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r2b2lynn
2008.01.28 18:45
Hi. I'm sort of new to forex. I have a question. Let's say I open a position; any position. Here's my question.
Note: The opening spread is not always the same as the closing spread. |
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devilian1899
2008.01.28 19:17
+0.12 is your profit, not an opening or a closing spread. Spread only be charged
once when you enter the market.
When you close at $0.12, then you'll have additional $0.12 in your account. |
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r2b2lynn
2008.01.28 19:46
devilian1899 wrote:
+0.12 is your profit, not an opening or a closing spread. Spread only be charged once when you enter the market. When you close at $0.12, then you'll have additional $0.12 in your account.
That answers my question. Thanx. |
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Zap
2008.01.29 00:05
r2b2lynn wrote: This is not true this way. devilian1899 wrote:
+0.12 is your profit, not an opening or a closing spread. Spread only be charged once when you enter the market. When you close at $0.12, then you'll have additional $0.12 in your account.
That answers my question. Thanx. You open a buy on Actual Ask, you close it on Actual Bid. You open a sell on Actual Bid, you close it on Actual Ask. That is, you kind of loose the bigger spread of the two (I mean opening or closing), since not the Actual Spread that counts, it is the Actual Bid/Ask that count. How far is the counterpart does not matter at the time of opening/closing. Shown profit is always net profit, that is the profit you would get if you closed the position at that very moment. (You start with 0 - actual spread, when opening a position.) |
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r2b2lynn
2008.01.29 01:38
Zap wrote:
r2b2lynn wrote: This is not true this way. devilian1899 wrote:
+0.12 is your profit, not an opening or a closing spread. Spread only be charged once when you enter the market. When you close at $0.12, then you'll have additional $0.12 in your account.
That answers my question. Thanx. You open a buy on Actual Ask, you close it on Actual Bid. You open a sell on Actual Bid, you close it on Actual Ask. That is, you kind of loose the bigger spread of the two (I mean opening or closing), since not the Actual Spread that counts, it is the Actual Bid/Ask that count. How far is the counterpart does not matter at the time of opening/closing. Shown profit is always net profit, that is the profit you would get if you closed the position at that very moment. (You start with 0 - actual spread, when opening a position.)
Or am I charged both when I enter, AND/OR when I exit? |
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phy
2008.01.29 02:38
The price on the chart is indicative of the current BID pirce. You are "charged" spead when you buy. You see a price you like on a chart, and pay price+spread (this is ASK). You are not "charged" spread when you sell. You see a price you like and sell. You sell at the price you see on the chart. ---------- Now, having said that: When you buy, you are not joining other buyers, you are paying "asking" price. When you sell, you are not joining other sellers, you are selling for what is being "offered". So you are at some disadvantage 2 times. ---------- Example A: A currency has a Bid af 1.2000 and an ask of 1.2005 (5 pip spread) You hop on MetaTrader, ready to make some money. You see 1.2000 on the chart and buy. You Buy at 1.2005 Moments later you fear the world will suddenly end. Price on the chart has not moved. You sell at 1.2000 Your net loss is 5 pips. ---- Example B: You are an astute trader using an ECN Broker with no restrictions on trade placement. You see Bid is 1.2000 and you join the others with offers to buy at 1.2000 A market order is executed by someone less astute, and your offier is taken You are now long at 1.2000 You decide to scalp the "spread", the Bid is still at 1.2000 and Ask is at 1.2005 You place an order to sell at 1.2005, joining other sellers Someone executes a market order to buy, and they pay your asking price, 1.2005 You are now flat, and have a profit of 5 pips. --- One method you are -5, the other method you are +5 (the difference is 10, or twice spread). --- Still confused? |
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r2b2lynn
2008.01.29 04:43
Thanx for the response phy. That also helped. But I think I can figure out the rest tomorrow. |
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devilian1899
2008.01.29 08:20
The difference between Bid and Ask is spread. You buy on Ask but will exit on Bid,
and sell on Bid but will exit on Ask. You'll always start with minus spread when
entering the market.
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Zap
2008.01.29 10:35
That is, you kind of loose the bigger spread of the two (I mean opening or closing), since not the Actual Spread that counts, it is the Actual Bid/Ask that count. Bid: 1.2000 Ask: 1.2005 You BUY at 1.2005. You could sell this opened buy at 1.2000, so you are in -5 profit. This is clear so far from what phy said. Now let's assume, "price" doesn't change, only spread widens as a herald of volatility. This can mean two things: Higher bid, or lower ask (or both) than normal (see, there is no real price at Forex) Bid : 1.1998 Ask: 2.0007 You want to close your Buy (opened at 1.2005), you can do it at 1.9998. So you sort of pay the bigger spread too. (If only changing bid had widened the spread, you would have paid the bigger spread) So do not take actual spread for granted, the only thing really counts is at what bid/ask you can/could open/close your position. |
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Dieesels
2009.03.25 11:38
How to write code the open price spread....script...to csv....???
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