Spread on Forex Trading
Spread on Forex Trading when you see a quote on the forex market it will see the currency pair symbol of the selling price and the purchase price. Now the difference between the selling and buying prices is what is called the spread . So this spread shows you how many pips are needed to break your position. Unlike when trading shares, we have to pay a fixed fee when opening a position (Buy) or closing a position (Sell) in the forex market there is no selling or buying fee , but there is a spread .
If we look at the table above, each currency pair has a large spread that is different and we must pay close attention to this before making a decision to make transactions, especially for those of you who are traders of scalper types. Why? if you trade with a short time frame it may be less suitable (target 10 Pips per transaction) if the number of spreads is very large.
So basically like this when you open a Buy position EUR / USD at the point of 109319 that is executed is at the point of 1.09187 so that to break even then the position of the EUR / USD point should move 13.2 Pips to 1.09319. Well spread is the advantage of brokers when selling currencies to you and buying your currency if the broker acts as a dealer.
Are you still confused? if yes, please refer to Bank Mandiri’s foreign exchange rate, for example, choose the USD / IDR currency pair.
At the exchange rate of USD / IDR the amount of spread is (13,925.00 – 13,900.00) Rp. 25.00 and when you are sure that the rupiah has the potential to weaken, the thing to do is to buy Dollar (USD) using the Rupiah (IDR). If you want to buy one dollar (USD) then you need to pay IDR 13,925.00 ( Buy USD / IDR 13,925.00 ) and if you want to sell one dollar directly then you will lose IDR 25.00 (for the spread) because of the position Close Sell USD / IDR 13,900.00 . So you will break even if the dollar strengthens as much as Rp. 25.00 or the Close position sells USD / IDR . 132525.00 . How about it, it’s easy not to be confused!