Bid/Ask and Spread question.

[Aldo Benetti]

Hallo,

there are some things I do not understand on spreads. I'll put some things I've noticed with personal considerations, please feel free to correct or confirm them. Thank you.

I'm considering the BTCUSD market with BTC between 10100 and 10300.

With one broker I have around 80/100$ of spread between bid and ask.

With one other about 30$ (I think this is ECN)

I understand that the first one use the spread for commission, while the second applies some small fees.

If I look at some coin exchange I can see spreads from  1$ to 0.01$ in the orderbook in one, 5-10$ in one other and 10-20$ in others... generally all coin exchange I've seen have spread better than the mt4 brokers I tried.

Prices between different platforms may vary up to 100$ and more. At the moment some exchange prices are about 100$ less than broker prices, I do not know if it is a costant or trend effect.

I wonder if can take advantage of that 1% spread of the first brooker.

If I'm not wrong, in a normal exchange, I can put a sell limit or buy limit order in the orderbook, and it stays there until someone put a market order and mine is the best bid or ask price.

So if I can keep updated a buy limit at bid+0.01 and a sell limit at ask-0.01 I should be able, on a general rule, to often meet buy and sell orders of other users at market price and gain the spread.

I used this ping/pong strategy between bid and ask long time ago in a game with a real money coin exchange and it worked quite well :)

With exchanges I think is not working because the spreads is generally less than the fees.

But with that mt4 broker with a 1% spread and no fees... I guessed it could work.

I wrote some code that did that, but I noticed that in the tester buy limit order are executed only when the ask price falls and meet the order price, that is almost never if I often update it at bid+0.01. The same in reverse for the sell limit.

So, is the tester that do not "simulate" other users doing market sell and buy orders? Or is the mt4 platform/brooker/btcusd market/CFDs/don't know that is not working as I think it should.

So it's correct this strategy fails even in demo live trading, because orders are not actually placed on the orderbook and the interaction with other users buying and selling at market prices is not simulated?

Could it work on real live trading or the broker deals with buy and sell limit orders in a different way?

If I put a buy limit at bid+0.01, I should be the first at that price. If someone else put another buy limit order at the same price, when someone sells at market price, will my order be the first matched?

Forgive my inexperience, it's only a month I'm learning.

Thanks for your time.