No Dealing Desk Forex Trading Execution
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FXCM MetaTrader 4

Why Trade with FRIEDBERG DIRECT

Reports

Please be advised that reports generated via the read-only log in from the FX Trading Station II will provide clients with the most current and accurate trading activity. If a client is ever in doubt as to what their margin or profit/loss figures are, the FX Trading Station II platform can provide such information. In the event of a discrepancy, the information on the FX Trading Station II shall take precedence.

Rollover

Interest rates are not displayed on the MetaTrader 4 Platform; however, traders will pay or accrue interest in accordance with the current rates. To obtain the rollover rates traders can view them on the Trading Station II platform or call customer service for current rates. Please be advised that interest rates are provided by multiple global banks. Every effort is made to display rollover rates one day in advance on Trading Station II. However, during times of extreme market volatility, rates may change intraday.

Any positions that are open at 5 p.m. ET sharp are considered to be held overnight, and are subject to rollover. A position opened at 5:01 p.m. is not subject to rollover until the next day, while a position opened at 4:59 p.m. is subject to rollover at 5 p.m. ET.

Expert Advisor

Expert Advisor's (EA) are automated trading tools that can perform all or part of a trading strategy. While FXCM offers proprietary EAs, there are others developed by third parties. FXCM does not vouch for the accuracy or reliability provided by the EAs not in its control. Traders utilizing an EA do so at their own risk. Additionally, many EA's employ the use of micro lots and do not account for fractional pip pricing. On the FXCM MetaTrader 4 platform 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 in the program and any potential issues that may arise from fractional pip pricing.

Slippage

We aim 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.

FXCM has obtained close banking relationships with some of the world's largest and most aggressive price providers. Having multiple price providers is especially important in volatile markets, when one or two banks may post wide spreads, or simply avoid quoting any price at all. With so many major banks quoting prices, there are competitive spreads and fills, even during market-moving news events.

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.

Hanging Orders

FXCM provides no dealing desk forex execution. We utilise 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 is an appealing feature, traders should be aware of the factors that may affect hedged positions.

Diminishing Margin

A 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 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 insufficient available margin exists and spreads widen for any period of time, it may certainly result in a 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," meaning after 5 p.m. ET. 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. 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 rollover occurs.

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 FXCM MetaTrader 4 Platform does not show pip costs. On Trading Station II, 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 the 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

FXCM maintains a predominantly agency execution model. When you trade, 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 our banks and financial institutions, we reserve the right to reverse such trades, as they are not considered valid trades.

Holiday/Weekend Execution

Trading Desk Hours

The quoted hours for the trading desk are from 9:15 AM Sydney time Monday morning through 8:55 AM Sydney time Saturday morning. Orders placed prior may be filled until 9 AM Sydney time. 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.

Outside of these hours, most of the major world banks and financial centers 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 with us 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 trading is that your margin acts as a good faith deposit to secure the larger notional value of your position. Margin trading allows traders to hold a position much larger than the actual account value. Our online trading platform has margin management capabilities, which allow for this high leverage. Of course, trading on margin comes with risk, since high leverage may work against you as much as it works for you. If account equity falls below margin requirements, an order to close all open positions will trigger. When positions have been over-leveraged or trading losses are incurred to the point that insufficient equity exists to maintain current open positions, a margin call will result, and open positions must be liquidated.

Please keep in mind that when the account's useable margin reaches zero, all open positions are triggered to close. The margin-call process is entirely electronic, and there is no discretion on our part as to the order in which trades are closed. Such discretion would require us to actively monitor positions and accounts. Margin requirements may be changed based on account size, simultaneous open positions, trading style, market conditions, and at the discretion of Friedberg Direct or FXCM.

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 liquidity providers and clearing firms, which may or may not reflect where liquidity providers are making prices. Indicative prices are usually very close to dealing prices. Indicative quotes only give an indication of where the market is. Equity and futures traders dealing 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 dealer (market maker) may quote slightly different prices. Therefore, any prices displayed by a third-party charting provider, which does not employ the market maker's price feed, will reflect "indicative" prices and not necessarily actual "dealing" prices where trades can be executed.