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Effect of spread on time frame being traded
Biedrs kopš
160 ieraksti
May 13, 2018 at 08:16
Biedrs kopš
160 ieraksti
Have you guys ever considered the effect of spread to the leverage used, and time frame in which you execute orders?
In short a post a couple of postulates I've formed through trial and error, and some thinking:
Low spread - lower time frame - scalping is possible
Higher spread - higher time frame - scalping is not possible because spread eats profits.
Definition of scalping?
If the spread is low - one can use higher leverage, and lower time frame. However, risk of total loss (bankruptcy), and becoming indebted is higher!
As a rule of thumb I switch "show ask line" on in MT4. If the ask line is visible on that particular time frame I don't enter in a position in that time frame. So no entry trigger there. I might exit on a time frame lower than that, though, if that feels good. I consider that if I can't see the ask line in that time frame the effect of spread is negligible.
Does anybody know how to calculate the effect of spread on profit (profit calculations), in addition that the trades lost should be taken into account, too? I'm no good in math.
Any thoughts, and ideas?
In short a post a couple of postulates I've formed through trial and error, and some thinking:
Low spread - lower time frame - scalping is possible
Higher spread - higher time frame - scalping is not possible because spread eats profits.
Definition of scalping?
If the spread is low - one can use higher leverage, and lower time frame. However, risk of total loss (bankruptcy), and becoming indebted is higher!
As a rule of thumb I switch "show ask line" on in MT4. If the ask line is visible on that particular time frame I don't enter in a position in that time frame. So no entry trigger there. I might exit on a time frame lower than that, though, if that feels good. I consider that if I can't see the ask line in that time frame the effect of spread is negligible.
Does anybody know how to calculate the effect of spread on profit (profit calculations), in addition that the trades lost should be taken into account, too? I'm no good in math.
Any thoughts, and ideas?

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