Good day, i understand the use of spread by brokers to make money for providing the trading services to traders
now my question is does spread change effect already open trade?
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Good question. This is what this site says:
What is a Spread in Forex Trading? - BabyPips.com. Variable spread changes while open could affect your profits.
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No, it will not affect the open trade.
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It can affect the open trade when you come to close it or if you have an exit order set such as a stop-loss or take profit order.
The spread you will pay is the spread when the position is closed, not when it was opened or at any time in between while it was running. A simple example would be you open a long position at 101, when the price is 99-101, so the spread is 2. You might set a stop-loss at 96: but if the spread is widened by your broker from 2 to 8, the price will now be 96-104 and your stop-loss will be triggered even though price has not moved.
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At the time of closing a profitable trade, if spread is big, your profit will be a bit less. In case of a very tight stop-loss, a spread may close your trade and lose money.
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When you open a trade spread won’t change for this trade.
What broker do you trade with?
The confusion is whether it’s a fixed spread or variable spread that the broker is offfering. Usually fixed spreads are higher than variable spreads, but not all the time.
Fixed spread does not change depending on time or general market fluctuations and volatility. However, in case of low liquidity and high volatility the spread may temporarily be changed, i.e. be transferred to the new fixed spread level; when the market returns to its normal condition the spread is changed back to its general level.
Variable spreads could affect your profits as I stated before, and which tommor explained how and why.
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It does not affect an open order directly
but affects the distance needed to hit your TP or SL
For example: If you need 2 pips to hit TP and spread widens, it may take you another 5 pips to reach your TP instead of your initial 2pips
Remember Buy orders open with Ask and close with Bid
Sell orders open with Bid and close with Ask
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