Different platform business will give different spreads. High spread means that the transaction costs are higher , which relates to the profitability of each transaction . The spread is close to Zero on a platform I used.The deal is very exciting, and the selling price and buying price are almost the on same line.The new platform standard spread which make me feel uncomfortable . Say what you think about the spread.
Interesting discussion topic!
As you have found from your own experience trading with a cheaper broker won’t necessarily make you profitable: How do reduce the unnecessary trade?
It seems from your previous posts as though focusing on the spread might be tempting you to trade more than you should.
We do not understand what you mean by this. Are you testing a new trading account with a broker that has a different spread?
Spreads are important for the reasons you listed. With all things being equal (regulation, service, platforms, charts, resources), you want to know you are getting a good deal with your trading costs.
However, it’s important not to be so focused on the spreads alone that you ignore the other important factors in choosing a broker. The most important factor is regulation.
Recently, there have been several discussions on this forum highlighting the dangers of trading with unregulated brokers:
Forex is regulated by government bodies in major financial centers around the world. For traders who live in those major trading centers, it makes sense to focus on brokers regulated in their home country.
Traders who don’t live in one of those countries should consider brokers regulated in major financial centers appropriate for their region. For example:
- In the US, forex is regulated by the CFTC and NFA, and brokers are required to maintain net capital of $20 million.
- In the UK, forex trading is regulated by the FCA and funds are protected for up to £50,000 per client by the FSCS.
- In Canada, forex trading is regulated by IIROC and funds are protected for up to $1 million per client by the CIPF.
Once you have focused your search on the well-regulated brokers appropriate for your region, then you choose the one broker based on other important factors including service, platforms, charts, resources and spreads.
Where to you live, @saintKLASS_1201?
I trade on swissquote platform, this is my new platform, this spread(PIPS) makes me very unadaptable
My previous platform spread was: EURUSD 1.17840/1.17841
my current platform spread is: EURUSD 1.17833 /1.17850
This spread(PIPS)often makes me calculate wrong
I am in CHN, so my choice is limited.
Some brokers who I wont mention (Oanda) will fill at the market orders OUTSIDE the spread! Do they all do that or is it just Oanda? So a spread cost may be double what it should be.
If your spread on EURUSD is 17 pips then you need to find a new broker. I would never tolerate a spread larger than 1 pip on the EURUSD.
Where do you see 17 pips? Currently it’s about 1 pip, but with the way they do it, it becomes 2 pips. Not that I care about 2 pips,
Pip is the fourth digit not the 5th. The 5th digit is pipette
I misread the digits, I see it’s 17 ticks. Although if klass’s previous broker was offering 1 tick spreads, that’s phenomenal. A 0.1 and an almost 2 pip spread could be a significant amount depending on how many pips are being bagged per trade. If these are weekly swing trades and the target is 1000 pips it’s nearly irrelevant, but if it’s 20-50 pip winners then 2 pips is significant. On 50 pip winners that’s giving up 4% profit on each trade.
Using an expense ratio calculator with a 100k account making 20% annually, a 1 tick spread on 50 pip average winners (0.2% expense) will cost the account around 100k in lost profits and a 2 pip spread(4% expense) will cost the account over 1.8 million dollars, over the course of 20 years.
It’s hard to see the cost of spread when looking at it in isolation but when you add it up over decades of trading it can be almost as important as the trading strategy itself.
I deal 1 hand EURUSD, come into play will have 20 dollars unrealied loss, this is the spread(PIPS )