If the spread is 2.2 pips…am I paying that on both sides of the trade?
I know that if I enter a long position, the price would have to move 2.2 pips higher before I’d be in a profit position, but once the price traveled 10 pips from where I placed the order, would I be charged the 2.2 on the other end when I clicked the close button as well?
i.e. I’d be left with only 10 - 4.4 = 4.6 pips?
Nope.
But it does depends on your broker. With most spot brokers, once that initial spread is paid, the rest is all yours.
Some brokers (ECN usually) do tack an open/close cost onto a trade. So double check your broker’s trade costs. When they charge per trade, the spread most often smaller, so it does even out somewhat.
1 - no, you only pay the spread once. think of it as paying once you close the net position and go “flat”.
1.1 - as above, make sure you know if the only costs are the spread, or spread + per-trade commission. if it’s the second one, per-trade means literally PER TRADE, regardless if it’s a buy, or a sell, you pay that commission each time you hit either a buy or sell button. and yes, as above, if this is the case, you’re likely to see a lower SPREAD but once you add the commissions (which you can readily convert to effective pips), the combined ‘cost to trade’ - or ‘effective spread’ - will be similar to what a ‘no commissions!’ broker does.
2 - i tend not to notice the spreads or think about it. i just monitor the appropriate side of the buy/sell buttons. for example, if i went long (buy) at 1.22459 then i know i have to start watching the sell button’s price for my actual best exit point. if you do that on a ‘no commission!’ broker’s site, then you know that once the sell button shows 1.22459 you are in the black. but if you have a ‘spread+commission’ broker, you’d probably need to wait until the sell button shows 1.22465 or so to cover the commission.
on the one hand, you can see EXACTLY when your trade passes the break-even point, but the spread is going to be higher.
on the other hand, you have lower spreads to watch but have to mentally tack on another pip or so to account for commissions.
six of one, half dozen of the other.
Ok, to buy into a position you pay the spread. When you exit it is a different price than if you entered again. Me thinks you do pay a spread in and out. It only makes sense, there is a always a seperate buy and a sell price. To close a position you pay the opposite side of that spread to exit.
Actually, after further thought, you do not pay a spread on exit because you are getting the other side of the spread. When in doubt side with Master Tang 
My broker sometimes does this, I noticed as I watched a trade today, the spread was 2.0, I had a 10 pip stop loss and the price only moved 6 pips for my stop to be taken out, it is a popular major broker and I’m well miffed, I shall be questioning them and asking for their second by second breakdown of the trade. Before I leave them!
Let’s asume you have 2 pips spreads for make things easy. The very instant you open a trade i wil appear to you in mt4 with -2 pips, so when it rises to 10 pips, you see 10 pips on the balance below but in fact you are in 12 pips but broker is discounting the spreads but only allows you to see what you are really earning. Te opposite happens when you see -10 pips, in fact you are in -8 but broker shows you what are you being debited from, in this cases -10 pips. Ad the ask line to the chart and after various trades you will understand. Most traders don’t use it and is very useful to catch liquid/inliquid moments
Thank you to all on this thread for your answers. As a futures trader, I am used to paying both sides of the transaction, so this was very informative. I have been struggling to estimate my trading costs and this shines a big bright light on the topic.
Same goes for some commission based brokers.
Looks like Forex com charges on both sides. How can I switch to commission only, because trading mini lots it might be cheaper.
I don’t understand the question of paying the spread twice. There is only one spread. It is the difference between the bid price and the ask price - so if you buy you pay the ask price and when you exit you receive the bid price. Ignoring commission fees, how do brokers obtain two payments?
I’ve read that futures are riskier than trading stocks. Is it true? Because I’m confused between these two other than forex.
You have to look at it from a leverage perspective. Leverage for an E-mini S&P 500 futures contract as I write this is about 18:1, (price x $50) / margin.
Margin for stock is: 1:1 (regular people), 2:1 those on margin accounts holding for > 1 day, or 4:1 for day traders.
Yeah, it is riskier. For me, my 50:1 leverage on EUR/USD is more risky.
The more leverage, the more risk, of course. However, this is mathematical risk, which does not take into account poor risk management techniques, psychology, and errors. Take a naked option: risk = unlimited. A stock technically has unlimited risk (value can go to zero). Futures can go to zero or negative (crude oil, April 2020). If you are not leveraged, then you only lose what is already laid out (think: Enron collapse and bankruptcy).
I hope this answers your question.
If I may say, futures aren’t any more risky than any other investment be it stocks or forex. Just like stocks, the prices of futures may go up and down. There really isn’t much of a difference.
The only reason futures is given a preference is that it can be hedged to offset the risks while limiting from the perils of price fluctuation.
Let’s not forget to mention the advantage of far greater leverage. However needless to say one ought to be careful before starting leveraged trading. Also important is to see that the platform you use for such trading is trader-friendly and would not trade against you. My current broker turnkeyforex and even the one I was using before (schwab) are good in this way. So it’s important to use no dealing desk ones I suppose.
I always prefer paying brokers through commissions and not spreads. Spread mark ups looks vague and scary to me. By paying through commission, I get the advantage to see prices that move on the basis of real market.
That’s not normally the case but I Still suggest you speak with your broker or the customer support team. Different brokers have different policies.
That would depend upon the broker or platform you are using. Although it should be the case, just confirm it once with your broker.