Pour utiliser le chat, veuillez vous connecter.
Retour aux contacts

Do you prefer fixed spreads or dynamic spreads?

TheLastBear
Aug 27 2012 at 07:53
posts 186
Hey guys,

do you prefer fixed spreads or do you prefer dynamic spreads? What does your broker offer you?

Thanks for taking time to respond.

Pax puts the X in Forex.
stevewalker
stevewalker
Aug 27 2012 at 09:00
posts 1439
ECN Account
- slippage + Comission + var Spread

it is better to trade with
- 4 digit or 5 digit fix spread NDD broker

variable spread is a big trap for EA s to fail.

better to trade with fix spread. ( 4-5 weeks ago I was on the other side )

walker

malkaby85
Aug 27 2012 at 11:13
posts 10
Moreno Rodrigez (MRodrigez)
Aug 28 2012 at 07:11
posts 168
malkaby85 posted:
fix spread of course 😀


it all depends on the trading strategy you are using

James_Bond
Aug 28 2012 at 14:49
posts 556
TheLastBear posted:
Hey guys,

do you prefer fixed spreads or do you prefer dynamic spreads? What does your broker offer you?

Thanks for taking time to respond.


A great question. I was sure dynamic spreads are best, until I read walker's response.

I do think fixed spreads is the more transparent approach broker's wise, as many traders overlook or don't understand the commission factor. However, with most brokers changing their model from fixed to variable+commission model, the costs per trade went straight down. By my calculations, spreads with a commission model are cheaper than fixed spreads.

For example (please correct me if I'm wrong), if a commission is $2.5 per 1 lot per turn, and the initial spread is 0.5, then openning and closing a trade of 1 lot would cost 0.5pip*2+($2.5*2) = $5*2 + $5 = $15 or 1.5 pips. Divided by 2, this makes a spread of 0.75 only. Anything above that number with a fixed spread is more expensive (fixed spread usually start from 1.5 pips).

stevewalker
stevewalker
Aug 28 2012 at 15:02
posts 1439
one Q
one input

why you divided it by 2 ?
calculate slippage %90 negative and starting from 0.5 to >5 pips sometimes

on the other hand variable spread is a big trap for fail EA s. EA s programmed for doing always the same. when EA work with variable spread broker it has much more fail poss then working with fix spread.

walker


James_Bond posted:
TheLastBear posted:
Hey guys,

do you prefer fixed spreads or do you prefer dynamic spreads? What does your broker offer you?

Thanks for taking time to respond.


A great question. I was sure dynamic spreads are best, until I read walker's response.

I do think fixed spreads is the more transparent approach broker's wise, as many traders overlook or don't understand the commission factor. However, with most brokers changing their model from fixed to variable+commission model, the costs per trade went straight down. By my calculations, spreads with a commission model are cheaper than fixed spreads.

For example (please correct me if I'm wrong), if a commission is $2.5 per 1 lot per turn, and the initial spread is 0.5, then openning and closing a trade of 1 lot would cost 0.5pip*2+($2.5*2) = $5*2 + $5 = $15 or 1.5 pips. Divided by 2, this makes a spread of 0.75 only. Anything above that number with a fixed spread is more expensive (fixed spread usually start from 1.5 pips).

James_Bond
Aug 29 2012 at 12:22
posts 556
stevewalker posted:
one Q
one input

why you divided it by 2 ?


Because a the spread is for one way trade, ie buy. If you wish to close it (ie sell), that is another spread cost. Actually, I could have counted it for one way only, instead of counting round trip and then dividing it 🙄.

As to slippage - I'm assuming it is the same for fixed and variable, or am I wrong here?

TheLastBear
Aug 29 2012 at 12:39
posts 186
I have to agree with Moreno Rodrigez, it all depends on your trading strategy. While EA's may under-perform with dynamic spreads, active traders may not. I am not a fan of EA's so that would not account. I myself have not decided if I would prefer a fixed spread over a dynamic spread.

Pax puts the X in Forex.
stevewalker
stevewalker
Aug 29 2012 at 14:08
posts 1439
we are calculating the cost.

according to my calculations, including slippage, fix spread is better then variable spread.
bigger the spread smaller the slippage

also with most of the brokers trader can limit slippage with instant order execution.

with ECN market order execution trade can slip as much as it can sometimes > 30 pips.

also variable spread is another ( name on it ) variable that trader can not control.

every variable out of trader control runs against trader

walker


James_Bond posted:
stevewalker posted:
one Q
one input

why you divided it by 2 ?


Because a the spread is for one way trade, ie buy. If you wish to close it (ie sell), that is another spread cost. Actually, I could have counted it for one way only, instead of counting round trip and then dividing it 🙄.

As to slippage - I'm assuming it is the same for fixed and variable, or am I wrong here?

James_Bond
Aug 29 2012 at 14:47
posts 556
stevewalker posted:
bigger the spread smaller the slippage



I think this is not a plus but a minus - most of the cost is built into the high spread - since the large part of slippage occurs (or should at least) during an economic event and since most of the time there aren't any events, the trader keeps paying a high spread for his trades.

stevewalker
stevewalker
Aug 29 2012 at 14:54
posts 1439
you think so

have you ever record your slippage😀

James_Bond posted:
stevewalker posted:
bigger the spread smaller the slippage



I think this is not a plus but a minus - most of the cost is built into the high spread - since the large part of slippage occurs (or should at least) during an economic event and since most of the time there aren't any events, the trader keeps paying a high spread for his trades.

Geoffrey Reynolds
12264
Aug 30 2012 at 11:20
posts 21
Dynamic Spread in my opinion is the way. It also gives you a good idea if there is movement in the market.

TheLastBear
Aug 31 2012 at 12:53
posts 186
So far I have stuck with dynamic spreads and I can't really complain.

Pax puts the X in Forex.
James_Bond
Sep 06 2012 at 15:10
posts 556
Besides the spread you see, you should also check the actual spread received. I saw somewhere a broker showing once price on the chart, but when you execute a trade, you get another.

stevewalker
stevewalker
Sep 12 2012 at 17:34
posts 1439
once I had coded an EA & testing it. I added a spread rescue. if spread goes above lets say 6 pips it was closing trades.
then EA started to close trades cont.

I recoreded the spread and see that sometimes spread is >20 pips. but eye can not catch it

wierd

walker
James_Bond posted:
Besides the spread you see, you should also check the actual spread received. I saw somewhere a broker showing once price on the chart, but when you execute a trade, you get another.

Financialarts
Sep 14 2012 at 13:47
posts 134
I use fixed spreads,
just because it was easyer to program in my ea's,
also havent gotten signs of any severe slippage.
It also suits my trading style the best.

The choice is personal.
as long as i'm getting profits and get payed out I'm not complaining.
Opened an account through a rebate IB which gives me part of the spread.
So my opinion is fixed spread all the way :)

I am the change in the market that causes you to lose :p / Watch out before I negative pip you! ^^
TheLastBear
Sep 14 2012 at 18:42
posts 186
I agree, the choice is personal and comes down to strategy.

Pax puts the X in Forex.
James_Bond
Oct 16 2012 at 10:02
posts 556
Aren't fixed spread a clear sign of a bucket shop? Obviously, brokers cannot offer a fixed spread when connected to the interbank markets as the spread always changes due to supply and demand, just like prices.

Financialarts
Oct 16 2012 at 10:24
posts 134
James_Bond posted:
Aren't fixed spread a clear sign of a bucket shop? Obviously, brokers cannot offer a fixed spread when connected to the interbank markets as the spread always changes due to supply and demand, just like prices.


yeah, you could see it that way.
I think the big fixed spreads are so they get a big piece of the money pie, no matter the spread variations, to make sure they got their pockets filled no matter how good/bad the excecution..

I am the change in the market that causes you to lose :p / Watch out before I negative pip you! ^^
James_Bond
Oct 16 2012 at 11:07
posts 556
Financialarts posted:
James_Bond posted:
Aren't fixed spread a clear sign of a bucket shop? Obviously, brokers cannot offer a fixed spread when connected to the interbank markets as the spread always changes due to supply and demand, just like prices.


yeah, you could see it that way.
I think the big fixed spreads are so they get a big piece of the money pie, no matter the spread variations, to make sure they got their pockets filled no matter how good/bad the excecution..


That's what I thought. And when the spread is actually higher than what they show you, they just requote you until spread gets back to normal - I don't see how a fixed spread can be better than variable in any scenario.

Veuillez vous connecter pour commenter .