Academy News Microlots on stock indices

Now in Purple Trading: Microlots on stock indices!

Participate in a big players’ game with smaller capital

Starting from Monday the 6th of April, we are adding a new liquidity provider which brings several changes with it. The most significant, and probably also the most positive, are the micro-lots for the stock indices instrument. But other changes in terms of trading hours and other various technical aspects of trading will follow. So we recommend reading the whole article

Trading micro-lots on stock indices

Stock indices are some kind of an indicator which is showing the value development of equity of the certain stock market. This way, investors have the possibility to monitor the direction in which this particular part of the market is going. The most notorious stock indices are DAX, NASDAQ, S&P 100, and others.

The first one of the mentioned the DAX index (more info about it HERE), a personal favorite of the majority of traders mostly due to its high volatility. However, it’s also the high volatility of this instrument that makes it quite a risky investment option. Thanks to micro-lots, traders can now speculate on the rise or decline of DAX prices with lighter volume investments and manage their risks better.

What are the micro-lots

A standard trading unit in the world of Forex is Lot which represents a transaction volume of 100 000 units of currency mentioned on the first place of the currency pair. For example 1 Lot of EURUSD currency pair has the value of 100 000 EUR. This way, trading in Lots can lead not only to higher profits but also to higher losses. In order to lower this risk, the trading with lighter investment volumes such as micro-lots (0.01 Lot) is recommended. If we were to use the same example currency pair as above (EURUSD), 1 micro-lot would have the value of 1000 EUR.

The relation between Lots, Micro-lots, leverage, and margin is something that should be covered in a separate article. So we wrote one, you can find it HERE.

Why did we change one of the liquidity provider

As a broker we play the role of a “middle-man” who pairs trading orders of traders with their counterpart. Due to the fact that we are an STP broker (Straight Through Processing) we don’t act at the counterpart ourselves but we rather pair each order with price on real market. And it’s these prices that liquidity provider helps us to provide. The better the liquidity provider, the bigger the depth of market and therefore better trading conditions for our clients. And that’s why we have decided to switch one of the liquidity provider.

What other important changes are in order?

Temporary changes for Friday 3/4/2020:

The trading hours on the following stock indices will close 1 hour earlier. After the closure, you will still see the price movement but won’t be able to open, close or amend trading orders. This exceptional trading pause is needed in order to enable the micro-lot trading for you.

Change of trading hours exclusively for Friday 3rd of April 2020:

All the time schedules mentioned above correspond with MT4 server time (GMT+3).
DAX	03:30-22:00
DOW	01:00-23:00
SP	01:00-23:00
NSDQ	01:00-23:00

Trading hours of other instruments will remain unchanged.

Permanent changes (from Monday 6/4/2020)

There will be a significant change in trading hours.
An additional 1 decimal place will be added to the quotation of DOW. Tick size and value will also be amended adequately. Minimal price movement (tick) will change from 1 to 0.1 and its value will change from 5 to 0.5. This change will have no impact on open positions.
The CL (Crude Oil WTI) contract volume will be lower from 1000 to 100. Tick size and value will be left unchanged as well as margin requirements. However, if you are working with an automated trading system the contract size will have to be amended adequately. The current tick size is 0.01 and its value is 10. This will not change, therefore, even with a change of contract size from 1000 to 100, your position will have the same value as now.
These changes will affect also the DEMO server. Conditions on the live and DEMO servers will, therefore, be the same.

Trading Hours

What will be unchanged?

Your opened positions

All the above-mentioned changes will not impact your open positions. You don’t need to worry about them being closed.

Spreads and Swaps

Spreads and swaps or margin requirements remain the same. However, you might notice a significant change for the better regarding swaps and spreads on certain stock indices.

In Conclusion

In Purple Trading, we strive to provide our clients with top-tier trading conditions. However, that cannot be done without relentless search for new possibilities and options which current market has to offer. The current switch to a new liquidity provider is the embodiment of the fact that in order to achieve better conditions, a significant change has to be done once in a while. We firmly believe that this change will be for the better and we wish you good luck not only in trading.

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