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April 13, 2016

Question:What are the trading conditions of commodities trading in LMFX MT4?

Answer:

LMFX offers 7 different Commodities instruments which are Coffee, Copper, Corn, Palladium, Platinum, Sugar and Wheat.

*These are the commodities offered currently in April, 2016.

Each commodity has got different conditions so you may want to make sure that you understand the whole condition before stat trading.

LMFX Official Website

Margin Requirement

LMFX will require fixed margin for trading commodities.

So even if you have set maximum leverage in your account, that leverage is not applicable to the trading of commodities.

Please refer to the below table.

Commodities Required Margin Contract Size (1 lot size)
Coffee $1400 per 1 lot 37500 Lbs
Copper $1500 per 1 lot 25000 Lbs
Corn $700 per 1 lot 5000 Bushels
Palladium $1500 per 1 lot 100 Troy Oz
Platinum $1500 per 1 lot 50 Troy Oz
Sugar $700 per 1 lot 112000 Lbs
Wheat $1400 per 1 lot 5000 Bushels

As you can not leverage the commodity trading as you want, you may be required more margins than you have though.

LMFX has set the stop out % to 20%(for Premium account) and 15%(for Fixed and Zero account), so if the margin level in your account reaches that % all your open positions will be liquidated(closed) by the system automatically.

Spread and Trading Commissions

There is no extra commissions charged for trading of commodities by LMFX, so the spread(variable) would be the only thing you will need to cover while trading.

The spreads are not fixed but variable. Please refer to the below table.

Commodities Average Spread Trading Commissions
Coffee 1 None
Copper 0.006 None
Corn 1.25 None
Palladium 1.8 None
Platinum 3.6 None
Sugar 0.1 None
Wheat 1 None

High Volatility & Wider Spread

In some certain situations, like when an important economic data is released or around weekends, due to the extremely high or low volatility might cause the spread to widen up.

In these situations, the spread could even go wide more than 20 pips or even more.

LMFX has set certain limitations in terms of slippage and if due to the slippage, the execution price is excessively slipped from the original order price, LMFX may simply reject the order itself.

This is to protect clients to not execute orders with different prices than the price they have expected.

LMFX Official Website

Roll over for Commodities

There are expiration dates monthly or every 2 – 3 months for all commodities instruments.

All open positions at the expiration date will be closed at the last available market price, so it does not roll over to the next contract.

LMFX does not interfere or manipulate traders’ positions, but the system will automatically close open positions only when the contract expires or the margin level goes too low.

For all open positions held over night, you will be charged or credited swap points according to the interest rate from the liquidity providers of LMFX.

Unless you hold a swap free account, you will be charged or credited every night at server time 00:00.

The swap points will be tripled on Wednesdays just like other financial instruments.(The swap points for Index CFDs are tripled on Fridays.)

Market Hours

Not like the Forex exchange market, the commodity market is not opened 24 hours a day but it is different for each instrument.

Commodities Market Hours(GMT+2) Breaking Hours(GMT+2)
Coffee Daily 11:15-20:30 None
Copper Monday 01:00- Friday 24:00 Daily 00:15 – 01:00
Corn Daily 03:00-21:00 Daily 15:45-16:30
Palladium Monday 01:00- Friday 24:00 Daily 00:15 – 01:00
Platinum Monday 01:00- Friday 24:00 Daily 00:15 – 01:00
Sugar Daily 10:30-20:00 None
Wheat Daily 03:00-21:15 Daily 15:45-16:30

Please note that all the pending orders of commodities will be cancelled when the market is closed or at the break time.

All the open positions will be left opened as usual.

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