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The Spread and Profit?

Quoting moonshot
{quote} I can't agree more. This is exactly what makes takes be aback when I see someone believing that a demo account can be an ideal way of practicing live trading. In my opinion, sue to issues like slippages in live trading, I think a demo account is better used for practicing various trading strategies, and perhaps getting to understand what moves what currency etc. Finally, I think brokers are ever delighted when they see a scalper.
Thank you for comment Moonshot..
I refer to the accountable cost metrics being discussed above (commission/spread/volume terms etc ) as "Considered Transaction Costs" (relative easy to quantify).
And the latency/slippage/execution type costs, as "Hidden" or "Unexpected Transaction Costs" The problem is that these cannot be accurately modeled in your broker Demo/Test data, since they are highly variable and Broker specific.

A recent Boston Technologies Blog by Anna Aratovskaya, quotes Rishi N Rang and his bookInside the Black Box,.. as follows..
" UTC/slippage accounts for more than half of all transaction cost combined. If you have already calculated your monthly Considered Cost, now double it - what percentage of your overall monthly profit and loss would that be?" ....
and goes on to comment on how difficult these costs are to model from demo/test data.


Institutional Transaction Cost Analysis has become a major focus in institutional trading.. and has exposed startling differences between different brokerage services.
I can only imagine what proper TCA would show if applied to Retail Brokers. LoL
Hope this of help.
Quoting Forexpcb
Hello. If the spread is 2 pips does that mean I need to target 3 pips in order to make a profit? Thanks.
If the spread is 2 pips, it means that your initial loss (when you open the trade) will be 2 pips. You know that trading is a negative-sum game, meaning that you start with a loss that you have to recover. So at +3 pips you will be at a profit, but as someone else here said, why would you want to "target" 3 pips only? You can target 50 pips, for example.
LOL, I know, and we are yet to hear from the poster on that question..it just does not make any sense..smh
Everyone knows that Forex market is a volatile market. So, be careful about the market situation.
trading spreads is an important financial tool which an investor should consider when choosing a broker , i always like comfortable trading spreads as a scalper.
Quoting DexterDuncan
Everyone knows that Forex market is a volatile market. So, be careful about the market situation.
That's why forex trading requires skills and abilities. But unfortunately most traders focus on earning more than learning. But learning is the first step of trading and it takes time to be skilled.
Sadly, a lot of people don't seem to understand that learning is the path to earning.
Money Management is essential to survive in the market. I use maximum 2% of my capital per trade.
Money and risk management are absolutely necessary to avoid losses, I agree. I too don't use more that 2% of my account.
Quoting mlawson71
Money and risk management are absolutely necessary to avoid losses, I agree. I too don't use more that 2% of my account.
Right. Money and risk management are important to survive long in the market. I take maximum 5% risk per trade.
The tightest spreads happen during overlap of London and NY session, at least I see improvements in performance of my scalping algos during this time.
Quoting mlawson71
Sadly, a lot of people don't seem to understand that learning is the path to earning.

True. They focus on making money rather than learning and end up losing it all.
I think choosing the wrong broker is the main reason to lose the money by most of the traders in this market.
Quoting Niels.Lar
{quote} True. They focus on making money rather than learning and end up losing it all.
It's how I started too, unfortunately, it's a very painful lesson to learn, especially as a newbie.
Quoting moonshot
{quote} Ok am assuming that you are completely green in Forex Trading and it would do you a world of good to do some online courses and get the basics right. There are several online courses some free others require payment but you can start with the free ones for your level. Now, the Answer is Yes and NO, sorry for complicating. The reason is when placing the order, things could change and the 3 pips target turnout to be something like 1 or 2 pips. It is Forex world after all. Additionally, when using live account, delays in executing order could...
Yes, I agree with you. It is important to see how much risk you are taking and how much reward you are getting.
Quoting DeanLittler
{quote} Yes, I agree with you. It is important to see how much risk you are taking and how much reward you are getting.
What is your preference?
spread affects profit. But the broker must be safe first
spreads is an important financial tool to choose a broker , we have to choose a broker which for all time ensure comfortable trading spreads.
I think more and more practice can give you the confidence to take risks. It can help you to remove the fear of trading.
Quoting WillGagnon
I think more and more practice can give you the confidence to take risks. It can help you to remove the fear of trading.
Yes practice builds our confidence. But for trading a trader needs to practice in a realistic and systematic way. Random demo trading is not helpful. One needs to develop his strategy by practicing demo .
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