Skip to main content

What is Split? (MetaTrader)

Split (or splitting) is a procedure corporations perform to increase the number of shares in a company and to make them more affordable to clients and traders. So, when splitting 10 to 1, the number of shares increases 10 (ten) times, and the price of one share decreases ten-fold. At the same time, the company's capitalisation remains the same, while the historical price chart is adjusted to reflect the new rate.

For example:

On 22 January 2014, MasterCard Inc did a 10-1 split. The price of MasterCard shares at that time was hovering at around $830. After the split, the price of each share decreased ten-fold to $83, while the number of shares increased 10 times. So, instead of having one share, each holder received 10 without affecting the company's total value.

The price chart in all information sources was adjusted accordingly, and historical rates had their value divided by 10.

In MT4, the position volume changes in addition to the open price.

For example:

If you open a buy transaction in MT4 for MasterCard Inc at $ 800.00 per share with a volume of 1 lot (100 shares), the financial result at the price of $803.00 per share is about 250 Euros in profit. After the split, the share price is $80.30 instead of $803.00. That means the trade's opening price would be $80, not $800. However, with a volume of 1 lot, the financial result of a buy transaction from $80.00 to $80.30 would be ~25 Euros. For this reason, both the trade's opening price and the position volume are increased ten-fold. That means that the trade would be opened with 10 lots instead of 1.

Note that the change in share price during a split is technical in nature; it does not reflect a change in the real price of the asset. As such, it's not possible to make a profit or loss through this procedure.

Did you find it helpful?