METATRADER 5 - MT5 - THE PLATFORM BETWEEN CUSTOMER AND BROKER
MT5 - Metatrader 5
The platform/program most commonly used to connect to the market. Algorithms are also often programmed for MT4.
Download MT5 below:
DICTIONARY AND EXPLANATIONS
Broker/Supplier/Broker
Our broker: FPM Trading. The role of a Forex broker is to:
• Provide a secure, reliable platform (most often Metatrader 5 is used) that allows money managers and investors to interact.
• Facilitate money managers' trading activities within the framework of permitted regulations.
• Facilitate account management, deposits, withdrawals and related activities.
• In addition to a regular trading platform, allow transparent review, feedback, ratings and related mechanisms for investors and money managers to choose and interact with each other.
How do we charge?
We charge, but only on the profit that the trade generates for you. If you earn 100:-, we take 30:- of it, i.e. 30% of your profit daily/weekly. It is called Performance Fee - "PF" and is charged according to "HWM" = High Water Mark, which means that we can only take our share once on the same uptrend. A fair system that all serious players apply.
Drawdown = "DD"
DrawDown is the account balance taking into account the positions that exist or if the account is free to trade. A low DrawDown indicates less risk in the trade but also less volatility and lower returns.
• Absolute DD: compared to the initial balance, i.e. invested capital
• Maximum DD: largest DrawDown (measured in currency), how many $ the account, if any. decreased by
• Relative DD: largest relative DrawDown (measured in %), i.e. taking into account the open positions
A typical relative DrawDown (DD) in different risk allocations is:
- Very low risk: 1-3%, bond funds and which ZIGMA AI has never exceeded
- Low risk: 4-6%, index funds
- Normal risk: 7-11%, mixed funds, free shares
- High risk: 12-21%, small company shares and shares on smaller share lists
- Very high risk: 22-30% and above, Hedge funds, direct investments in individual companies, start-up companies, new issues and trading yourself on the FX market. Or like when Norweigen Airlines diluted its shares so the value went to a few percent.
Be aware that those who trade individually on the FX (Forex/currency market)
lose 75-95% of their entire invested capital. That's why ZIGMA AI exists
which does this with a predetermined risk allocation and completely
automatically and with 80-90% positive trades!
Size of each trade = Lot
Is the size of the position that you buy or sell. Like buying 1 share or 100 shares in the stock market. Previously, spot Forex was only traded in specific amounts called lots. The standard size of a lot is 100,000 units. There are also mini, micro and nano lot sizes which are 10,000, 1,000 and 100 units respectively. Lot number of units:
• Default 100,000 = 1 Lot
• Mini 10,000 = 0.1 Lot
• Micro 1,000 = 0.01 Lot.
• Nano 100 = 0.001 Lot
ZIGMA AI with a deposited capital of $ 2,500 trades in lot sizes between 0.01 - 0.05
The change in the value of one currency relative to another is measured in "pips", see below, which is a very, very small fraction of a unit of the currency's value. To take advantage of this minute change in value, you would need to trade large amounts of a particular currency to see any significant profit or loss.
Beep
"PIP" stands for Point In Percentage. However, more simply, a pip is what we in FX would consider a "point" for calculating profits and losses.
The unit of measurement for expressing the change in value between two currencies is called a “pip.” If EUR/USD moves from 1.0737 to 1.0738, that increase in value of 0.0001 USD = (1) is one pip.
A pip is usually the last decimal place in a quote. Most pairs go out to 4 decimal places, but there are some exceptions such as Japanese Yen pairs (they go out to 2 decimal places).
Important: There are brokers that quote currency pairs beyond the standard "4 and 2" decimals to "5 and 3" decimals. They quote FRACTIONAL PIPS, also called "pipettes".
For example, if GBP/USD moves from 1.27090 to 1.27091, the $0.00001 that moves higher = (1) one pip.
Since each currency has its own relative value, it is necessary to calculate the value of a pip for the specific currency pair. In the following example, we will use a quote with 4 decimal places. To better explain the calculations, the exchange rates will be expressed as a ratio (i.e. EUR/USD at 1.2500 will be written as "1 EUR/1.2500 USD").
Security in trading - Hard-stop
ZIGMA AI allows a minus of 5% in open positions and stops trading if it exceeds >5%.
Then there is a safety stop with the broker of 10% minus on the account. So the safety is very high, higher than for example the stock market if one or more of your shares go down several percent on one or more days in a row.
Normally, we are at a maximum of minus 1% in open positions, but as an example, in closed positions during 2023 we had only 0.38% in total drawdown, at an annual plus of +93% in return.
Margin call and hard stop
If the account is loaded with too many lots, each broker has a safety level where the account will be closed. That limit is 80%, it can be reached when you have bought so many and large positions that they have eaten up most of the deposited capital together with open losses.
ZIGMA AI rolls between 3,000-6,000% (the higher = the less load on the account) when the positions are open so it is so remote that it can never go towards a hard stop but it is good to know what it stands for.
How much of your invested capital is traded?
It varies between 1-5% of your deposited capital. If you have deposited $1,500, "the positions (trades) that are purchased" cost between $15 and $75, the remaining capital is just in the account. This entails a small burden = a low risk.
Justice and balance
The balance of open positions is called equity: The balance if you were to sell all open positions. Equity can be either above or below the "balance" depending on whether total open positions are plus or minus at the time. SD").