Forex newb

Discussion in 'Forex' started by itm, Aug 18, 2012.

  1. itm


    For main stream usa brokers like and MB Trading, is slippage (difference between last price and entry price) equal to the spreads they advertise? MB trading offers up to 0.1 pip spreads, with spreads under 1 pip on EUR-USD typical. This means I'll get in at 0.1 pips below the last price?

    The reason why I'm asking is that Ninja Trader 7 market replay shows the EUR-USD spreads to usually be at 2 to 3 pips, with it rarely at 1 pip. So when I enter a trade, I'm paying $20-$80 "commission" (slippage) per 100,000 units.

    I know I am a newb please forgive me. Thanks for helping me out.
  2. check the spread during normal market hours, it should tighten up. It should be tight 00:00 midnight sunday night monday morning until Fri at 17:00. I trade with ib, normal for eurusd is half to one pip. Price improvement is not uncommon.

    not sure I would consider and MB to be the same.

    in forex there really is no such thing as a "last price"
  3. slippage only applies to market orders. If you are trading 100k or more you are better off going with an ecn and paying the commission.
  4. itm


    100k-this is $2,000 in a 50:1 account. Do you mean 100k in a 50:1 account?
  5. traders usually refer to slippage when they get stopped out. For instance you have a stop that is to be exeucuted as a market order when the market hits a certain price. Slippage is the difference between your trigger price and the executed price. Like one night I had a stop in on some long chf when the swiss national bank intervened, and a stop which usually got executed with 1 pip of slippage traded through so hard it almost had 10 pips slippage. Fortunately I also had some short chf on and it turned out to be one of my better nights.

    The spread is the difference between the bid and the ask, so if you buy at the ask, the best now you can do to liquidate is to sell at the bid. There is no slippage, if you enter a market order to sell you should get filled at the bid.

    A market maker will typically charge no commission but add a pip (or more) to the spread. An ecn charges a commission, but it is in their best interest to keep the spread as tight as possible, and they do this by putting your order out all over the world trying to find the best price for you.
  6. price improvment occurs when you want to sell the bid and someone else wants to buy at the ask, since both of you are the best price the broker will split the spread and you both get price improvement, and sometimes that is referred to as positive slippage.
  7. You would pay 0.1 to 1 pip in spread for a good broker on EURUSD. No other costs.
  8. and just who would that good broker be?
  9. 100k notional, so yes $2000 margin at 50:1 would cover 100k, so one pip on eurusd is $10, so you are better off paying 1 pip spread and $2.50 commish than paying an exrta pip to the mm and no commish.

    1 pip 10.00
    plus $2,50

    2 pips $20