I'm confused with spreads deduction help pls :)

Have a question about trading? Any questions are welcome. Go ahead!

I'm confused with spreads deduction help pls :)

Postby craziel » Mon May 09, 2011 7:30 am

First of all hi to everyone, I'm new here...well I was visiting the site from a long time, but I've registered soon :)
My confusion comes from the spreads ... let me explain: Let's assume we trade EUR/GBP 1.4397/1.4400 ... I buy a lot of 5.000 and my opened position goes automatically
-3.00 (is it normal right?) okay please someone explain me on what price my position will be 0.00 (on 1.4400/03 right?) and finally it will go "green" for making some profit?
I really can't understand it cuz if need a profit of 10 pips I must deduct the 3 pips is this right. Someone who has time I'll really appreciate some detailed explanation :)

Thanks and regards :)

And please can someone do the math what is the profit from this trade that I describe () ...because I want to see If I do it right! Thanks again!
craziel
 
Posts: 4
Joined: Wed Apr 13, 2011 1:28 pm

Re: I'm confused with spreads deduction help pls :)

Postby TrendTrader » Thu May 19, 2011 5:09 am

craziel wrote:First of all hi to everyone, I'm new here...well I was visiting the site from a long time, but I've registered soon :)
My confusion comes from the spreads ... let me explain: Let's assume we trade EUR/GBP 1.4397/1.4400 ... I buy a lot of 5.000 and my opened position goes automatically
-3.00 (is it normal right?) okay please someone explain me on what price my position will be 0.00 (on 1.4400/03 right?) and finally it will go "green" for making some profit?
I really can't understand it cuz if need a profit of 10 pips I must deduct the 3 pips is this right. Someone who has time I'll really appreciate some detailed explanation :)

Thanks and regards :)

And please can someone do the math what is the profit from this trade that I describe () ...because I want to see If I do it right! Thanks again!


Hi craziel,

Regarding the spread, each time you buy or sale, the broker charges you the difference between the ask and the bid. In your case it is 3 pips. The cost is $1 a pip.
What happened is, when you bought it, it automatically showed spread difference. You don't have to deduct anything from your profit. It is all automated. The profit or loss you see it what you get.

Just to clarify it better. in your present case, you bought one mini lot. Let'say you purchased the following lots:

One mini lot, the costs will be $3 based on the data you provided
Two mini lots cost $6
Three mini lots cost $9 etc....

I hope this helps.

My regards,
"Proper patience is needed throughout the lifecycle of the trade, at entry, while holding and exit" Dennis Gartman
“Self discipline is when your conscience tells you to do something & you don’t talk back.” W. K. Hope.
TrendTrader
 
Posts: 84
Joined: Sun Dec 19, 2010 11:46 pm

Re: I'm confused with spreads deduction help pls :)

Postby craziel » Thu May 19, 2011 6:53 am

Thank a lot for that explanation! Now things are more clear
I really want to succeed with the ForEx, but without someone to be a mentor of you is really hard. I'm glad that the community here is very willing to help one other!
Thanks again!
craziel
 
Posts: 4
Joined: Wed Apr 13, 2011 1:28 pm

Re: I'm confused with spreads deduction help pls :)

Postby TrendTrader » Tue May 24, 2011 4:46 pm

craziel wrote:Thank a lot for that explanation! Now things are more clear
I really want to succeed with the ForEx, but without someone to be a mentor of you is really hard. I'm glad that the community here is very willing to help one other!
Thanks again!


No problem, I am getting all the help and advices I need in this forum, and I am still learning.
Mentor, everybody needs a mentor to guide you on what you are doing wrong and right! Mentor can be anybody who understand forex. Someone who will watch if your plan is being executed as planed or not...

Craziel, there are lots of information in this forum, lots of good strategies. After you go throug them all, you will find yourself and what you are fit for. everyone is differet and what works for me won't necessary work for someone else. But at the end, you will creat your own plan you are comfortable with and fits your personality.

my regards,
"Proper patience is needed throughout the lifecycle of the trade, at entry, while holding and exit" Dennis Gartman
“Self discipline is when your conscience tells you to do something & you don’t talk back.” W. K. Hope.
TrendTrader
 
Posts: 84
Joined: Sun Dec 19, 2010 11:46 pm

Re: I'm confused with spreads deduction help pls :)

Postby craziel » Thu May 26, 2011 4:38 am

Thank you TrendTrader you speak very motivational! :)
craziel
 
Posts: 4
Joined: Wed Apr 13, 2011 1:28 pm


Return to Newbie questions & answers



cron