Hello comrades! I come to mail a letter with questions from the readers of this blog, I try to answer, if I can do something to help. Here is the text of one of these letters, published with permission of the author:
I'm a beginner. Recently opened its first real account, I try to trade the strategy.
But there is a problem, it seems to me that my broker deceives me, because after the discovery of any transaction, it is fighting becomes unprofitable! I specifically checked it as soon as I open the transaction, in the column "Profit» MT4 terminal already has a small minus! And the price of even the slightest movement did not have time to do ...
Tell me, please, how to be? Maybe I do something wrong? Or from such brokers is better to run?
But there is a problem, it seems to me that my broker deceives me, because after the discovery of any transaction, it is fighting becomes unprofitable! I specifically checked it as soon as I open the transaction, in the column "Profit» MT4 terminal already has a small minus! And the price of even the slightest movement did not have time to do ...
Tell me, please, how to be? Maybe I do something wrong? Or from such brokers is better to run?
Do any of these beginners did not arise questions and unfounded suspicions about brokers (which is unreasonable, because the company had nothing to do with it!)? It is understandable, each transaction immediately becomes unprofitable - try to earn! The thing spread, which is often not taken into account beginning traders.
What is the spread?
What is the spread in forex? Spread - the difference between the sale price and the purchase price. That is, at a certain point in time the purchase will take place at a slightly higher price than sale. See figure below. The purchase price is called the Ask. Sale price is called the Bid.
What is the spread?
What is the spread in forex? Spread - the difference between the sale price and the purchase price. That is, at a certain point in time the purchase will take place at a slightly higher price than sale. See figure below. The purchase price is called the Ask. Sale price is called the Bid.
It is because of this difference in prices, each transaction after the discovery immediately becomes unprofitable. Because you bought at the price of Ask (higher), and will be sold at the price of Bid (lower). This is taken into account in MT4 terminal, and in the column "Profit" automatically displays a small loss, which is the size of the spread. That's what I said to Michael.
Why do I not see the size of the spread?
Because the Ask price is not displayed by default in the terminal settings, shown only Bid. If you MetaTrader4, the fix is simple. We need to right click on the chart, select "Properties":
Why do I not see the size of the spread?
Because the Ask price is not displayed by default in the terminal settings, shown only Bid. If you MetaTrader4, the fix is simple. We need to right click on the chart, select "Properties":
In the window that opens, tick the item "Show Ask line":
spread on forex
spread on forex
Now the chart will display 2 lines: the top (purchase price Ask) and lower (sales price Bid).
Examples of transactions.
Example 1. A transaction for the purchase. The deal on the purchase is made at the Ask price is the higher price. Even if your terminal off its display, the order is still open at the price of Ask (in the figure below by 1.03504). But to close the order, you will have a different price - Bid.
Example 2: The deal for the sale. It lies at the Bid price (in the figure below by 1.03485), this lower price. She always displayed. At the close of the transaction to sell, there is a ransom of the same volume at the Ask price.
Example 3: Here is another question from a reader:
Hi, Ivan!
I read your article, thanks for the work!
I wonder your opinion on one issue might have faced such a situation. I began trading under the new strategy, he said that the price often comes to the set take profit, but it is not executed! Sometimes the price goes beyond this level, but the order is still not closed, it is necessary to close the hands ...
You do not know what could be wrong?
The point again spreads. Of course, it is unpleasant, when the price reaches your profit, but it is not executed. But let's see the example of why it can happen!
Suppose you open a deal to sell and set the profit target below the current price. When the price reaches this level, the transaction should be closed, that is, there will purchase (as we originally sold).
Now look at the picture:
Hi, Ivan!
I read your article, thanks for the work!
I wonder your opinion on one issue might have faced such a situation. I began trading under the new strategy, he said that the price often comes to the set take profit, but it is not executed! Sometimes the price goes beyond this level, but the order is still not closed, it is necessary to close the hands ...
You do not know what could be wrong?
The point again spreads. Of course, it is unpleasant, when the price reaches your profit, but it is not executed. But let's see the example of why it can happen!
Suppose you open a deal to sell and set the profit target below the current price. When the price reaches this level, the transaction should be closed, that is, there will purchase (as we originally sold).
Now look at the picture:
You can see that the price of sale Bid actually dropped below the level of take profit, but note that the purchase price is higher than Ask. Because our take profit set to purchase, it only works when you touch the top price (Ask).
Due to such nuances can seem that the order does not work (especially when displaying off the Ask), in fact, the price is simply not reached him.
As forex spreads affect the results?
As you have seen above, the spread - is a small commission, which takes the broker for each transaction. On the one hand - a trifle, the difference is very small! But if you count carefully, the figures are quite impressive. In a little on each trade, eventually run over ten per cent of the deposit! This is not a joke, for instance, I have lost over 100 transactions for about 30% of the deposit on the spread! It's quite an impressive amount, to be the bottom line, you need to earn in excess of this. But the loss of a spread depends on many factors: the broker (see how to select the minimum cost), trading strategy, trading time, so you will have very different numbers.
On this subject, conducted its own research. It turned out, a commission fee of 0.1% made from non-operating profit strategy! For 4 years of testing commission ate nearly 1,200% profit! All results are translated into graphics, you can appreciate here.
What determines the size of the spread in the Forex?
The spread can be fixed, floating and floating with the Commission laid down.
Fixed. Very popular with forex brokers, especially for the types of accounts that are targeted at beginners. The size of the spread constant all the time, for example, 3 points. Novice traders clearly know what they will pay a commission, even before the opening of the transaction. Besides it is possible with great precision to test trading strategies on historical data. But there is a significant minus - the size of the spread is very high (which is not a bit confuse new speculators!).
Floating. This type of spread is typical for ECN accounts, transactions which are displayed on the interbank market. The difference between the purchase and sale varies over time, for example, may be minimal during the news expectations and dramatically expand in the time of their release. In the long term, trade in such conditions more favorable than the fixed spread.
Floating with the Commission laid down. In exactly the same as described in the paragraph above, but there is a minimum value, fixed fee, less a spread can not be.
The forex market is still in our country is not regulated, so the pricing is far from clear (as it should be!). Each broker can establish its own commission, for example, that for the EUR / USD spread is 3 points and it has 10 times less (!) - From 0.3 points.
Complete Dictionary of forex terms.
For beginners it is an indispensable thing! Here I remember how he read a variety of articles and half did not understand :). What is the spread that such a swap, some margin, leverage, and so on. D. In fact, it is the simple things that you can just read and not to suffer. You can get forex glossary of terms is absolutely free. Enter the e-mail, it will automatically come in for a minute.
Your e-mail address
GET
Well, everything, now it's time to finish. With you was a private trader, we discussed what the forex spread. I invite you to subscribe to blog updates by email in the form below, so you'll know about the most interesting first. Or add in social networks, where I was able to announce the posts. I wish you success, so far!
Due to such nuances can seem that the order does not work (especially when displaying off the Ask), in fact, the price is simply not reached him.
As forex spreads affect the results?
As you have seen above, the spread - is a small commission, which takes the broker for each transaction. On the one hand - a trifle, the difference is very small! But if you count carefully, the figures are quite impressive. In a little on each trade, eventually run over ten per cent of the deposit! This is not a joke, for instance, I have lost over 100 transactions for about 30% of the deposit on the spread! It's quite an impressive amount, to be the bottom line, you need to earn in excess of this. But the loss of a spread depends on many factors: the broker (see how to select the minimum cost), trading strategy, trading time, so you will have very different numbers.
On this subject, conducted its own research. It turned out, a commission fee of 0.1% made from non-operating profit strategy! For 4 years of testing commission ate nearly 1,200% profit! All results are translated into graphics, you can appreciate here.
What determines the size of the spread in the Forex?
The spread can be fixed, floating and floating with the Commission laid down.
Fixed. Very popular with forex brokers, especially for the types of accounts that are targeted at beginners. The size of the spread constant all the time, for example, 3 points. Novice traders clearly know what they will pay a commission, even before the opening of the transaction. Besides it is possible with great precision to test trading strategies on historical data. But there is a significant minus - the size of the spread is very high (which is not a bit confuse new speculators!).
Floating. This type of spread is typical for ECN accounts, transactions which are displayed on the interbank market. The difference between the purchase and sale varies over time, for example, may be minimal during the news expectations and dramatically expand in the time of their release. In the long term, trade in such conditions more favorable than the fixed spread.
Floating with the Commission laid down. In exactly the same as described in the paragraph above, but there is a minimum value, fixed fee, less a spread can not be.
The forex market is still in our country is not regulated, so the pricing is far from clear (as it should be!). Each broker can establish its own commission, for example, that for the EUR / USD spread is 3 points and it has 10 times less (!) - From 0.3 points.
Complete Dictionary of forex terms.
For beginners it is an indispensable thing! Here I remember how he read a variety of articles and half did not understand :). What is the spread that such a swap, some margin, leverage, and so on. D. In fact, it is the simple things that you can just read and not to suffer. You can get forex glossary of terms is absolutely free. Enter the e-mail, it will automatically come in for a minute.
Your e-mail address
GET
Well, everything, now it's time to finish. With you was a private trader, we discussed what the forex spread. I invite you to subscribe to blog updates by email in the form below, so you'll know about the most interesting first. Or add in social networks, where I was able to announce the posts. I wish you success, so far!
