Spread, Profits and You

You might not recognize the effect that spread has on your trading, and your broker likes it that way. If you are a scalper, you have no doubt already noticed that the spread can cut your winnings in half on a single trade. However the effect of spread on long term traders is not less drastic from a statistical point of view.

Your expected outcome from a random trading system is negative and equal to the spread (if anyone wants to see this I will post the explanation here). Of course you aren’t trading randomly, but the fact remains that the larger that your spread is the more you have working against your profitability. So I am going to assume that the reason you are reading this article is that you are not as profitable as you would like to be, so finding a broker that offers a lower spread would be helpful to your profitability.

Don’t be fooled, however, when you see a broker advertising spreads as low as half a pip, you will never get that price. This is their lowest possible spread. Yes, their spread has been that low before, but hardly long enough for you to receive the benefit of these spreads. The most important value to look for is what is called the typical spread. This is the spread value that is seen most of the time. The typical spread for EURUSD, the most traded pair, is usually around two pips, here at IntegrityFX we typically offer a spread of 1.9 on EURUSD.

See if currency trading with IntegrityFX is right for you.