confused about spreads.

[tradewinds]

I ve been learning about FX trading lately and have developed some pretty sucessful systems,using breakouts over weekly, daily and 1 hour and 15min timeframes.
I ve just been testing them in real time over afew months. I ve been using the Visual Trader platform. I am going to go live soon.

The only thing I am abit confused about is the spreads. I think the reason I am not sure is because of my spreabetting account I use.

For Example, it says the spread for Euro/$ is 3 pips and for EURO/CAD is 10 pips. NOw, on my spreadbetting acount the spread was calculated from the mid price,so if the spread was 10 you would actually only have to make up 5pips to breakeven. So does a spread of 10 mean you start 10 pips down or 5 pips down. If its 10 as it is for the EURO/CAD then this is quite alot of pips to make up especially if you only want to take 10 pips in some trades.

I would appreciate some feedback on this as it is annoying not to know what the crack is. Cheers

Chris.

 

[G-Man]

What you usually find with spreadbetting companies is that they will quote the mid-price on any charts or open trades.

If the spread on EUR/CAD is 10 pips, then when you open the trade you are immediately down 10 pips. This needs to be covered by the trading strategy to get to break even. Hence the markets are often called a negative sum game.

G-Man

 

[tradewinds]

What you usually find with spreadbetting companies is that they will quote the mid-price on any charts or open trades.

If the spread on EUR/CAD is 10 pips, then when you open the trade you are immediately down 10 pips. This needs to be covered by the trading strategy to get to break even. Hence the markets are often called a negative sum game.

G-Man

This is as I thought. Oh well thanks for the reply G-man. It looks like the ones with the larger spreads will be used for longerterm trades. Cheers.

 

[henry766]

Except when you trade on an exchange, where the spread isn't a negative sum game at all, ( except for small commission), any exchange traded instrument is an even money game ,(except for small commission).

 

[tradewinds]

Except when you trade on an exchange, where the spread isn't a negative sum game at all, ( except for small commission), any exchange traded instrument is an even money game ,(except for small commission).

Excuse my ignorance Henry but what is an exchange?