I know some of you will think I'm absolutely nuts. But, I actually like, really like, dynamic spreads. In fact, I love to see spreads widen significantly. Think I'm crazy, right?
I currently have two trading accounts - one with fixed and one with variable spreads. I like the variable account better. I've noticed that spreads widen, not when the market is moving or a big move is happening. But rather, when a big move is about to happen but the market isn't sure yet which way the move is going.
As an example, yesterday I noticed InterbankFx's spreads widen after the NFP announcement by 14+ pips on the EURUSD. But, this widening didn't happen when the first upward move started, or when it crossed below resistance on the big drop down. So for me, a channel breakout trader, the widening didn't impact my trades. However, the move did happen a little ways into the first upward move. This was a STRONG indication that the market was either preparing for a larger upper move or that it wasn't sure this upper move was the right way. The spread widening kept me out of the market until the market had decided a direction - down.
This is not the only example and I encourage anyone shying away from a variable spread account to re-think the decision. Many traders follow trend breakout systems like me and I've rarely seen a spread widening that impact the entry or exit (unless it was an emergency exit) under such a system.
So, the gist of what I'm saying is that widening spreads with an anonymous trading broker may not be all that bad of a thing. Just think of it as another datapoint guiding your trading decision.
Anyone with similar or different observations are welcome to respond.
I currently have two trading accounts - one with fixed and one with variable spreads. I like the variable account better. I've noticed that spreads widen, not when the market is moving or a big move is happening. But rather, when a big move is about to happen but the market isn't sure yet which way the move is going.
As an example, yesterday I noticed InterbankFx's spreads widen after the NFP announcement by 14+ pips on the EURUSD. But, this widening didn't happen when the first upward move started, or when it crossed below resistance on the big drop down. So for me, a channel breakout trader, the widening didn't impact my trades. However, the move did happen a little ways into the first upward move. This was a STRONG indication that the market was either preparing for a larger upper move or that it wasn't sure this upper move was the right way. The spread widening kept me out of the market until the market had decided a direction - down.
This is not the only example and I encourage anyone shying away from a variable spread account to re-think the decision. Many traders follow trend breakout systems like me and I've rarely seen a spread widening that impact the entry or exit (unless it was an emergency exit) under such a system.
So, the gist of what I'm saying is that widening spreads with an anonymous trading broker may not be all that bad of a thing. Just think of it as another datapoint guiding your trading decision.
Anyone with similar or different observations are welcome to respond.