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Part 3

Discussion in 'Beginners Bootcamp' started by SwingTrader1, Jun 22, 2010.

  1. SwingTrader1

    SwingTrader1 Recruit

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    Welcome to part 3 The Spread

    The spread is the difference between the bid and ask price.
    Fairly simple right? Ok

    The bid is the quote a trader gets when they sell a currency pair.

    The ask is the quote a trader gets when they buy a currency pair.

    A couple of things to remember, the bid is always lower than the ask.
    and when a trade is opened, the opening rate will be lower or higher than the rate opened by the amount of the spread. Thats a mouthful.

    Here is an example. EUR/USD
    I open a trade I buy at 1.2308 the spread I pay for the EUR/USD is 3 pips so I dont break even on my trade until the ask price reaches 1.2311 (3 pips away) from 1.2311 on up its all profit. At least thats what I want.

    Selling would be the exact opposite except I would be using the bid quote.
     
  2. Pharaoh

    Pharaoh Colonel

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    Good, simple explanations. I like it. :D

    Keep up the good work.
     

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