I’m demoing ForexBrokerInc with $600 left and 1:500 leverage, but the spread for EURUSD ranges between 18 and 21 pips. So, entering any possession with 2.00 volume, I’m instantly at a $40 or $60 deficit to overcome. If I chose wisely and the market travels in my favor, then after a 50 or 60 pip move, I might have made $15. Now, if and is often the case, I then made an unwise choice in timing and/or directional prediction, then the instant $40 to $60 deficit spirals against me into compounding deficits, many many times eclipsing my earlier $15 profit. As it is, I’d have to be near perfect in my timing and market direction predictions to be in any amount of money.

What am I doing wrong in my trading management and is an 18 to 21 pip spread for the EURUSD even reasonable?:62:

Why would you be trading at a 1:500 leverage when you aren’t consistently profitable on much lower?
And an 18 to 21 pip spread… is that normal for a high leverage broker? Normal is like 1.2 pips in peak.

I think you meant 1.8-2.1 pips. Your broker probably uses 5 decimal places for the euro dollar. The number at the 5th decimal place is called a pipette or 1/10th of a pip. Generally speaking, the more liquid currency pairs like the majors have lower spreads while exotic currency pairs have higher spreads

You could try trading on higher time frames with wide stops to minimize the negative edge of spreads.

bun, I use the “spread” indicator and it measures in points. I assume by that it means pips. So, when it indicates an 18 to 21 point spread, I’m thinking 18 to 21 pips. Am I wrong?

Nah Bun, even if it was set at 4 decimal, it would just be a whole number, like 1 or 2 but 20 is crazy, Im not even sure if it gets that high even on the weekends? And Points, it would be the same.

I see OandA at 10 at the most, I think, lol,

Vanessa, if your using MT4, right click the chart, and go into properties, then Common, and check the " Show Ask Line" and then look at what you get…

Yes. Pips are different from points. I also use a similar indicator and it also displays two digits. If you were using a broker that only displays 4 decimal places on fiber the indicator would show 1.8-2.1 points as the spread. You are trading 2 lots on EUR/USD with a USD denominated account and pay around $40-60 for 1.8-2.1 pips. The math adds up.

I am not much worried about the spread because I am not doing scalping where spread matters a lot. My broker is giving 2-3 pips spread on Major currency pairs and I am happy with it because I am trading intraday and swing. What is more important is the order execution and I am not having any problem right now.

The currency pair eur/usd. has 5 digits. That’s mean pips are 0.00010. Our spread cannot be as high as 18 or even 21 pips. Our spread is as low as 1 pip and typical 1.8 pip.