In a recent MT4 update, developers added a new tab to the terminal. It was integrated into MT4 from a more up-to-date MT5 terminal and is called “Exposure”.
The “Exposure” tab in MT4 displays summary information on the volumes of each currency for all open positions. Simply put, the “Exposure” shows how much and what kind of currency was bought/sold (allowing for leverage).
For example, if you’ve bought 1 lot of EUR/USD, the “Exposure” will show EUR 100,000 (which is equal to one lot). If you’ve sold 1 lot of EUR/USD, the “Exposure” will show a negative value of EUR -100,000 meaning that you’ve given the nth amount of euros to buy dollars. See the picture for more details:
Perhaps, it all looks complicated and unclear, but it is the “Exposure” that clearly shows what’s happening while you open a trade. Newbies will find it useful to examine this tab for a better understanding of what they’re doing in Forex.
To fully understand the “Exposure” in MT4, let’s consider another situation.
You’ve bought one lot of GPU/USD, EUR/USD, and USD/JPY each. In the “Exposure” tab, it will appear as follows:
The first two currency pairs are direct meaning that buying 1 lot of the pair equals buying 100,000 units of currency for dollars. The opposite is true for indirect (inverted) pairs – you buy the nth amount of other currency for $100,000. The value will always be equal to “lot * 100,000” for direct pairs and “100,000 / exchange rate” for indirect pairs.
What is a negative value? When you buy 1 lot of USD/JPY, you buy dollars for yens. Since the account currency is the dollar, and you have no yens, you figuratively take on them in debt and give them back after closing a trade. The same happens if you sell a direct pair of EUR/USD: you’ll sell EUR 100,000, which you don’t have, and thereby the value will turn into a negative one.
We hope that we gave you a fairly detailed description, but if you still don’t understand it, try opening a demo account and open/close several trades.
What’s the “Exposure” Tab in MT4 for?
The “Exposure” will help beginners in learning the basics of trading and show the process of making trades in the Forex market in detail.
There is a strategy where you can apply the information obtained in the “Exposure” tab. Some investors use a currency basket. For example, you have $1,000, but you’re afraid that the dollar may fall in price, so you change a portion of your dollars for euros and pounds to limit your exposure to such a risk. As a result, you’ve 30% in dollars, 40% in euros, and 30% in pounds. Now, if the dollar experiences sharp fluctuations, you’ll still keep your money safe.
However, this strategy can be applied to own funds only. If you try to implement such a strategy using leverage, you may simply not have enough margin to cover a floating loss at once.