I just accidentally placed an order buy limit (instead of a buy stop). I kind of understand that buy limit means that the trade is going to buy when price moves down to that limit. But my price was already under that order limit, so the trade happened instantly. Okay I understand that, but I dont understand why did I get an instant loss of a big amount. When I make an instant execution, the trade starts out (for me) around $-0.5 of profit, but this time it was around $-20.
There are 2 prices on your platform Bid (Sell) and Ask ( Buy)
Ex.
Bid will always be lower than Ask. If you use MT4 the price displayed on the chart is the bid price.
132.07/132.09
When you place an order to buy you will get the Ask price of 132.09. To close your position you would need to sell it at the Bid price which is 132.07. Accordingly, you will be in the red as soon as you open a trade. This is called the spread and it’s one of the ways a broker makes money.
Thanks for the reply, but I understand the spread.
What I dont understand is the HUGE spread. As I said before, normally my loss is around -$0.5 when starting the trade, but this time (while using buy limit) it was -$20. So a massive difference of almost 40x.
Maybe your trade coincided with a news release. It’s very common for brokers to widen their spreads to protect themselves from the volatility. Other than that I’m not really sure, maybe you should ask your broker?