I am trading with Tradeo, whose platform I quite like; it’s built on top of FXGlobe’s brokerage. I can trade with MT4, but I actually prefer Tradeo’s interface.
Anyway, using their demo I got used to spreads that were about 12-13 pips wide (screenshot attached), and not even a consideration, but while I was looking at my results this week, I noticed how wide the spread appeared to be at the close of trading this week.
I took a screenshot, and then did some math, at which I am not always good but I came up with 0.0048 between bid/ask and that’s 48 pips! (screenshot attached)
Here are my questions:
Did I calculate that right?
Is that quite a big spread or is that in the normal range for most brokers?
Is this normal for the end of trading on a Friday when maybe liquidity is lower than usual?
I should note Tradeo does not charge commissions. However 48 pips puts them at the very top (or bottom depending on your view) of the brokers listed on Forex broker’s spreads page (sorry can’t post links yet).
I would like to stick with Tradeo as their support and on-boarding have been excellent. Execution quality and slippage have both been good I think but I’m not experienced. I don’t like that the demo and real account pip spreads are different, that seems misleading.
[B][I]Under normal market conditions[/I][/B] (more on that in a moment), a 48-pip spread is ridiculous, unless you’re trading an exotic currency pair — something like the USD/MXN (US dollar / Mexican peso).
And 12-13 pips (which you said you got used to) is ridiculous (under normal market conditions) for the EUR/USD, which is the pair you were trading.
Here is a WEBPAGE showing typical spreads for various classes of currency pairs. Spreads typically vary from broker to broker, but generally should not be [I]very[/I] different from the spreads shown on that webpage.
Your question about “the end of trading on a Friday” implies that you have no clue about what’s been going on in the financial markets all day today.
Have you heard about “Brexit” — the referendum in Britain to exit the European Union?
[B]Today was not an ordinary Friday in the forex market (or in any other financial market).[/B]
Today, the daily range (from HIGH to LOW) on the EUR/USD was over 500 pips. This is not normal.
The daily range on the GBP/USD was 1,795 pips. This is extraordinary.
And the daily range on the GBP/JPY was over 2,700 pips! This is unheard of.
So, of course, at various times throughout the day, as these extraordinary market conditions were playing out, spreads widened dramatically at many brokerages. But, near the end of the day today, prices settled into narrow trading ranges, and spreads returned to normal.
Here is a screen-shot of (live) prices for selected pairs from FXCM, taken at about 4 pm (New York time) today (Friday, 6/24). Compare the column of spreads with the spreads you have “gotten used to”.
It’s amazing that you were trading the currency market today (in demo, I presume), without the slightest inkling of the extraordinary events taking place in this market, and every other financial market.
There has not been a day like today in the forex market, since the Swiss National Bank debacle in January 2015. You should do some reading on that event, as well as the events of today.
Thanks, Clint that is very informative. So you’re saying these high spreads I’m seeing at the end of trading Friday could be due to this “Brexit”?
I’m kidding of course, I have been following Brexit closely for a while, and I did fairly well on the 23rd, adding 15% to my account in a single evening, but I’m sure an experienced trader would have done much better. I was trying to be cautious and avoid getting wiped out.
I did [B]not[/B] notice the spreads were quite so high, maybe Tradeo is doing a very good job keeping spreads reasonable then, under the circumstances? Friday (24th) I added only 1% to my account and it seemed to me the market was fairly cautious and range-bound (because of the thrashing that happened on Thursday), but maybe that was the large spread effect?
I guess if spreads are still this high Sunday evening I will have to consider switching brokers, but that’s going to be a pain.
[QUOTE=Clint;773800]Your calculation of 48 pips is correct.
[B][I]Under normal market conditions[/I][/B] (more on that in a moment), a 48-pip spread is ridiculous, unless you’re trading an exotic currency pair — something like the USD/MXN (US dollar / Mexican peso).
And 12-13 pips (which you said you got used to) is ridiculous (under normal market conditions) for the EUR/USD, which is the pair you were trading.
You and I are probably talking about different forex “trading days”.
In my world, trading days begin and end at 5 pm New York time. So, the real chaos in the forex market began after 5 pm Thursday, which was the beginning of “Friday”, as I reckon “days”.
By contrast, I think you are using “calendar days” as trading days.
Clint, I’m confused. Here is a screenshot I’ve taken from FXCM’s online demo and it’s showing huge spreads also. Admittedly Tradeo’s are a bit higher. 48 vs 42.2 for EURUSD and 29.5 vs 24.2 for USDJPY.
Is this just very different from the desktop client screenshot you showed me?
Yes, you are correct. But so, things returned to normal for you at the end of Friday then? Please see my previous post. I can’t believe I’ve been getting gouged so badly on my trades if the spreads have been like this since I started. But, I’m not sure as I wasn’t checking that carefully to start with.
Notice the time stamp at the top right of both the EUR/USD and USD/JPY quote boxes say 16:59:59. I’m guessing you took that screenshot after 5pm New York time on Friday which means FXCM’s trading desk was already closed for the weekend and prices were no longer updating. Those spreads are not indicative of the prices that were available on our platform when trading was still open.
To see what our spreads were at a specific time in the past, you can pull up a tick chart on Marketscope.
Go to File > Create Chart
In the window that pops up, select “t1” as the Period
Select “Other” where it says “Show Data Range”
Specify the time and click OK
Right click on the chart that appears
In the menu that pops up, go to Chart Mode > Table
As you can see our EUR/USD spread was between 1 or 2 pips around 1am New York Time on Friday. While that’s wider than our typical 0.5 pips, it’s nothing like the spreads in your screenshot from when trading was already closed for the weekend.
It seems there may be some confusion. You refer to “other trading times” when the “end of the week” is not a trading time. To clarify, the trading desk is closed for the weekend from 5pm Friday to 5pm Sunday New York Time and any spreads you see during that time are not tradable.
