Take Profit not Executing Immediately

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Hiall,

FIrst of all, I'm new to Forex trading and am sorry to bother with such a basic question.

When I am trading with a Take Profit order, I've noticed that sometimes my chart will show the price tick through the Take Profit that I've set, but not close out. I'm using Metatrader as my client. Anything I should be looking at here?

 
mixhar1:
Hiall,

FIrst of all, I'm new to Forex trading and am sorry to bother with such a basic question.

When I am trading with a Take Profit order, I've noticed that sometimes my chart will show the price tick through the Take Profit that I've set, but not close out. I'm using Metatrader as my client. Anything I should be looking at here?

If you have a short position and you place a T/P then that T/P is actually a limit long position that you place ( you close a short by taking in a long).

But when you go long you do that on the ask price and not on the bid price. But the price that you see on your chart is the bid price.

So what happens ?...

You see the price going bellow that T/P line but it needs to go as low so that the ask price is going bellow that line. In other words the bid price + the spread needs to go bellow that T/P line.

If you are in a long position you will not see that problem. Because when you are long and you place a T/P then that T/P is a short position. And you go short on the bid price which is the price you see on your chart. So the moment that you will see the price going over that line your T/P will be taken out immediatly.

Can sound a bit confusing but once you get the hang of it, it is quite simple.

I hope this helps.

iGoR

 

That make perfect sense. Thanks for your help!

 

Would it be better to use a broker that has a fixed spread? It seems to me (with my limited Forex knowledge) that a large spread could cause a well designed trading system to fail more often than it should.

 
mixhar1:
Would it be better to use a broker that has a fixed spread? It seems to me (with my limited Forex knowledge) that a large spread could cause a well designed trading system to fail more often than it should.

Yes and no....

The best brokers are ECN brokers. They have automaticly a fluctuating spread. They have the biggest liquidity and they don't mind if you win or loos money.

Important: This does not mean that every broker that has a fluctuating spread is automaticly an ECN broker.

Brokers who use a fixed spread are always market makers. Meaning that you trade against them. Meaning if you win money they loos money. So they will try a lot of tricks so that you would not make profits ( also called bucket shops).

But it could be that you have some sort of a system that is trading certain pairs where you don't want to have a fluctuating spread but a fixed spread. (for ex. a system that would scalp on the eurgbp or eurchf or ausnzd).

Friendly regards...iGoR

 

Thanks again for the info.

 

iGoR, thanks for explanation, though I never noticed the tick price to go through TP

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