Help with spread cost?

I’ve seen a lot of brokers offering no fees, just the cost of spreads. What [B][U]exactly[/U][/B] does that mean?

Here is an example from Oanda’s site:

There are no costs other than the spread to trade with OANDA. Trading clients pay the spread only (1.2-3 pips on all major currencies traded), with no fixed transaction fees or service charges.

Hi

It means that spread is the only cost to the customer by broker.

say you open a 1 Lot (100,000 units) position in EURUSD with 3 pip spread then the cost is $30.

so if you open a position and close it quickly without the price moving up or down it will cost you the spread like $30 in the above example.

so if the position you opened moves in your direction by spread amount you will breakeven at that point and if the price moves further in your direction you’ll be in profit.

Hope this helps

Regards
tradertalent

Yes, thank-you, that really helps. :slight_smile:

Another question:

Can/Do brokers ever change the spread cost after an order has been placed?

No spread is charged when you open a postion so it remains same but spread could be fixed or variable depending upon the account and the broker. Fixed spread is offered by Market makers.

I would advice you to open a demo account do some practice on it and read about ECN brokers and market makers.

regards

Yes, I’ve been running many demos from many different brokers. I understand now why traders love low spreads. Ha!

I’ve also learned to avoid MMs like the plague and go for ECN/STP brokers. The problem I have now is trying to find an honest broker, but that’s a whooooole 'nother topic, :wink:

Anyway, thanks for the help!

you are welcome

Good Luck