Kat Hillard asked:
I’m a little confused as to when stop losses and trailing stops are actually triggered, when taking into account the spread as well as commissions and rollovers.
I’m a little confused as to when stop losses and trailing stops are actually triggered, when taking into account the spread as well as commissions and rollovers.
For example, if you were to go LONG on a currency pair, is the stop triggered when the ASK or the BID reaches the designated price? I assume it’s the opposite when you’re going SHORT?
For instance, if the spread is 2 pips when you enter LONG, does that mean you’re already 2 pips closer to your stop loss, or that if you set a 25-pip trailing stop, that it’s already down to 23 pips, right from the entry?
Also, are things such as broker commissions (for ECNs) and rollover interest “counted” towards how many pips the price has actually moved against you?
Does it matter what kind of broker it is? For instance, I’m currently associated with MB Trading, an ECN broker. I’m not sure if this makes any sort of difference.
Kansieo.com
Create a video blog…instantly.
The stop is triggering when the last trade that took place is at or below the stop (assuming you’re long).
Example:
Last trade: 100.00
Bid: 99.90
Ask: 100.20
Your stop in a Long trade: 99.95
Assume a trade is made at 99.90. Then you’re stop is triggered and your position will be sold at the going bid. The broker’s fee will be calculated afterwards, using the value at which the trade took place.
Kansieo.com
If you go long a currency pair, the stop is triggered when the sell (bid) price touches your stop price.
If you go short a currency pair, the stop is triggered when the buy (ask) price touches your stop price.
If you set a stop loss 20 pips from your open price and the spread is 2 pips, then the market will have to move 18 pips against you to get stopped out.
**COMMISSIONS
Any commissions will be taken out separately from a trade and are not reflected in the floating profit/loss of a trade.
**ROLLOVER
Some brokers will modify your entry price to account for rollover, which does not make your rollover cost very transparent. Others will display your exact rollover cost or earnings in a separate field titled rollover or swap.
Caffeinated Content
The enormous size of the Forex market gives it the speed and liquidity like no other financial world market. Losses exist, but Profits are even higher! But just like any other speculative trade, amplified risks are involved along with the probability for a higher profit/loss.
It is advisable not to place your stop/loss orders too close to the normal market price, as a little fluctuation in the market, can then trigger the order. Likewise, limit orders should also reflect a rational hope of profits you are expecting, based on the market’s trading activity. They should be set at the rate which is not overexposed to the trade, and also not too close to the market.
‘Stop-loss’ and ‘limit’ orders can lower an investor’s exposure to risk by a large proportion.
Create a video blog…instantly.
didn’t find any answer ?, you can find books, tutorial, video, chart, prediction about forex here: