Indices may require dividend adjustments, which depend on whether you are long or short the index.
What is a Dividend?
An index is a weighted basket of companies. When one of these companies pays a dividend, its market value decreases by an amount equal to the dividend on the ex-dividend date.
This decrease is usually reflected in a drop in the share price on the ex-dividend date. The magnitude depends on the dividend size and the company’s weighting in the index. Sometimes the impact is minor, while in other cases it can significantly affect the index price.
How Are Dividends Calculated?
To reflect market conditions accurately, dividends are credited or debited to your account balance (if applicable) at the start of each trading session for the index. Dividends are adjusted per instrument, meaning all open positions held past the close before the ex-dividend date are included.
Be aware of when dividends may be applied during index trading sessions to better plan your positions and risk.
Calculation Method
Long (Buy) positions usually receive dividends:
Dividend Received (in index quote currency) = Lots × Contract Size × Dividend Rate
Short (Sell) positions usually pay dividends:
Dividend Paid (in index quote currency) = Lots × Contract Size × Dividend Rate
You can monitor dividend details in your Client Portal > Performance > Dividends section, or view balance changes caused by dividends directly in the MT trading platform.