FXCM, 1k min too coarse for scaling. Embellishing with MirrorTrader?

jago25_98

Junior member
25 0
OK, so I have my strategy all ready. The scale is long term. The thing is just executing it to my exact goal on a spreadbet broker.

I know exactly how much I want to invest but the interface at FXCM only works in multiples of 1k. Flashing lights and all it all seems setup for short term swing trading rather than the patient long term guy like me.

I might want my portfolio to look like this:

Amount to risk: £5,000
NGAS-Buy £1100, massive T/P of maybe 200pips
USOIL-Sell £1400, similar T/P to above
GBPJPY-Sell £2143, etc
NZDAUD-Sell £541
Leftover: GBP left in account balance.

But how can I do that if the size of holdings minimum 1k?

That's the first problem.

The next problem is that I would like to use currency baskets and also a social trade platform to help me when to enter and exit in the shorter term as an extra little boost. There's 2 problems with this. First, if the strategy doesn't take a position then I'm exposed to the default currency of my account. Whether it's USD or GBP this is not what I want.
The next problem with using a mirrortrade or social trade platform for short term entry signalling is that while I can find a strategy (on mirrortrader for example) trading AUDJPY, I can't find one in the opposite direction, JPYAUD. Perhaps this isn't needed if the strategy is always in position, no?

How can I find out more on these problems?
 

NVP

Legendary member
37,536 1,988
dont bother with the social trade platform ...........learn to trade yourself.aftr a while you will realise that the key to long term profitability in trading (and life) is to design and believe in yourself ....not others

N
 

Jason Rogers

Senior member
2,768 92
OK, so I have my strategy all ready. The scale is long term. The thing is just executing it to my exact goal on a spreadbet broker.

I know exactly how much I want to invest but the interface at FXCM only works in multiples of 1k. Flashing lights and all it all seems setup for short term swing trading rather than the patient long term guy like me.

I might want my portfolio to look like this:

Amount to risk: £5,000
NGAS-Buy £1100, massive T/P of maybe 200pips
USOIL-Sell £1400, similar T/P to above
GBPJPY-Sell £2143, etc
NZDAUD-Sell £541
Leftover: GBP left in account balance.

But how can I do that if the size of holdings minimum 1k?

That's the first problem.

The next problem is that I would like to use currency baskets and also a social trade platform to help me when to enter and exit in the shorter term as an extra little boost. There's 2 problems with this. First, if the strategy doesn't take a position then I'm exposed to the default currency of my account. Whether it's USD or GBP this is not what I want.
The next problem with using a mirrortrade or social trade platform for short term entry signalling is that while I can find a strategy (on mirrortrader for example) trading AUDJPY, I can't find one in the opposite direction, JPYAUD. Perhaps this isn't needed if the strategy is always in position, no?

How can I find out more on these problems?

Hi Jago,

Welcome to the forum! :)

Just to clarify, you mentioned that the amount you want to risk is £5,000. By this did you mean that you have £5,000 to deposit into a spread betting account? If that's the case, then you can actually control positions in the market totaling more than £5,000. For example, below are FXCM's minimum margin requirements in British Pounds and the corresponding minimum trade sizes for all the products you expressed interest in trading above.


  • NGAS: £40 margin for 1 million British thermal units
  • USOIL: £125 margin for 100 barrels
  • GBP/JPY: £5 margin for £1000
  • AUD/NZD: £4 margin for A$1000

Note that there is no currency symbol NZD/AUD, but you can buy AUD/NZD, if you feel New Zealand dollars will fall in value relative to Australian dollars. This is the same reason why you can find a currency symbol for AUD/JPY, but not one for JPY/AUD.

Another obstacle you mentioned is that you don't want to be exposed to the default currency of your account. Your forum profile mentions that you live in the UK, so I assume you'd want your account to be denominated in British pounds. Is there another currency you would prefer to be long?

For example, suppose you felt that the Canadian dollar will outperform the British pound. You could sell GBP/CAD and keep that trade open as a long term hedge. That position would make money if the Canadian dollar rises, and lose money if it falls relative to the British pound. You mentioned having £5,000 to invest, so if you sold 5k GBP/CAD would effectively switch the exposure of your account from British pounds to Canadian dollars.

Alternatively, if there wasn't a specific currency you preferred over the British pound, but you were simply bearish about sterling overall, then you could use the currency basket on Mirror Trader called "GBP Basket - Sell".



Jason
 
Last edited:

jago25_98

Junior member
25 0
It's the margin that confuses me. I don't know how to separate the margin from the amount I am investing for each trade. I would prefer to be able to trade with no margin at first and then add margin later.

Those totals I mentioned as an example:

Code:
Amount to risk: £5,000
NGAS-Buy £1100, massive T/P of maybe 200pips
USOIL-Sell £1400, similar T/P to above
GBPJPY-Sell £2143, etc
NZDAUD-Sell £541
Leftover: GBP left in account balance.

What would that look like at FXCM seeing as the minimum is 1k? Let's forget about stop loss for simplicities sake.

Would it be something like:

Code:
NGAS- 11k
USOIL-Sell 14k
GBPJPY-Sell 21k
NZDAUD-Sell 5k
?

The GBPJPY would have to be rounded up, no?

I have asked about the default base currency of that account and if I'm not mistaken I would have to open a new account if I want to do that.

I'm using a basket of currencies long on JPY at the moment. I'm going to cancel that tomorrow and set it up again by hand so I have more options since with the basket you can't close out one currency pair.

I also have rollover fees. I think that is referring to overnight fees on positions right? Is that something I should be worried about? I will be holding positions very longterm.

I asked FXCM (Austin) what happens when a MirrorTrader strategy exits and they said that it doesn't exit to the base default currency in the account (GBP in my case). So instead it seems that whatever you do, the entire balance of the brokerage account will be invested, but spread evenly across the trades you are currently exposed to?

edit:

Coinsidently, I notice the CoT report is delayed today...
and I wonder if there's a different broker to offer all the things the CoT report covers?
 
Last edited:

Jason Rogers

Senior member
2,768 92
It's the margin that confuses me. I don't know how to separate the margin from the amount I am investing for each trade. I would prefer to be able to trade with no margin at first and then add margin later.

That might be a good starting point. With £5,000 to invest, you would have enough to place at least the currency trades you mentioned without having to use leverage. (You would need more money to trade CFDs like oil without leverage, because the minimum trade size on USOil is 100 barrels. At over $100 per barrel a since contract has a face value over $10,000.) Since the minimum order size for currency trades is 1k or 1000 currency units, your currency trades could look as follows:

Short 2k GBP/JPY
Long 1k AUD/JPY (£541 comes out to about A$871 given the current GBP/AUD exchange rate of around 1.61)

Those totals I mentioned as an example:

Code:
Amount to risk: £5,000
NGAS-Buy £1100, massive T/P of maybe 200pips
USOIL-Sell £1400, similar T/P to above
GBPJPY-Sell £2143, etc
NZDAUD-Sell £541
Leftover: GBP left in account balance.

What would that look like at FXCM seeing as the minimum is 1k? Let's forget about stop loss for simplicities sake.

Would it be something like:

Code:
NGAS- 11k
USOIL-Sell 14k
GBPJPY-Sell 21k
NZDAUD-Sell 5k
?

You have the right idea, but it's important to note that while currencies trade in lots of 1k, the lot size of CFDs is different. For example, the lot size for USOil is 100 barrels, and the lot size of NGAS is 1 million British thermal units. Below is an example, you can test in a demo account.

3 lots of NGAS
1 lots of USOil
21k GBP/JPY
9k AUD/NZD

The GBPJPY would have to be rounded up, no?

You would have to round your currency trades to the nearest 1k, so you could trade 21k or 22k.

I have asked about the default base currency of that account and if I'm not mistaken I would have to open a new account if I want to do that.

It's probably best to have your trading account denominated in the currency you intend to deposit. If you intend to deposit British pounds, then that would mean setting up a GBP account. If you have a bearish outlook on the British pound, then you could use the GBP - Sell currency basket in Mirror Trader. That would short GBP against a basket of major currencies for you.

I'm using a basket of currencies long on JPY at the moment. I'm going to cancel that tomorrow and set it up again by hand so I have more options since with the basket you can't close out one currency pair.

In a live account, if you enter the JPY - Buy currency basket, then you will have the ability to close out the individual component trades of the basket separately.

I also have rollover fees. I think that is referring to overnight fees on positions right? Is that something I should be worried about? I will be holding positions very longterm.

If you have long term trades, then you definitely want to take rollover interest into account. Since you intend to sell GBP/JPY, you'll want to focus on the RollS value of -£0.20. (Note that if you were buying GBP/JPY instead, then you could earn £0.09 in rollover interest per lot per day.) Since you intend to buy AUD/NZD, you'll want to focus on the RollB value of -£0.01.



I asked FXCM (Austin) what happens when a MirrorTrader strategy exits and they said that it doesn't exit to the base default currency in the account (GBP in my case). So instead it seems that whatever you do, the entire balance of the brokerage account will be invested, but spread evenly across the trades you are currently exposed to?

It's not that your entire balance in invested. You have to set aside a certain amount of money as used margin in order to open a trade. For example, you have to set aside £125 as used margin to buy 1 lot (100 barrels) of USOil. Whatever's left of your equity after setting aside the used margin for all your open positions is your usable margin.

Your usable margin will go up if your trades make money and will go down if your trades lose money. Usable margin is available to you to open more trades, but you must always leave some usable margin in reserve. That's because the moment your usable margin falls to zero, all your open trades will be liquidated to prevent further losses in your account.

Coinsidently, I notice the CoT report is delayed today...
and I wonder if there's a different broker to offer all the things the CoT report covers?

Are you referring to the actual report of CoT data that's published on the CFTC website or a different report analyzing that data from the CFTC?
 

jago25_98

Junior member
25 0
Thanks there Jason.

Ah, the CFD NGAS amounts baffle me - I need to convert what 1 unit as 1 million brit units equates to in $usd. I need to read up on this somewhere, just need to figure out the search terms to use. "CFC contract size value" maybe.

re: CoT. Yes, the CFTC reports are not being issued due to the US gov shutdown. There are still EU/UK ICE futures by AFAIK they only cover oil and gas. This is a major problem for me as the CFTC CoT report was a central compass for me helping me establish ballpark figures to go from both for price and also for scaling. I'm dead in the water now. There are hundreds of countries in the world, surely there must be similar disclosure reports from other countries?

So if:
GBPJPY-Sell 21k
NZDAUD-Sell 5k
=equals=
GBPJPY- £2100 at risk
NZDAUD- £500 at risk

then
1k = ~£100?

"In a live account, if you enter the JPY - Buy currency basket, then you will have the ability to close out the individual component trades of the basket separately."
I think you could be wrong there? In MirrorTrader I tried this and automatically all pairs were closed for me. Might be different in a different interface. I'll test with a demo account. In fact, I better do some more testing in general with a demo account, might help me get my head round the amounts by clearing out all other symbols and then just entering NGAS.

Ok, I price of NGAS is currently 3.645, spread is 10. I buy one in the demo account, p/l is instantly -10, gross: -6.22
^ so that's the margin coming into pay right?

And in order to avoid margin I would just have to remove those bigger CFD contracts - in the example the currency amounts make this so right?

But if I wanted to be more exact in getting the amounts at risk exact to £10 that's not possible - I need to scale in and out in £100 jumps?
 

jago25_98

Junior member
25 0
The "roll A & B" for NGAS and USOIL is zero. So I guess the cost of holding these long term is offset by the more expensive margin use, right? - unless you hold i.e. $10,000 worth of USOIL in the form of a single 100 barrel contract ( assuming $100/barrel price)

For anybody reading this thread, the FXCM support page is useful:
http://support.fxcm.com/fxts/user-guide/rollover/

edit:
How do I find a chart of a single currency, estimated against a basket of currencies for example?
 
Last edited:

Jason Rogers

Senior member
2,768 92
Thanks there Jason.

Ah, the CFD NGAS amounts baffle me - I need to convert what 1 unit as 1 million brit units equates to in $usd. I need to read up on this somewhere, just need to figure out the search terms to use. "CFC contract size value" maybe.

The amounts used to measure natural gas trades can be confusing at first. The lot size for NGAS is 1k. Natural gas quantities are measured in units of mmBtu which stands for 1 million British thermal units.

If you place an order for 1 lot of NGAS on Trading Station, you are actually trading 1k mmBtu or 1,000 million British thermal units. Technically, that's 1 billion British thermal units, but people don't say it that way. It's similar to how people say 1,000 kilometers instead of 1 million meters, because kilometers are the commonly used unit of measurement.

Suppose NGAS is trading at 3.740. That's means the price of natural gas is $3.740 per mmBtu. If buy 1 lot of NGAS, then your trade has a face value of $3,740.00. That's why the used margin you have to set aside for the trade is 40.00 which is approximately 1% of the face value.

re: CoT. Yes, the CFTC reports are not being issued due to the US gov shutdown. There are still EU/UK ICE futures by AFAIK they only cover oil and gas. This is a major problem for me as the CFTC CoT report was a central compass for me helping me establish ballpark figures to go from both for price and also for scaling. I'm dead in the water now. There are hundreds of countries in the world, surely there must be similar disclosure reports from other countries?

I asked Jamie Saettele this question, since he uses COT extensively in his articles for DailyFX. He says the only other source he knows of for this kind of sentiment data on futures markets is a survey of floor traders called the Daily Sentiment Index (DSI). Unfortunately, that report isn't free. Of course, this shutdown reminds us that COT isn't free either.

So if:
GBPJPY-Sell 21k
NZDAUD-Sell 5k
=equals=
GBPJPY- £2100 at risk
NZDAUD- £500 at risk

then
1k = ~£100?

The amount of money you are risking on a trade is actually based on 2 factors: the trade size and the pip cost. The pip cost for 1 lot (1k) of GBP/JPY is approximately 6 pence as you can see from the table below. (It's actually closer to 6.4 pence based on the current GBP/JPY exchange rate, but the Pip Cost column on shows 2 digits past the decimal point. You will still get credit for the full unrounded amount on trades.)


That means on 21k GBP/JPY you are risking approximately £1.35 per pip. Consider how many pips you want to risk on this trade. For example, if you want to set your stop 100 pips away, then you would lose approximately £135 if you got stopped out.

Also, it's important to remember that the currency symbol is AUD/NZD, never NZD/AUD. If you feel NZD will fall in value relative to AUD, then you would want to buy AUD/NZD.

"In a live account, if you enter the JPY - Buy currency basket, then you will have the ability to close out the individual component trades of the basket separately."
I think you could be wrong there? In MirrorTrader I tried this and automatically all pairs were closed for me. Might be different in a different interface.

You are correct. This was my mistake and I apologize. It used to be the case that you could close individual components of the currency baskets using Trading Station. That was changed with an update last month.

I'll test with a demo account. In fact, I better do some more testing in general with a demo account, might help me get my head round the amounts by clearing out all other symbols and then just entering NGAS.

That's a good idea. A demo account will help you get comfortable with the numbers. Experiment by placing trades of different sizes. See how those changes affect your used margin, usable margin and Gross P/L. Also, I encourage you to read the CFD FAQs section on our site and CFD Product Guide.

Ok, I price of NGAS is currently 3.645, spread is 10. I buy one in the demo account, p/l is instantly -10, gross: -6.22
^ so that's the margin coming into pay right?

What you saw was that you were losing 10 pips, and the pip cost must have been 62.2 pence at the time. That's why your Gross P/L was £6.22. Gross P/L is the amount you are making or losing in British pounds based on your P/L in pips and the pip cost.

And in order to avoid margin I would just have to remove those bigger CFD contracts - in the example the currency amounts make this so right?

But if I wanted to be more exact in getting the amounts at risk exact to £10 that's not possible - I need to scale in and out in £100 jumps?

The larger the trade, the more used margin you have to set aside to maintain the position. Your usable margin is what's left of your equity after subtracting this used margin. Your usable margin will go up if your trades are making money and will go down if your trades are losing money. If your usable margin were ever to fall to zero, then all your open trades would be liquidated to prevent further losses.

Keep in mind that this is a safety mechanism of last resort to prevent you from ever having a negative balance. However, you should never place such big trades that your usable margin is ever in danger of falling to zero in the first place. I mentioned earlier to consider how many pips you want to risk on a trade.

Personally, I try never to risk more than 2% of my equity on a single trade. With £5000 in your account, that would mean risking no more than £100 on a trade. Since you're risking about £1.35 per pip on a 21k GBP/JPY trade, that would mean you could risk about 74 pips on the trade. If you wanted to risk more pips, then you would have to reduce your trade size accordingly.
 

Jason Rogers

Senior member
2,768 92
The "roll A & B" for NGAS and USOIL is zero. So I guess the cost of holding these long term is offset by the more expensive margin use, right? - unless you hold i.e. $10,000 worth of USOIL in the form of a single 100 barrel contract ( assuming $100/barrel price)?

There is no rollover earned or paid on NGAS and USOil, because these CFDs expire every 3 months. The interest earned or paid is factored into the price. If you wanted to hold a position in NGAS longer than 3 months, you would have to open a new trade every 3 months when the old CFD expires. Our website has a table listing the expiration dates.

How do I find a chart of a single currency, estimated against a basket of currencies for example?

I found these custom indicators on FXCodeBase that let you view charts that show the value of a single currency relative to a basket of major currencies: http://www.fxcodebase.com/code/viewtopic.php?f=17&t=970&p=26984&hilit=indices#p1796

Note, those custom indicators use CHF in the basket instead of AUD.
 

jago25_98

Junior member
25 0
"It used to be the case that you could close individual components of the currency baskets using Trading Station. That was changed with an update last month."

That's a shame. You should be able to do both; close single pair or close group.

I could do with a spreadsheet to help with money management - to help me translate pip*trade size vs total invested figures into % of holding more quickly and easily. In short, I don't get it. I don't understand what the margin used each time and how much it varies by.

If there was a spreadsheet what would the formula be to show how much of my real money (rather than with leverage) I am risking if I was to:
- buy
- on GBP/JPY
- with pip cost at 0.064
- & a size of 1k
- with the (buy)price at 156.810
?

Also... this margin must be costing me something... how do I work that out?

Thanks for those custom indicators. I can't run FXCM desktop (crashes on linux) though so I'm searching for the same thing for MT4. Found a few such as

Thanks also for being here. This definately encourages me to use FXCM
 

jago25_98

Junior member
25 0
OK the term I was looking for was positioning and money management.

I'm looking at minipositionsize.xls but the DDE server connecting to MT4 doesn't seem to connect, maybe also because it's linux. So I've edited it to use the 15min delayed yahoo lookups for the moment. Also I notice it seems to have a bug in cell C10-15.

There are also tools such as a downloadable one that goes in the systray but i'd prefer one directly in MT4 or similar really; pain to have to type the numbers in all the time.
 

jago25_98

Junior member
25 0
OK the term I was looking for was positioning and money management.

I'm looking at minipositionsize.xls but the DDE server connecting to MT4 doesn't seem to connect, maybe also because it's linux. So I've edited it to use the 15min delayed yahoo lookups for the moment. Also I notice it seems to have a bug in cell C10-15.

There are also tools such as a downloadable one that goes in the systray but i'd prefer one directly in MT4 or similar really; pain to have to type the numbers in all the time.
 
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