friday 4:00 PM EST. The open or close times may be altered by the Trading Desk because it relies on prices being offered by banks and financial institutions that provide liquidity for MF Global FX.
Outside of these hours, most of the major world banks and financial centres are closed. The lack of liquidity and volume during the weekend impedes execution and price delivery.
PRICES UPDATING BEFORE THE OPEN
Shortly prior to the open, the Trading Desk refreshes rates to reflect current market pricing in preparation for the open. At this time, trades and orders held over the weekend are subject to execution. Quotes during this time are not executable for new market orders. After the open, traders may place new trades, and cancel or modify existing orders.
LIQUIDITY
Please be aware that during the first few hours after the open, the market tends to be thinner than usual until the Tokyo and London market sessions begin. These thinner markets may result in wider spreads, as there are fewer buyers and sellers. This is largely due to the fact that for the first few hours after the open, it is still the weekend in most of the world.
GAPPING
Sunday's opening prices may or may not be the same as Friday's closing prices. At times, the prices on the Sunday open are near where the prices were on the Friday close. At other times, there may be a significant difference between Friday's close and Sunday's open. The market may gap if there is a significant news announcement or an economic event changing how the market views the value of a currency. Traders holding positions or orders over the weekend should be fully comfortable with the potential of the market to gap. One of the great things about trading at MF Global FX is that outside of announced major holidays, the trading hours routinely close only once a week on the weekends, which corresponds with the hours of major banks and financial institutions. In contrast, most stock exchanges close five times each week, and can gap significantly on each day's open.
WEEKEND RISK
Traders who fear that the markets may be extremely volatile over the weekend, that gapping may occur, or that the potential for weekend risk is not appropriate for their trading style, may simply close out orders and positions ahead of the weekend.
Margin Calls
The idea of margin FX trading is that your margin deposit acts as a good faith deposit or a performance bond to secure the larger notional value of your position. Margin FX trading allows traders to hold a position much larger than the actual account value. The MF Global FX Trading Station has margin management capabilities, which allow for leverage up to levels permitted by regulation.
Trading forex on margin carries a high degree of risk, since high leverage may work against you as well as for you. If account equity falls below Maintenance Margin Requirement, a Maintenance Margin Warning will be issued with 72 hours given to bring the account back above margin requirement. If account equity falls below Liquidation Margin Requirement at any time, a Liquidation Margin Call will trigger to liquidate all open positions. Please review the MF Global FX Margin Policy & Procedures.
Traders who utilize the MT4 terminal to place live trades will also receive read-only access to the MF Global FX Trading Station via separate log in and password. MF Global FX recommends that all traders who place live trades on the MetaTrader 4 terminal should also have the MF Global FX Trading Station open when trading.
Please keep in mind that when the account's Usable Maintenance Margin or [Usbl Maint Mr] as displayed in the [Accounts] window of the read-only Trading Station platform reaches zero, no additional positions may be opened and account is in "liquidation only" mode. At this time a "pop-up" message will appear in the [Messages] window and a "W" will appear in the [MC] column in the [Accounts] window.
Traders have 72 hours to restore Maintenance Margin to a sufficient level to resume normal trading. If after 72 hours the account is still margin-deficient as determined by regulation, some or all open positions may be closed at the discretion of MF Global FX.
If account equity falls below Liquidation Margin at any time, a Liquidation Margin Call will trigger to liquidate all open positions.
A "Y" appears on the [MC] column in the [Accounts] window of the trading platform whenever positions are liquidated due to insufficient margin.
Please note the “Margin” amount displayed in the “Trade” setting on the MT4 terminal and in the MT4 statement refers to the Liquidation Margin, which is 10% of the Entry or Maintenance Margin.
To view margin requirements for individual currency pairs on the MT4 terminal, right-click anywhere inside “Market Watch” and click on “Symbols”, then highlight any currency symbol. Click on “Properties” and more margin info for that pair is displayed. Please note that the margin info displayed in $ inside the “Contract Specification” window is based on the requirements for a 100K contract.
Margin requirements are subject to IIROC regulation and may change at anytime without notice. MF Global FX may set higher margin requirements based on account size, simultaneous open positions, trading style, market conditions, etc. It is the trader's responsibility to ensure there is sufficient margin in the account at all times. All quotes and trades are subject to the terms and conditions of the Client Agreement accessible from this website.
Important margin information relating to Initial, Maintenance and Liquidation requirements should be accessed from the [Accounts] window on the MF Global FX Trading Station II platform. In the event of a discrepancy, the information on the Trading Station shall prevail.
Chart Pricing
It is important to make a distinction between indicative prices (displayed on charts) and executable prices. Indicative quotes are those that offer an indication of the prices in the market, and the rate at which they are changing. Market watchers, such as S&P and eSignal, compile indicative quotes as a proxy for the market's actual movement. These prices are derived from a host of contributors such as banks and clearing firms, which may or may not reflect where the MF Global FX liquidity providers are making prices.
Indicative prices are usually very close to executable prices. Indicative quotes only give an indication of where the market is. Equity and futures traders trading through a broker will see indicative quotes. Executable quotes ensure finer execution and thus a reduced transaction cost. Equity and futures traders are used to prices being the same at any given time, regardless of which firm they are trading through or which charting provider they are using, and they often assume the same holds true for spot forex.
Because the spot forex market is decentralized, meaning it lacks a single central exchange where all transactions are conducted, each forex broker may quote slightly different prices. Therefore, any prices displayed by a third-party charting provider, which does not employ the forex broker’s price feed, will reflect "indicative" prices and not necessarily actual "executable" prices where trades can be executed.
