HI , I wonder if anyone could answer my question, ive been trading for a few months now , but notice something that seams suspicious on my trading platform , so here is the question , is it normal when you have a position opened to see a difference in the price of the opened position then the actual price on a live chart , usually off by 120, is this the spread price ?
There are two continuous price streams for every currency pair — the BID price, and the ASK price. Most trading platforms display BID prices by default, and most traders do not alter the default setting. (Some traders don’t even seem to be aware that they can switch from a BID-price display to an ASK-price display, if they choose to.)
• If your chart shows the BID price of the pair you are trading, and then you enter a LONG position (meaning you “buy”), you will instantly see a difference between your entry price and the current price on your chart — because you entered at the (higher) ASK price, and your chart is displaying the (lower) BID price. The difference, as you have suspected, is the spread.
• If your chart shows the BID price, and then you enter a SHORT position (meaning you “sell”), there will be no difference between your entry price and the price on your chart, momentarily, until the price ticks up or down.
If your charts are set up to display ASK prices, then the rules given above are simply reversed.
One of the things a trader should know — without having to think about it — is this:
You BUY at the ASK price, and you SELL at the BID price. Always. No exceptions, ever.
And the ASK price is always higher than the BID price.
You mentioned a price difference of “120”. I assume that means 12.0 pips.
If that is the spread, then you must be trading an exotic pair; the majors (EUR/USD, USD/JPY, AUD/USD, etc.) and the major crosses (EUR/CAD, GBP/AUD, CHF/JPY, etc.) should not have spreads nearly that large.
thank you for going in details in your response to my question, and yes I would say its 12 pips for the spread , I mostly trade on the majors but have been trading on a couple of exotic pairs aswell, will be keeping an eye on the spreads when I enter a position. thanks !
You can easily check MT4 logs to see trade details. 12 pips for EUR/USD or other majors smells like serious fraud. Keep a closer watch on your broker we would be glad to discuss it with you…