Gain the brokers edge

trevman · #1 (**permalink**) 03-09-2007, 10:54 PM

so many systems fail because of the spread. the spread is a set number of pips which regardless of the direction of trade is credited to your broker, BUT your broker returns interest on certain positions. if i hold a position on any currency (and in the right direction) long enough i will recover the spread through interest. obviously you need bigger sl and tp to stay in the trade longer but this means you will trade less, thus the effect of spread is lessened, and since you recover it through interest, negated.

if you go 50/50 on a trade, the odds start in the brokers favour but as time progresses become in your favour as you recover the spread and gain additional interest. the big sl and tp help the odds in your favour too. if your risking 20pips for 20pips and paying 5pips spread you start 15pips from your stop, but if its 200pips each way a 5pip spread doesnt matter nearly as much.

testern · #2 (**permalink**) 03-10-2007, 12:12 AM

Quote:

Originally Posted by trevman

so many systems fail because of the spread. the spread is a set number of pips which regardless of the direction of trade is credited to your broker, BUT your broker returns interest on certain positions. if i hold a position on any currency (and in the right direction) long enough i will recover the spread through interest. obviously you need bigger sl and tp to stay in the trade longer but this means you will trade less, thus the effect of spread is lessened, and since you recover it through interest, negated.

if you go 50/50 on a trade, the odds start in the brokers favour but as time progresses become in your favour as you recover the spread and gain additional interest. the big sl and tp help the odds in your favour too. if your risking 20pips for 20pips and paying 5pips spread you start 15pips from your stop, but if its 200pips each way a 5pip spread doesnt matter nearly as much.

So, how would you use this info to come up with a successful trading strategy?

prasxz · #3 (**permalink**) 03-10-2007, 12:59 AM

just looking for the broker with minimum spread and legitimate ...but if you want to go long term trading i think bout the spread it doesn't matter....5 m chart strategy will be good with minimum spread ...what about oanda with 1.5 spread but it's not based on MT platform

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