Hello People,


I have a question about the broker spread.

Let's say the current broker spread is 2, and you entered a position at that point.
You are holding the position, but the spread changed to 5 for some reason.


1) Then what happens if I close the position when the spread is 5?


2) If you had a stop-loss order 3 pips below, would you be stopped out?



Can anyone please clarify these with some explanation of general procedure how FX trading occurs? (bid, ask etc)




Thank you!!


ASB

I would highly discourage you to set a S/L three pips below where you opened your position otherwise I can imagine that you lose every trade you place.

I hope this is not a joke

spread depends on what kind of account you trade with

fix spread
variabe spread
variable spread+comission

which type you are you trading or willing to trade?



gomoov posted:
When we are referring the 'current exchange rate', is it bid or ask? (or avg?)

And, when we say spread 'widens',

if the current spread is

                                      [A------B]

do you mean,
                                      [A-----------B] (A fixed)
or
                               [A------------B] (B fixed)
or
                                 [A-----------------B] (the avg fixed)

or just randomly the end points moving?




Thanks,

My apology for not being so concise.



ASB
  

Ask always > ( bigger ) then the Bid.

Ask - Bid is broker profit + comission if there is.

spread widens when price move fast on news hours to protect broker or when price make direction change.

is that clear?


gomoov posted:
It is variable spread + commission.

there is no way to make profit from spread change on the same data feed.

you pay spread when you open on long
you pay spread when you close on short

ask side is the pay spread side.

when you go long @1.0000 your profit/loss will be calculated from the Bid.

basicly
as soon as you open the trade you will be in loss as much as the spread.

first, bid should reach the ask price to BE ( break even )

'If you close, you gain 10pip.'

you open long with 'ask' and will close it with 'bid'. not with 'ask'. so there is no profit when spread changes.

is that clear?
 


gomoov posted:
Let's suppose the current bid/ask is

ask: 1.0000
bid: 0.9990

spread = 10pip

and you long @ 1.0000.

If this changes to

ask: 1.0030
bid: 1.0010

spread = 20pip

If you close, you gain 10pip.

So, widen spread doesn't necessarily mean you lose...