Why Forex trader minimum spread?
The minimum spread, low spreads-why professional traders are looking for brokers it is with such trading conditions? The answer is simple: spread-this is the first that pays the trader when opening a position. And because Forex trading has for goal the enrichment of the trader, every cent. How to choose the "right" broker, what are the spreads and how to reduce your costs, increase your profits-we are going to carry on a conversation.
Definition of the spread. The benefits of minimum spreads
The simplest definition of spread (spread) is the difference between buying and selling. This fee is charged by your broker every time you open a deal. Therefore, the more transactions you open, the more you pay to your broker. In order not to lose money, your transactions shall be either zero (the profit is equal to the spread, your net profit is zero) or profitable (1 point or above).
Why is there a spread? Because the broker wants to get its profits, which is embedded in considering that between the trader and the purchase/sale of currency may be several intermediaries (brokerage, Bank, etc.), size s. can be significant. Conclusion-use brokers with a minimum number of intermediaries, such as ECN-accounts.
If you're a scalper rather than medium-term trader holding the deal over a couple of hours, at most days, it is especially important to make deals on tools with the lowest spreads. Ve b with skal′pinge , a trader can close hundreds of transactions per trading session. And the profit with each transaction is often 1-2 point or may even be losing value with 2-3. item. Not surprisingly, many scalpers banal increase trading volumes in the event of the closure of loss-making deals.
Not coincidentally, many traders just love the currency pair EUR/USD, for which the broker with four-digit prices can be as little as 2 pips, a broker with five-digit quotes -0.5 points.
I hope you now understand the value of the l′kih for a few cents, which are removed from your account each time you open a new deal.
Our choice-minimum spread!
The first thing you need to look out for when choosing a Forex broker to trade conditions, namely the size of the brokers with ECN-accounts (and not only) extra one-off Commission to open a deal. Keep this in mind.
The second is your trading style. If you trade long term, opening 10-20 trades per month (transactions are held open days and weeks), even in the case of a currency pair with 10 points of this will greatly affect your bottom line. If you are a day trader, and are trading on multiple instruments-the choice of the latter is very important.
Thirdly, the smart trader knows about another benefit of a good broker is charging interest on the balance of the unused funds at the end of each month. For example, Foreks4û is 7-12, 5%, Instaforex -13%. Interest rates may vary depending on the type of account (for example, cent and dollar). For more details, see the website of your chosen broker.
So, just because you hold the broker your money you already earn. Add to that the profit from the transaction, and figures are you will like them.
Quite another thing when a trader trades more aggressively. Payment in the form of s. can be very impressive figures, so it is important for a trader "overcoming" every item. On the second place is no slippage (the requote), that is, the transaction should be opened/closed by a clearly defined price. We went back to the accounts of the ECN typewith the lowest spreads and transactions are executed almost instantly, eliminating the possibility of slippage. Don't forget about the possibility of the Commission in the case of trade in such accounts.
Sum up the results. Size s. very important for active traders, therefore WMD choose broker with minimal spreads. Knowing which currency pair (s) you are trading, what style of trading you prefer (aggressive or moderate), can and should choose a broker with trading conditions suitable for your trading system. That way, you'll earn, save, and earn even more.
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