Tuesday, October 13, 2009

Comparison in the spread

We have already explained the importance of the width to the cost. It would be probable to affect your trading style in other aspects. Let us compare the spread in two cases, 5 points and 10 points, for example. Assuming that the trading range is set within 50 points with the lowest at 30 and the highest at 80. On of forex brokers would show "30-35", while others "30-40", when the market price is now just breaking downside. On the contrary one would show "75-80" while others "70-80" when the forex market is now breaking upward around 80. As you can see from this example, if you choose a forex broker with wider spread on the price quotation, it will lead you to lose the chance to buy at the cheapest zone and to sell at the highest. Please remember that such forex brokers as provide for the wider spread tend to force you hard to take profit, because of your play holding in narrower trading range than the actual forex market.

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