I’m not sure if I am misunderstanding how the spread works but…
I’ve been doing some practice trading on IBFX. Every time I open a new order, the ask line is 30 pips away from the bid line. So, every order I end up being -30 pips as soon as I open the order. Is this normal?
I thought the spread was supposed to represent the difference between the ask and bid. Am I wrong?
Thanks for the advice!
You actually buy the ask price and sell at the bid. As you stated correctly, the spread is the difference between these two prices. With standard settings the ask line is hidden in MT4 and only the bid line shows. You can change that in properties which, in the beginning, might give you better visual understanding of what’s actually going on. Don’t forget to zoom in a bit otherwise the two lines may blur together and you won’t see them both.
Logically it follows that every time you open a trade you’ll immediately find yourself in the red by the amount of pips that the spread happened to be when your order went through.
(Btw, I think those 30 pips probably represent 3 pips. The last 0 is a so called pipette brokers add to be able to give fractional pip spreads such as 2.5 pips will look like 25 pips with all brokers that use 5 decimal pricing)
What you’re experiencing is, in other words, quite normal.
Ahhhhh…I see I see. There was something ridiculously disheartening about seeing myself negative 30 pips. 3 pips makes more sense. It makes a lot more sense for my calculations too.
Thanks for the answer, it makes me feel a lot better.
