Iâm new here and I have a question (Basic probablyâŚ), but I need to understand. I want to know when the spread is apply on a trade (when I open the trade?..) and if a variable spread can affect a live position.
(Today, I did a trade USD/TRY to tested the rollover(Swap) and 15 mins before 17h, the spread bounce from 111 points to 600 points and a had the impression than my position drop a lot because of that.)
Iâm trading with a Forex.com demo account with MT4 by the way.
The spread is relevant both when you open and when you close your trade.
For a long trade, you buy to open at the higher price and sell to close at the lower price; for a short trade, you sell to open at the lower price and buy to close at the higher price.
Changes in the spread canât affect your trade [I]while itâs open[/I], only on opening/closing it.
Those are huge spreads youâre describing. More tradable currency-pairs like the EUR/USD should typically have a spread of about 1 pip, during their regular trading hours.
Thanks for the explanation, If I understand⌠When I open a position the negative effect on my position is the spread apply at this time and if the spread going up (1 pip) this is will take effect when I will close my position (Add the difference on my position) and if the spread going down (1 pip) this is subtract the difference on my position.
Take a look @ this, too, to further help illustrate âspreadâ.
The 10 year is very âliquidâ, and thus has a very tight spread.
During periods of increased trading activity, you can see the spread widen out b/c traders are pulling their limit orders (those willing to buy (Bids) and those willing to sell (Offers)) b/c of uncertainty. So, the price for the asset (always quoted as Bid/Ask) can widen based on liquidity and where the next âbestâ price is on each side of the ladder.
Understand this, and youâre 10 football-field lengths ahead of 90% of other retailers out there.
If Iâve understood you correctly, I think so, yes.
If the spread is one pip wider when you close your position than it was when you opened your position, then on average the whole trade is probably going to cost you something like half a pip more than it normally would, because of the spread change.
What [U]matters[/U] is to trade somewhere where the spread is small and as constant as possible.
Spreads can always change a very little bit, according to market conditions, but those changes should be [I]very small[/I] fractions of one pip, not a [I]whole[/I] pip, unless youâre trading at times when you perhaps shouldnât be.