What a disaster of a thread !
I have just read the whole thing and am seriously disheartened at the total lack of knowledge expressed as “Facts” to you.
Read, study and believe what you have been told in this thread by @_bob , @LaughingCharlie , @MrDE.
@eddieb seems to be correct also and @Trendswithbenefits submission is fine.
Make a note of the other names and treat anything they say with suspicion in future.
Is correct, as is the rest of his post.
Is correct, but if I can say it in a slightly different way ?
The spread (Lets say 2 pips for example purpose) is the “Bookies edge” (“Bookie” = “Broker” )
Now when you enter a bet, you are committed to paying the "spread, win or lose. with many platforms, the moment you enter the bet you are immediately in a losing position of 1 pips (example only). So if your bet moves 50 pips in your favour, you win 48 pips (See where the “Other pip” is taken later.
If the Bookie wins the bet and the trade has moved 48 pips against you (You are already “losing” 2 pips remember?) then the bet gets closed and you lose the 50 pips value.
So now you are in this bet and price is moving your way “Price” gets to your “Take profit”, but the bet does not get paid ! (see later) - Or Your bet is losing and "Price gets to one pip away from your “Stop loss”, but the bet gets closed and you have lost 50 Pips.
Because if you are in an up bet, you effectively have a “Sell” order in place as a “stop-loss”. This will get filled at the “Bid” price. Think of the Bid in an up bet (when price is going down) as a grabbing hand trying to grab your money ! This grabbing hand is extended 1 pip in front of “Price” and grabs your money for the bookie.
If you are in an upbet and price reaches your “Take profit”, you have a “close order” in place which behaves like a “Sell” order and gets filled at the “Buy price” - think of the "Buy price " as a sulky child trailing behind and trying to avoid having to “pay you”. The “Price” is well past your “take profit” before the sulky child will finally hand over your meagre winnings!
The exact reverse happens in a “Down bet” the “grabbing hand” is the “Ask price” (when price is going up) and the “Sulky child” when price is going down.
Sometimes the “Bookie” seems to “accidently” incorporate “quirks” into his software, to extend the “grabbing hand” and an example seems to be shown here ;
So you lose 2 pips on winning bets AND you lose 2 pips on losing bets.
Effectively if your trading neutral and winning 50% of your bets, each winner has to overcome a disadvantage of FOUR pips to cover the losers, before you even start to enter “Profit”.
That means that short - term traders, only seeking a few pips have massive “costs” due to the “spreads”, whereas long term traders can almost ignore “spreads”, except for incorporating an allowance in the positions of “stops” and “Take profits”, to allow for the “Grabbing hand” and the “sulky child”.
Now changing to “PIPS” - The position of the “Pip” value is the second decimal place on JPY bets like AUDJPY whereas it is the Fourth decimal place on all other instruments like EURUSD etc.
So for JPY bets the numbers will look something like ; 89.123, Satrt at the decimal point and count 2 to the right - so the fuull pip value is the “2” the “3” is the “Point value”
On other instruments such as EUR USD like ; 1.23456 , start at the decimal point and count 4 to the right - so the “Pip value” is defined by the “5” and the “6” is the “Point value”
That is about all I have to say, sorry for the lengthy post
I hope that helps