Spread in Forex & Indicator

Forex Trading - Spread & Indicator

Who didn't know the spread? Every day traders who trade in forex market will directly deal with the spread. But more broadly the use of spread and its influence on the overall trader few who review it. In this article we will examine the role of spread and calculations in forex trading as well as the correct definition of the spread.

If we look at forex quote or price, usually always followed by the value of the bid and ask prices. Spread is the difference between the selling price (bid) and the buy (ask) quotes or quotes, sell and buy. This is the revenue earned by the broker at each time we sell, the spread will be charged between 2 points to dozens of points depending on the currency pairs.

Size (Value) of spread may vary within each pair.  No forex broker that uses a fixed spread, the spread does not change in any market condition. However, some are using the spread floating system, which spreads fluctuate depending on market conditions.

 

Spread Forex

Usually forex spread (floating) has been pegged by each broker and will not undergo significant changes too except on further developments, forex broker feels the need to increase the spread. Although this spread can be said to remain or uncertain, but in the rules of each broker is usually added to the sentence that "will increase the spread when a very strong fundamental issues affecting the market", where the rate of movement of the currency pair is very fast.

For an experienced forex trader, this moment is a moment that they eagerly awaited, because it's not every time that trader could gain profit in a very short time. When there is a change in the spread, it wouldn't be a problem for the trader who already open position at the beginning. Because the effect is not going too big, unless the trader is in a loss position, the swelling spread it hurts. But for a trader who just entered the market, the swelling spreads will caused a deep impact, especially coupled with the presence of a very small margin, or arguably only able to withstand the movement below 100 points.

Since there're number of forex traders who also perform open position at the same time, sometimes there are delays in the open position and of course this is very detrimental to a trader. There is a possibility of spread borne already swollen and the desired points for their misses the delay. For that, consider the spread on the pair you used before transacting currency.

Spread MetaTrader indicator — displays current spread in the main window of the chart. You can modify the font parameters, indicator's position and the normalization of the spread value. The spread is redrawn after each tick, ensuring the most current and active spread value. This can be useful for brokers with variable spreads or with spreads that are widened often. The indicator is available for both MT4 and MT5.

Input parameters:

• font_color (default = Red) — color of the spread indicator.
• font_size (default = 14) — size of the spread indicator.
• font_face (default = "Arial") — font of the spread indicator.
• Corner (default = ANCHOR_LEFT_UPPER) — location for the spread indicator on the chart.
• spread_distance_x (default = 10) — horizontal distance from the corner to indicator.
• spread_distance_y (default = 130) — vertical distance from the corner to indicator.
• normalize (default = false) — if true, then the spread value is normalized and is given in conventional pips. If false, then the spread is given in the current pips as is. Can be useful for nonstandard quotes.
• AlertIfSpreadAbove (default = 0) — if greater than zero, then a sound alert will be issued if spread becomes greater than the given value.
• DrawTextAsBackground (default = false) — if true, the text label with the spread value will be drawn as background. It can be useful if you want to prevent the indicator from obscuring the chart.

Spread in Forex

Example 

This indicator cannot be used to generate trading signals. It can only assist you to make trading decisions, set proper stop-loss or take-profit levels and inform of the current market situation in a simple and fast manner.

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Forex Trading Strategy

FOREX TRADING STRATEGY - "CHARIOT OF ENGINEERING" UNDER THE MOVING AVERAGE

There's only one indicator - Moving Average (MA) at the time of closing, whichever period is used in the trading process by using the strategy of "Chariot" is 40.

Forex Trading Strategy

Any currency pair, as well as the time span at any time, which ranges from one hour to one week, would fit with this forex strategy. This strategy is more suitable when used with a longer time span.

The situation is when the price moves up slowly, which often occur in the process of trading, although it also occurs when prices have a big movement in the opposite direction. This forex trading strategy is designed to be used for the condition of swing (swing) like this, when markets fall or rise. Although this trading strategy looks very simple, but it was quite effective if the price moves sideways or on the market with the general trend moving upward / downward. It is advisable to use this strategy on the weekly chart, but can also be used on the intraday and daily price chart.

This trading rules are very simple. If the price is above the moving average, you should open a long position (buy). In this case, there is no short positions opened.
If the price moves in a flat condition and the range is close to the moving average, it is not recommended to open new positions. In a situation, where in the chart, the candlestick (candle) first surpassed moving average (MA), in which the closing occurs at the top of the price range, then you should do the following:

open a position on the first candle stick, at least not at the moment the price is more than 80% of long candles in the moving average, if the price closed in the upper third of the price range;

open a long position when the price broke through the top of the candles, which are relevant to this character. Rod wax candles is considered a sign.

While the balance of the price is above and below the moving average, the opportunity to enter the market available after the price "dip" out of the moving average (MA). If the candles before of candles entrance is located on the Moving Average and closing occurs in the upper half of the price range, then this is a signal that you're ready to open a long position, but you should only enter the market when the price broke through the top of the stem of this candle.

Position to buy should be opened if the price is above the moving average (40) and a short position - below. Initially, this strategy will involve a long position.

MA on the chart indicator settings
Stop Loss is best placed at the level of the bottom of a rod wax candles before admission. Take Profit does not need to be placed as well as the use Trailing Stop. The larger the scale of time, the greater the value of a trade. Similar choices - is closing some positions, with the benchmark development and Fibonacci levels, which is placed nearby.

Before opening a position, it is important for traders to analyze the price schedule and ensure the existence of a price reversal in the SMA (40). The best thing is if the amplitude (amplitude) of the reversals occurred to the maximum, because this is a new sign of the occurrence of a consolidation. Look for a trend that is not too strong, not greater than 45 degrees. In the conditions of a bigger trend, the angle of the price will be similar to the movement of SMA (40). When you move away from this picture, it is better not to open any position. The core of this strategy is to follow a proper trend when the trend began. To avoid a delay, you can use the ADX as an additional oscillator.

Each person chooses the most appropriate strategy for himself. However, in any situation, you should try all the popular and common strategy, because you alone are going to find a suitable strategy to deliver yourself to get a steady income.

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