Floating spread or fixed spread ? - page 4
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
I agree with all of you. I believe i'm still learning.
Thanks very much
I agree with all of you. I believe i'm still learning.
Thanks very much
I would like to gather information on the advantages and disadvantages associated with different kinds of spread. It seems fairly obvious to every trader to find a broker with the lowest spreads. But personally I do not know the obvious implications of the choice floating or fixed.
Do you have any information? As much as possible not speculation but arguments based on facts. I think that might be useful to all traders if we can synthesize the knowledge and experiences of community MQL5.
Avantages of floating seems be : a lower value on average, but widening on events which may trigger our stoploss.
Ressources about spread :
Spread on chart (indicator)
Spread candle creator (indicator)
In my opinion the spread is applicable at the open and close, as it has been said, if from the open you have a profit target of 50 pips from open you will have a set figure to work towards, however, the figure (50 pips profit) after open will differ at close, if the spread is fixed at 2, then taking this into consideration from the open, the profit after close would be first the spread at open 2 + 2 at close making a profit of 46 pips, you would have to create an order of profit to allow for the spread, so taking the last example, you would set your profit target at 54 pips to get 50, so considering a floating spread, where as the ask and bid can fluctuate, you will never know what to factor in to get your 50 pips profit, but, if you were trading manually then you could wait for the desired 50 pips profit to appear then close your position
As I explain above, spread is applicable between open price and close price. Obviously it'is applicated only ONCE and not at open and close (twice) as you say. If you have a target of 50 pips, add this to your open price and wait that your close price reach this level.
The "trick" is that open price and close price can be the Bid (for a sell) or the Ask (for a buy). See above posts for more detailed explanation.
A little confused, yes you pay the the privilege at open, hence the trade is negative, but consider a buy trade that on open has 50 pips target from open, the profit at open is say, -2 so move 50 point from here and yes you hit 50 points but the profit is in theory 48, but its only 46, reason, you are selling the position when the bid is hit, I'm getting somwhat confused here,
Hypothesis : A buy on EURUSD, with a target of 50 pips (0.0050) and a fixed spread of 2 pips.
Hope this help you.
A little confused, yes you pay the the privilege at open, hence the trade is negative, but consider a buy trade that on open has 50 pips target from open, the profit at open is say, -2 so move 50 point from here and yes you hit 50 points but the profit is in theory 48, but its only 46, reason, you are selling the position when the bid is hit, I'm getting somwhat confused here,
i'd say that this is irrelevant.
it is just a matter of perspective. and the perspective is defined by the fact that you are looking at bid graph all the time.
so if you are confused by the difference, you should treat all openings in the same way:
for entering sell position, you should watch the PA (Price Action) on bid, and for entering buy position, look at PA on ask.
same is valid for closing of the position, for closing sell, look at ask, and for closing buy, look at bid.
even on 'fixed' spread, the spread is not fixed. e.g. my broker defines 1 pip spread for €$, but:
a) it's 2 during 'night'
b) it can be greater during higher volatility periods: you can notice that on 'F9' graph when the price is playing, the bid/ask can separate for more than 1 pip
so on ECN brokers you only see this difference in spread more precise, due to use of 5th decimal.
generally, i believe that each use case depends on the strategy you are using.
if you are closing buy during rise of price, you will get better price than trying to close while price falls.
vice versa for sell.
what you should be concentrating on is that spread should be at most 10% of your entry/exit.
or not. but in that case you are paying too much for open/close.
You don't actually pay the Spread at all . . . it's simply that you Buy at Ask and Sell at Bid.
Yes your right, we are splitting hairs a little here, I've seen how a floating spread works, different from fixed, rightly in your comment Raptor, the trade is just that, the floating spread can widen though, the bid can rise and the ask stay ridged, as is true of the other way around, this would play havoc with a stop loss, the idea of the price hovering around anyone of them to spring up or down to take out a position.
The only problem I see is if you are optimizing, how could you factor in an erratic spread, having said that it doesn't factor in a fixed spread either