Break-Even Point

Greetings everyone, Hopefully I’m not kicking a dead horse here but I couldn’t find my answer in the other threads.

I’m trying to figure “my” break-even point resulting in me not taking a loss. My understanding is (if long) that my break even point is the trade entry price plus the spread. That makes sense but my understanding is that Oanda is using the half-spread. I’m assuming this means that they utilize half the spread on trade open and half the (current) spread on trade close which makes my real break-even a variable.

If the spread is 3.0 pips on trade open and 6.0 pips on trade close then aren’t they using 4.5 as the actual spread to calculate their commission? Has anyone else ran into this?

Also note I’m using the developer API so this is the only way I know of the half-spread definition.
Any Ideas?

In trading, the “break-even point” doesn’t refer to the spread, in a long trade it is the level which price has risen to above entry at which point the profit equals the capital risked if the stop-loss had been hit.

Going back to the spreads issue, a 9 pips spread is massive. What the heck are you trading to find that?

Sorry I can’t comment directly on commission charge calculations, I am spreadbetting and pay spread only.

Find a broker with near 0 spreads like ic markets raw spread. You pay a small commision per lot but since you wont even be trading a single lot per trade it will be negligible. Avoid scalping as a newbie, try go for 1 to 4 hour timeframe targeting 20+ pips, dont forget you can move stop loss and tp to lock in more profits if the trade is going in your favor.

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lol, sorry those were bogus number I was using as an example. I’m typically seeing 1.3 as an average on spread. Isn’t it true that in a long position the break-even is when the bid price goes up to the trade entry point? I think that is the same thing you are saying and I’m just seeing it as the spread because in a long position I’m buying on the Ask price and the spread is the difference between the Ask and the Bid prices. I think we are on the same page.

After further looking into this I think I defined the Break-Even incorrectly. If entering a Long trade then the Break-Even is actually the price of the trade. Since immediately I’m in the red from the price of the trade to the Bid price. That gap is also the spread because I bought at the Ask price and once the Bid price moves up to my trade enter price (previous Ask price) then I break even even though the broker has his commission.

So I don’t think I’m teaching myself anything and more of re-assuring myself that my calculation is correct.

I see a lot of people getting confused between break-even point and spread. When you are in a long trade, the break even point is the level at which the price rises above entry. At this point, the profit is equal to the capital risked if the stop-loss has already been hit.

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Breakeven is usually followed by trading discipline. If a trader cannot manage a trade after making a trade, he will be far away from being a profitable trader.

Hey and I’m sorry but haven’t faced a situation like this coz 9 pips is way too high and I prefer staying with brokers that offer low spreads.

You can gain some profit from a losing trade if you can manage the trade properly.

What in the world is this answer. o_O

When I started to trade forex, I was not sure about the profits. I realized later that it is very strategy-dependent. It is all in your knowledge and practice.