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What happens if you trade while there is a stock split?

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Martin Braun
1537
Martin Braun  

For instance, talking about the stock of Netflix (NFLX.US):

NFLX.US stock

It had a massive drop in price in 2015 that was happening, because the stock was split: http://money.cnn.com/2015/07/15/investing/netflix-stock-split-earnings/index.html

What would have happened if I would have a LONG position right before this massive BEAR candle?

In reality the shares of the stock just got multiplied by 7, so the price was updated by a fraction of 7 of its original price. How does MT4 / MT5 reacts to this kind of situation?

Netflix stock just got 'cheaper.' Will you buy?
Netflix stock just got 'cheaper.' Will you buy?
  • Matt Egan
  • money.cnn.com
Stocks had a great first half despite D.C. drama
Keith Watford
Moderator
10645
Keith Watford  

It would be down to your broker not MT4 or 5. They should multiply your holding accordingly.

Always be careful and check in these situations. Some years ago, I had a buylimit order on a particular stock and the company doubled their shares with a 2 for 1 split. This meant that the shares halved in price when the market opened. I was amazed to see that my order had been filled at the limit price and showed a large loss. I got my money back from the broker as I pointed out that the stock had never been offered at that price so it would have been impossible for it to be filled.

You should also make sure that you are credited with things like Rights issues and dividends. Remember that if you hold a stock at the ex-dividend date, you should still receive a credit if you dispose of that holding after the ex-dividend date but before the dividend is paid.

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