Hi,
when I enter a position, then exit it, do I pay the spread twice, when I enter and exit ? Or just once ?
thanks
Just once, when you enter.
You never actually “pay” the spread. It’s not like someone comes along and takes it out of your account like a commission. The spread is reflected immediately in your P&L since that is based on the price at which you would exit your trade. If you are trading with a broker that has absolute fixed spreads then it’s easy to say you’re paying it when you enter. Many brokers (and all ECNs) have variable spreads, however, which means you won’t necessarily know the spread’s impact on your P&L until you exit. With ECNs you can sometimes get zero or even negative spreads, in which case it would never end up costing you anything at all.
Quite true.
Is it really possible to get a negative spread, that’s kinda cool I have to admit. Didn’t know that.
I’ve seen it during very active times of day. You can’t plan on it, of course, but it happens once in a while.