Spread trade question?

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Maceo Plex
502
Maceo Plex  

As a fresh trader, i have a simple question which hurts my head.

I have noticed in my ECN Account that EURUSD Spread goes 0 pipes many times.

What happens if i open simultaneously BUY/SELL trade when spread is 0 and friday night the spread goes 4 pipes?

Fernando Carreiro
4315
Fernando Carreiro  
lucky_seb:

As a fresh trader, i have a simple question which hurts my head.

I have noticed in my ECN Account that EURUSD Spread goes 0 pipes many times.

What happens if i open simultaneously BUY/SELL trade when spread is 0 and friday night the spread goes 4 pipes?

It is normal for spread to be "0" on an ECN account, because you are also paying commission on your trades.

If you place both Buy and Sell orders when spread is "0" then when you close the orders, you will pay the spread cost at that time if it is greater than "0".

While the two orders remain open, then the net position will change over time as the spread changes (it will show as a loss).

Maceo Plex
502
Maceo Plex  
Fernando Carreiro:

It is normal for spread to be "0" on an ECN account, because you are also paying commission on your trades.

If you place both Buy and Sell orders when spread is "0" then when you close the orders, you will pay the spread cost at that time if it is greater than "0".

While the two orders remain open, then the net position will change over time as the spread changes.


This means that it will be a positive value > 0 .

Fernando Carreiro
4315
Fernando Carreiro  
lucky_seb: This means that it will be a positive value > 0 .
No! Spread will always be a negative impact and show as a loss!
Maceo Plex
502
Maceo Plex  
Fernando Carreiro:
No! Spread will always be a negative impact and show as a loss!

I have seen many times the net profit to be poisitive.How is it possible?

whroeder1
17945
whroeder1  
Fernando Carreiro: If you place both Buy and Sell orders when spread is "0" then when you close the orders, you will pay the spread cost at that time if it is greater than "0".
When you buy you pay the spread up front. When you sell you pay the spread when you close. You always pay the spread.
Fernando Carreiro
4315
Fernando Carreiro  
lucky_seb: I have seen many times the net profit to be poisitive.How is it possible?

On two opposite orders at the same opening price? NEVER!

That is only possible if the Orders opened at different prices to each other, in such a way the the Buy order opened below the Sell order!

Fernando Carreiro
4315
Fernando Carreiro  
whroeder1: When you buy you pay the spread up front. When you sell you pay the spread when you close. You always pay the spread.
Is that not exactly what I already stated? «If you place both Buy and Sell orders when spread is "0" then when you close the orders, you will pay the spread cost at that time if it is greater than "0".»
Alain Verleyen
36033
Alain Verleyen  
Fernando Carreiro:
Is that not exactly what I already stated? «If you place both Buy and Sell orders when spread is "0" then when you close the orders, you will pay the spread cost at that time if it is greater than "0".»

You are saying different things as I understand.

Whatever, I think you are both wrong. (Please no dispute).

whroeder1:
When you buy you pay the spread up front. When you sell you pay the spread when you close. You always pay the spread.

I don't think that's exact, unless we understand differently "pay".

In case of a true STP account (no dealing desk), you don't pay anything, except a commission. The spread is the difference between the best offer price and the best demand price, there is nothing to pay. Neither at open, neither at close of an order, and even if the spread changes. 

On a market maker (dealing desk), you pay something, but that's not the spread int totality, that's the difference between the spread you get from your broker and the "original" spread from the buyer/seller (liquidity provider). 

I don't consider scam brokers where there is not even liquidity providers, which are not worth to discuss.

I could be wrong but it's how I understand it.

EDIT: The way I wrote it is of course wrong and confusing (see Fernando answers in next posts). I was talking about something else but didn't find the right words to explain it. 

sbdavra
5
sbdavra  

Hello sir,

i wants to know that how can i get {last deal price} and {last deal volume} of  particular symbol without using loop in MQL5

thanks in advance
Regards
Shailesh

Fernando Carreiro
4315
Fernando Carreiro  

Alain Verleyen: You are saying different things as I understand. Whatever, I think you are both wrong. (Please no dispute).

I don't think that's exact, unless we understand differently "pay".

In case of a true STP account (no dealing desk), you don't pay anything, except a commission. The spread is the difference between the best offer price and the best demand price, there is nothing to pay. Neither at open, neither at close of an order, and even if the spread changes. 

On a market maker (dealing desk), you pay something, but that's not the spread int totality, that's the difference between the spread you get from your broker and the "original" spread from the buyer/seller (liquidity provider). 

I don't consider scam brokers where there is not even liquidity providers, which are not worth to discuss.

I could be wrong but it's how I understand it.

Sorry, but you are sadly mistaken! EDIT: Correcting my arrogant statement. My apologies!

You do PAY the total spread (irrespective of it being ECN, STP, DD or what-ever), and here is a very simple example to illustrate this:

Say you buy 1 Lot of the EUR/USD and it is currently with a spread of 1 pip. Your order (and your equity) will immediately be down by $10, and you have just paid spread. If you were to then close the market order before the Bid price changes (i.e. Ask can change as much as it wants, but not Bid), then your Balance would be decreased by $10 (1 Lot x 1 Pip). You have just physically paid the spread!

The reason why @whroeder1 states that you pay spread on the opening of a buy order and at the closing of the sell order, is simply the convention that one opens a Buy Order at Ask and Sell Order at Bid and then closes the Buy Order at Bid and Sell Order at Ask. So, should the spread become 0 (i.e. Ask becomes same as Bid, but Bid does not change), just before closing the order, then a Buy Order would still be in a loss by the initial spread but a Sell Order would end up not paying any spread at all.

For all intents and purposes, as soon as you place a market order (irrespective of it being a Buy or Sell), its Profit/Loss will be down by the value of the spread and if you close it immediately at the same Bid and Ask prices, that value comes out of your pocket.

PS! Obviously, if you wait until the market moves in your favor before closing and you start making a profit, then the spread cost comes out of that profit and not out of your Balance, but you are still paying it.

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