SMART HEDGER PLUGIN

Smart Hedger helps MetaTrader brokers automatically balance and minimize their risk by hedging customer positions without manual dealer intervention, streamlining operations and maximizing profits through smart algorithms.

Multi Account
Manager For Meta Traders

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SMART HEDGER PLUGIN

A PLUGIN FOR AUTOMATICALLY MANAGING RISK IN MT4 SERVER

This fully automated tool allows the MetaTrader broker to systematically cover the sum-total of the un-hedged risk-adding customer positions and minimize the risk of loss to the broker. Our smart hedging algorithm manages your total risk without any dealer intervention. Save time and cost of manual dealer control over your overall position, and maximize your profit using smart cover logic!

SMART HEDGER LOGIC OVERVIEW

Risk reduction part

Advanced mathematical modeling is used to accurately forecast possible losses of the broker due to client positions (this quantity is referred to as Value at Risk, or VaR)If overall VaR of the position exceeds custom-set limit, Smart Hedger makes smart Cover trades to reduce the risk. Each broker can set loss limits suitable for his or her own operating conditionsWe consider the transaction cost of opening the Cover trades, so as to minimize the spread-crossing cost to the broker

Cut-loss part

Smart Hedger monitors instantaneous mark-to-market PnL of the overall broker position in each currencyIn the unlikely case that currency PnL is negative Smart Hedger finds the optimal currency pair to produce a Cover tradThis Cover \

trade plays a role of the hedge against any further adverse moves in the currency price

TECHNICAL DETAILS OF SMART HEDGER

The following diagram shows the basic workflow of the Smart Hedger integrated in the MT4 Server:

1. Smart Hedger is a plugin to server-side MT4 which has the following forms of communication with MT4:

2. Smart Hedger seeks to maximize Total Broker PnL via smart (but minimal) Hedging in the Cover accountion with MT4:

3. AutoDealer is used to auto-confirm client orders that fall within tolerance level of the current LP price

4. Safety features

  • MT4 switches to its usual position management approach
  • Secondary Smart Hedger receives a ‘snapshot’ of all relevant data up-to-now
  • When trader is ready he switches back to Smart Hedger

CHARACTERISTICS OF SIMULATION:

1. Total of 500 lots traded each day (open trades)

2. All toxic clients – one of the two following cases

  • MT4 switches to its usual position management approach
  • Secondary Smart Hedger receives a ‘snapshot’ of all relevant data up-to-now
  • When trader is ready he switches back to Smart Hedger

3. Each client trade has a high chance of generating a positive PnL for the client

4. Broker adds 0.5 pips to LP spreads

Table below shows average daily client order volumes (open trades) and spreads shown to clients by the broker:nts by the broker:

Currency Value Base Currency
EURUSD 21.5 EURUSD
GBPUSD 6 EURUSD
USDJPY 5.5 EURUSD
AUDUSD 5 EURUSD
EURJPY 2.5 EURUSD
USDCAD 2.5 EURUSD
EURGBP 2 EURUSD
USDCHF 1.5 EURUSD
NZDUSD 1 EURUSD
EURCHF 1 EURUSD
GBPJPY 0.5 EURUSD
EURAUD 0.5 EURUSD
GBPAUD 0.5 EURUSD
EURCAD 0.5 EURUSD
GBPCHF 0.5 EURUSD

Example 1:Trend Followers

We use historical market data to generate customer buy orders that catch the up-trend of the market prices or sell orders that catch the down-trend (successful trend-following behavior)

Assumptions of the Simulations:

Average Customer PnL/trade 15 pips
Average Percentage of Customers Winning 95%
Average Profit of Winning Trade $2,000
Average Loss of Losing Trade -$500
Average Position Duration 2 hrs
Average Position Size 1 lot
Number of Simulations 1000

Results Summary (average daily results for all simulated days of trading)

Average Total Smart Hedger PnL $7,000
Total Customer PnL Range -$20,000 to -$35,000
Max Smart Hedger PnL Drawdown -$700
Average STP PnL $5,700
Average Cover Traded Volume (vs LP) $65 million
Average STP Traded Volume $125 million

Result: For Trend-Following customers Smart Hedger increases broker PnL by 20% and decreases volumes traded versus LP by ~50%

Sample one trading day activity for the Trend-Followers

Compare Smart Hedger versus STP hedging:

Broker loses money on his customer orders (top graph, reg), but Cover account PnL compensates for the losses on the Customer Orders (top graph, black).

The Total PnL for the brokers using Smart Hedger equals (Cover Account PnL + Customer Accounts PnL) (bottom graph, black). Smart Hedger returns 30% more profits than the STP method (bottom graph, blue).

Average Total Smart Hedger PnL $7,000
Total Customer PnL Range -$20,000 to -$35,000
Max Smart Hedger PnL Drawdown -$700
Average STP PnL $5,700
Average Cover Traded Volume (vs LP) $65 million
Average STP Traded Volume $125 million

Example graph: EUR 1 day exposure without netting

Green – total Customer EUR exposure for buy orders (above zero) and for sell orders (below zero). Blue – total EUR exposure of the Cover account.

Example graph: EUR 1 day, after netting

Green – net total Customer EUR exposure. Blue – total EUR exposure of the Cover account. Cover account exposure is almost a mirror image of the net Customer exposure.

Example 2: Scalpers

We use historical market data to select customer trades that generate small profits over short periods of time (successful scalping behavior).

Assumptions of the Simulations:

Average Customer PnL/trade 2 pips
Average Percentage of Customers Winning 80%
Average Profit of Winning Trade $25
Average Loss of Losing Trade -$10
Average Position Duration 2 Min
Average Position Size 1 lot
Number of Simulations 1000

Results Summary (average daily results for all simulated days of trading)

Average Total Smart Hedger PnL $6,100
Total Customer PnL Range -$5,000 to -$8,000
Max Smart Hedger PnL Drawdown -$500
Average STP PnL $5,900
Average Cover Traded Volume (vs LP) $69 million
Average STP Traded Volume $135 million

Result: For Scalping customers Smart Hedger increases broker PnL by 10% and decreases volumes traded versus LP by ~50%

Sample one trading day activity for Scalpers

Compare Smart Hedger versus STP hedging:

Broker loses money on his customer orders (top graph, reg), but Cover account PnL compensates for the losses on the Customer Orders (top graph, black).

The Total PnL for the brokers using Smart Hedger equals (Cover Account PnL + Customer Accounts PnL) (bottom graph, black). Smart Hedger returns 30% more profits than the STP method (bottom graph, blue).

Smart Hedger PnL @ Close $6,300
Customer PnL @ Close -$5,600
Max Smart Hedger PnL Drawdown -$450
STP Heding Method PnL $5,820
Smart Hedger Cover Traded Volume (vs LP) $68 Mm
STP Hedging Method Traded Volume (vs LP) $138 Mm

ADVANTAGES OF SMART HEDGER

OVER THE STP METHOD

Metric Smart Hedger STP
Profitability 10 to 20% higher than STP (*) Tied to extra spread over LP spread
Speed of Client Order Execution Instantaneous from 500ms to 1 sec
Volume of Trades vs LP Decreases by up to 50% compared to STP (*)
Broker Risk Broker sets acceptable Risk Level Zero
Spread Variable spread, which is on average lower than STP spread (**) Pre-set extra spread over LP
Customized Hedging Methodology for Different Client Groups Custom Hedging setup for:
Trend-Followers
Scalpers
Mean-reverters
Not available
Client Flow Forecasting Available, to optimize held inventory to upcoming customer orders (**) Not available
Short-Term Price Movement Forecast Upcoming Not available
Performance Analytics Metrics Broker Risk Level
Broker PnL History by Currency/Client
Toxic Client Identification/Classification
Not available

Word From Our Client

5 Stars Based on 4,700+ Real Users Reviews

"Keysoft’s helpful attitude defines them as a provider."

"You can really trust the reliability of METAfx’s MAM application."

"Aklima The standard chunk of Lorem Ipsum used since the 1500s."

Word From Our Client

5 Stars Based on 4,700+ Real Users Reviews

“Keysoft’s helpful attitude defines them as a provider.”

Costas Kappai CEO & EXECUTIVE DIRECTOR, FXPRIMUS
94%

Increase in offline purchases versus control group.

“You can really trust the reliability of METAfx’s MAM application.”

Ryan Nettles HEAD OF FX DEALING, SWISSQUOTE
58%

Increase in offline purchases versus control group.

“Keysoft is amazingly adaptive to your needs.”

Shiwei Kwong HEAD OF RISK MANAGEMENT AND LIQUIDITY, BLACKWELL GLOBAL
82%

Increase in offline purchases versus control group.

FAQ

Frequently
Asked Questions

Questions about MAM, PAMM and all things
multi account management system!

Multi Account Manager application is connecting the MetaTrader Server and managing multiple master and sub accounts. The MAM application has a user friendly interface which allows seeing all the accounts and applying changes to them.

• There are 10 allocation methods for MAM4 and 14 methods for MAM5

• MAM Client application used by your asset manager allows to change allocation parameters, track opened positions, request reports etc.

• MAM Administrator application enables the control of all master and sub-accounts as well as create client licenses

• MAM5 Mobile and Web API allows flexible integration with the online services of your web site

There are three types of Commissions available:

1. Performance Fee – based on the High-Water Mark (HW) algorithm. The high-water mark ensures that the manager does not get paid large sums for poor performance.

2. Management Fee – a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise.

3. Flat Fee – a price per period, which remains constant regardless of the performance or amounts under management.

The license fee for brokers is calculated based on the trading volume. There’s no installation fee and no fees per server. So, you can use our MAM software in both versions MAM4 and MAM5 and on an unlimited number of servers. We will always base our fee calculation on the total volume traded with our MAM on all your servers. Please contact our team for the pricing details.

You can have an unlimited number of accounts. You can implement block orders – potentially involving thousands of accounts – with one on the Master Account with almost no delay in the data transfer following the instruction for such a transfer. You can also monitor performance and commissions in real time, as well as manage clients’ money with a choice of allocation techniques.

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