What is a partial close?
MetaTrader 4 (MT4) has a feature that allows the trader to close a portion of an open position. This gives the trader flexibility when it comes to locking in profits or trimming losses by closing a fraction of the total, keeping the remainder active in the market.
In practice, if a trader initiates a buy trade on EUR/USD with a lot size of 1.0, where they notice that the market is moving in their favour, instead of closing the entire position, they can partially close it.
The trader can specify the lot size they wish to close, e.g. half of the position. In this case, they will close 0.5 lots and the remaining 0.5 lots will remain open in the market.
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What is a close-by?
A “close-by” trade refers to a specific method of closing multiple long and short positions of the same trading instrument in a single action. It allows traders to close multiple positions simultaneously, which can be useful for consolidating positions.
Example: a trader has three open positions on EUR/USD with a lot sizes of long 0.6 and shorts of 0.3 and 0.2 as seen below:
Instead of closing these positions individually, you can use the close-by feature to close them all at once.
When you initiate a close-by trade, the system will calculate the net position of the trading instrument across all open positions and execute a single order to close that net position, opening the leftover remainder.
Data issues related to partial close and close-by trades in MT4
1. Late reports:
The close-by feature in MT4 has the correct net effect on the trades, however the feature has some limitations when it comes to regulatory reporting. As you can see in Figure 1, the initial position is opened at 2023.08.01 08:10:12, the rest of the trades are placed and then bulk closed. The left-over remainder position is created with the opening time of one of the existing trades (Figure 3), meaning that the trade was created with an execution datetime in the past, which is a problem for regulatory reporting which requires T+1 submission.
2. Notional sizes of 0:
Figure 4 demonstrates how the process of close-by creates exit trades in the opposite direction with volumes of 0, linked through the comment field. This can create an issue carrying out regulatory reporting for these transactions. The trade’s “Comment” field which provides a link between the trade’s lifecycle has limitations in that it can be overwritten by subsequent actions and therefore cannot be relied on in all circumstances. This can be seen in the following screenshot, where the comment field can’t be used to see the prior order ID. As such, a method of reporting these transactions without requiring the Comment field is necessary.
How TRAction handles MT4 partial close and close-by trades
When implementing the close-by or partial close function in MT4, TRAction will close out each trade independently and in the case of a close-by, netting off the original trades. In both situations we will reopen the remainder if there is one. During the reporting process, we will exclude any trades with volume of zero created during the close-by process. This is consistent with the methodology applied in MT4, however linking each trade to its other parts is generally not possible at this point of the process due to the limitations with relying on the comment field.
Summary
TRAction remains committed to making trade reporting simple by staying ahead of regulatory developments and monitoring for changes that may affect our clients. Don’t hesitate to contact us if you would like to know more.
