is spread cost decided at time of entering trade,
or is there effect if spread widens whilst trade is open…? If the second could this trigger stop loss (explanation)?
Thanks guys.
Yes, spread can widen during a trade, for example during erratic unexpected news events, or even expected news events that have unexpected results.
So if you have a typical 3 pip spread and you are 5 pips away from your Stop Loss and then spread widens from 3 pips to 10 pips for short period of time, you would be stopped out of your current trade.
The idea is to keep up to date with market moving events such as scheduled news events. You will always get unexpected news events, but thats just part of the risk involved in trading.
Hi thought I had seen this & it was mentioned in reply to another of my threads… just never experienced dramatic spread effect.
Read recently on babypips ‘instant execution vs. market execution,’ I was previously using mental stop losses & on reading thought better adopt auto ones, so will figure your reply into stop level,
thanks.
Not trading during expected high volatility news is a good approach to day trading, although longer term trades will price this day to day news in.
And, as you said, an actual stop loss set within the price of your trade is sensible, however some trading approaches do work without setting a Stop Loss. Either way, trading high impact news with NO stop loss is plain stupid if you know your trade is in the ‘danger zone’ LOL
Trading with a mental stop is fine if you have the discipline to do it. [B][U]Always[/U][/B] have a stop on every trade even if you use mental stops, this stop can be well past your mental stop its your oh sh** stop. It is on the brokers server it is there for times when your internet goes down, your power goes out, and any of the other things that will go wrong at the worst time. It also should make a record for you to fall back on if you get in a dispute with a broker. Any spread spike that knocks you out will probably not be worth disputing most broker fine print will say it happens and is part of the risk you take. But there are other things that happen to price feeds and trading platforms that can be disputed. A stop on a trade that gets blown by somehow gives you a leg to stand on.
OK I did this…
Can you confirm something, if you use Metatrader 4 or for anyone who does, the line chart/ candle doesn’t need to cross the red-dotted stop line necessarily, for instance the spread widening could trigger the stop even if the price has yet to reach your stoploss line, is this right (you have to figure the spread in mentally)?
Yes, you have to calculate is mentally. Or you can get a spread custom indicator like I have which tells you the spread in real time and sits on the for-ground of your desired chart
Can you link me this please… I would google but there’s probably several & I’d prefer one recommended…
Edit: Showing (ticking) the ask line option will work as well, anyone?
I think this confirms it?
http://forums.babypips.com/fxcm/40104-trade-closed-above-candle-high-how.html