Personal Composite Instruments PCI
PCI is the abbreviation for Personal Composite Instrument and a key component of GeWorko Method, where the value of the base asset (portfolio) is expressed in the value of the quoted asset (portfolio). PCI belongs to the class of synthetic instruments, it is a unique technology in the market, providing an opportunity to compose personal instruments, such as new cross rates, correlations between various assets, currency indexes, stock portfolios, portfolios for pair trading and many more. The variations of PCI are limited only by trader's imagination. You can create personal instruments on your own by reading the quick guide for creating PCI by GeWorko Method.
Personal composite instruments, created by GeWorko Method, are used for analyzing financial markets, studying complex interrelations between assets and their combinations on historical charts. Moreover, traders instantaneously get an opportunity to trade the created instruments.
- Create instruments in form of portfolios with various degrees of complexity, from very simple, including only two assets, to complex combinations, consisting of dozens of assets.
- Add base and quoted assets in the personal instrument, which will result in opening both long and short positions, while making deals.
- Give each component (asset) an individual weight in units of the asset volume – in the U.S. dollars, in percents of the total portfolio volume (base or quoted); the U.S. dollar, as an asset, can be added both to the base and quoted portfolios.
- Simple and user-friendly interface for creating PCI.
- Get the historical prices of the created PCI.
- Maintain the database of the created personal instruments.
Each user of trading-analytical terminal NetTradeX gets access to a unique technology, providing an opportunity to create unique Personal Composite Instruments (PCI).
Examples of PCI
Besides the PCIs created on your own, you can use the PCIs created by our professional analysts. You can easily find these instruments in the PCI Library on our website. The number of these instruments is increasing constantly to provide a wide choice for our clients.
The instruments are divided into several groups: currencies, commodities, stocks and indices. Traders only need to download the instruments to their trading terminals and start trading them.
However, these are only examples of Personal composite instruments that can be created through the new technology. You are free to create your own instruments, analyze and trade them on NetTradeX trading terminal.
How to Create, Analyze and Trade PCI
Let us consider an example of trading a quite complex personal instrument, consisting of two portfolios. The base portfolio consists of three energy assets (from Commodities category, available on the terminal) - #C-BRENT, #C-NATGAS, #C-HEATOIL, the quoted portfolio consists of two commodity currencies – AUD and CAD.
In our example we will set assets of the base part in the following portions of the current value of the asset: #C-BRENT - $4000, #C-NATGAS - $3000, #C-HEATOIL – $3000 (the weight of Oil is more); and assets in the quoted part – in portions, equal to $5000 for an asset (note that in general, the values of the base and quoted portfolios can be set not equally).
A personal instrument is created (with the name "&Energy/Currency_cmd", given by the user)
We will add this instrument to the list of ''Instruments in Use'' (in ''Market Watch'' window) and will reflect on the chart with an example of simple technical analysis.
Buying 1 unit of "&Energy/Currency_com" instrument means buying corresponding commodities in volumes, set in the new instrument, and selling corresponding currencies from the quoted portfolio. Moreover, selling the AUD means selling the AUDUSD and selling the CAD means buying the USDCAD. Accordingly, selling this PCI means selling assets of the base portfolio and buying assets of the quoted one.
The user can view properties of open positions on the new instrument and on its components in the table of ''Open positions''.
PCI Trading Features
After creating and placing PCI in the “Market watch” window, it may be traded as a common instrument, set pending and linked orders Take Profit and Stop Loss.
Current Bid and Ask values of PCI are calculated from the current Bid and Ask values of all the components, included in the instrument, taking into consideration their weights in the structure of the PCI. The PCI quotation accuracy is defined by the accuracy of the assets included in it and is set in six digits (the sum of digits before and after the decimal point). The typical spread of PCI is defined by the weighted averages of the instruments, included in it.
PCI swaps are calculated as a sum of swaps of all its components.
The created PCI may be traded only during the trading sessions of all the components, included in it.
Note that actually PCI trading means a group of operations with the included components, when it is possible to perform series of deals in set volumes and directions with only one command. That is why the purchase/sale of the PCI may be decomposed into positions on common instruments.
If the trader has opened a PCI position, all the corresponding positions of the instrument’s components are also available in the terminal. Moreover, when the trader closes a position on at least one of the components, the PCI “breaks down” (and is removed from the PCI database), but the rest of the components are saved in the system as ordinary positions.
There is no “Order distance” for PCI, orders may be set “directly in the market.” However, the trader cannot put forward a fixed slippage value and get a re-quote. Trading is realized by market prices of the instruments, included in the PCI at the moment of receiving the order by the server.
When calculating the PCI charts, represented in “Bars” and “Candles,” High and Low values for each bar in future will be calculated to the minute accuracy when downloading the charts from the server. At present the charts are downloaded from the server only with Open and Close values without the minimum (Low) and maximum (High) price of the time frame. The values of the minimum and maximum price of the time frame are available only on the charts, built in real time mode with the turned on client terminal. The display of the PCI on the charts does not impact the accuracy of performing deals and activating orders.
Limitations on working with PCI in the current version of NetTradeX terminal:
- The maximum number of PCIs is not more than 100 for one account;
- The maximum number of PCIs in the subset of “Instruments in Use” is not more than 10 for one “Workspace”;
- The maximum number of assets (base plus quoted) is not more than 25 for one PCI;
For working with PCI you need to download the terminal and open an account on NetTradeX platform.
You can find the instruction for creating and using PCI through GeWorko Method on NetTradeX trading terminal on ''Quick Guide'' page.
Traders and fund managers may find articles about the application of Personal Composite Instruments, created through GeWorko Method, in the constantly updated section "Articles on application of PCI" on the website of IFC Markets.