Say I bought some USD/GBP at a 2.2 Spread (just an example). I hold the currency for a few hours and the spreads jump up to 10 (weekend, big market change ect). What spread do I pay the brokerage ?
If your trade hasn’t moved you are now 10 pips down.
Either don’t trade news or cash out before the weekend or
wait until the spread evens back out, then you will be back to
the spread at that time.
Rather a hypothetical question because a trade will move either
up or down.
So spreads are deducted at time of sale?
Yes spreads are calculated when the trade ends.
No. That’s not really true.
If there’s a 10 pip spread and you are buying, you will do so at a price 10 pips higher than what you could sell for, so you have an immediate 10 pip loss reflected in your account.
Now, if the spread were to tighten while you’re in the trade, say to 2 pips, you would actually get back the difference.
Here’s an example.
Starting quote is 100.05-15. You buy at 100.15.
Immediately thereafter the spread narrows to 2 pips. In that case the mid rate would likely stay the same (100.10), so the quote would be 100.09-11
When you bought, you were immediately down 10 tips. When the spread narrowed, though, you were only down 6 pips.
If we were to flip the scenario, and you bought at 100.11, then the spread widened from 2 to 10 pips you would go from being down 2 pips to being down 6.
So basically, you are going to take at least part of the hit when you open the trade. It could then either expand or contract when you sell based on the change in the spread.
Yes spreads are calculated when the trade ends.
Yes this bits true.
but
this bit ain’t
If your trade hasn’t moved you are now 10 pips down.
I was just trying to make it simple.
Would you make a trade when the spread is 10 pips?
Or close a trade when the spread is 10 pips?
It is all hypothetical, once you’re experienced at trading you
close a trade when you hit your profit target.
Great post though rhody. 
Let me ask…How about the carry over charge? I have these premium charges on this demo acct with fxsol. So i asked them what these premium charges were. And they told me that this could be a debit or credit for keeping the trade open overnight. They are called carry over charges. So they are charging me for having a trade continuously opened? I have not closed the trade because it is not time. In one week this premium charge is almost $100. I see some interest debits and credits for my Oanda acct. Is this the same thing as this carry over? thanks in advance
Carry charges are interest charges that you pay or receive (depending on the currency you’re trading) when you hold a trade overnight (usually past 4-5pm EST).
Oanda also pays interest on your account balance, which is different.
Oanda, unlike most others, actually pays/charges carry interest continuously. If you hold positions overnight you will see it post at 4pm Eastern. If you close out a trade during the day, though, you’ll see the carry credit/debit for whatever portion of the day you had the position on post when you exit.
Quite true. I forgot to mention that part.
With most brokers, you won’t see the carry charge unless you hold it overnight. With Oanda, you’ll see it when the position is closed if it’s before 4pm EST or at 4pm EST if you do hold it overnight.
Thanks for clarifying, rhody.
For anyone who is interested in the math this page
shows how “carry” is calculated at Oanda.
OANDA FXTrade - Interest Rate Calculation
Knock yourselves out.
Happy Holidays.