A stock split is a technical procedure that companies use to make their shares more accessible to investors and traders. Although it might seem like a big change, it doesn’t affect the total value of your investment or the company itself. Let’s walk you through how it works and what it means for your trades — especially if you use MetaTrader 4 (MT4).
What happens during a stock split?
When a company performs a stock split:
🔹 The number of shares increases
🔹 The price per share decreases proportionally
🔹 The total market value (capitalization) stays the same
🔹 The price chart gets adjusted historically
Example of a 10:1 split
Let’s say a company does a 10:1 split. That means:
For each share you own, you'll now have 10 new shares
If each share was worth $830, it’ll now be worth $83
The total value of the company and your investment remains unchanged
Real example: MasterCard (MA)
On January 22, 2014, MasterCard Inc. performed a 10:1 stock split.
Before the split, the share price was around $830.
After the split, each share was worth $83, and shareholders received 10 shares for every 1 they held.
The historical chart was adjusted: all past prices were divided by 10 to reflect the new rate.
What if you have an open trade in MT4?
Imagine you opened a buy trade of 1 lot (100 shares) in MasterCard at $800 per share, and the price went up to $803. Your profit would be: $300.
After the split:
The opening price is now $80 instead of $800
The current price becomes $80.3
The profit per share is $0.3
But you now hold 10 lots instead of 1 (1,000 shares total)
Final result:
$0.3 × 1,000 = $300
Your profit remains the same!
Key point: It’s a technical adjustment
You can’t profit or lose just because of a stock split
The price change is technical, not market-driven
The total value of your trade or investment stays intact
Reverse Split
A reverse stock split is a process where a company reduces the number of its outstanding shares while proportionally increasing the price per share. Unlike a regular split, where shareholders receive more shares, in a reverse split they end up with fewer shares, each worth more.
This procedure does not change the total value of the investment, but it is often used to meet regulatory requirements or improve the stock’s perceived value.
📌 In summary
A stock split increases the number of shares and reduces the price per share
Your MT4 trades are automatically adjusted (price, volume, and lots)
It doesn’t affect your actual gains or losses
It’s purely a technical change, not a trading opportunity