Help Needed By A Newby

[pipadee]

HI all,

Joined today seeking wisdom !

Having played around with a Demo Account for the past 3 weeks I have learned quite a bit, but have one serious problem that I cannot get my head round.

Whilst I understand the meaning of " average " , I find it hard to equate to realtime numbers. Whenever I livetest, or backtest I am sometimes pleased that I have read it right and feel pleased that I could have made a possible x number of pips. However ... when I actually place a simulated trade 99% of the time the P/L goes negative as the current price has apparently instantly moved the other way by over 30 points. I assume that this would immediately trigger any Stop Loss of say 20. If it happened only once or twice I could understand, but not everytime.

How can I Ever enter a real trade like this ?

Can anyone please explain ?

Thanks,

Geoff

[Scorpion]

I'm not sure if I got your point right. You said you did a backtest and a forward test of your system, and you were pleased to see it being profitable. Then when you placed a simulated trade (what you mean by simulated trade?) you saw loss immediately.

What you were saying was pretty confusing, but anyway let me explain what I can understand from your post.

First of all, "live test" or "forward test" is done by placing orders in your platform in real-time. This is the opposite of a backtest which is done by a backtesting software placing orders in past prices. In others, backtesting is a simulation of trades on past data.

When your trade position is opened, you will immediately see the P/L in negative, because you have to pay the spread to the broker. What I mean is that, you buy something at its Ask price and sell something at its Bid price. Ask and Bid prices are normally not equal. Bid is always lower than Ask.

So basically, when you enter a trade transaction, you will have to pay the price difference of Bid/Ask. That price difference is called Spead. Ask - Bid = Spread.