Please help an experienced stock trader looking to change to Forex. Where I can see spreads published (Oanda), they appear to increase a lot when financial centers are closed (nights). If you carry a stop overnight, it looks like you could get hurt by the spread if it was triggered? How is this best dealt with? Is there a broker that would be best in this circumstance. Also, I can see what claims are being made about spreads, but what is the reality? Thanks for your time. I very much appreciate any responses.
http://fxtrade.oanda.com/spreads/comparing_broker_spreads.shtml http://fxtrade.oanda.com/spreads/recent_spreads.shtml
Well let me rephrase that for you. Where I have already seen spreads published such as Oanda, it looks as if you might get burned by the large spread during off hours if you had a stop that was triggered at that time. I do know Oanda's site. I hope you can see the issue to which I am referring here. Thanks
I guess it is more the weekends than nights when Oanda's spreads really go off the deep end. According to them they uniformly go up to 10 pips except GBP/JPY was 20. Ouch. I'd hate to have a stop triggered on that. Is there some way to avoid that problem? Thanks
You can't avoid the spread increases, other than not trading at news announcements and holding positions over the weekend. Mind that the spread increases are not a big problem if you think about it. The spread is equally distributed on the bid and ask. A spread increase of lets say 6 to 20 for GBP/JPY on the weekend would only result in a 7 pip spread disadvantage (20-6)/2. I think you will find that a 7 pip movement is not much in the forex market (especially for GBP/JPY). Your standard stoploss level should be able to absorb the spread increase easily. Of course it will happen sometimes that the spread increase will just trigger your stoploss, but I don't think it will have a structural impact on your trade performance.
Thanks TradingWise. Would you or anyone else tell me if spreads increase on weekends at the ECN's like IB or MBTrading or is this just a market maker (Oanda) thing.
In my short career in forex I have come to the conclusion that you are better off moving up a bit in timeframes and using wider stops. I started off trying to trade off of 5 min charts using around 10 pip stops. This did not work well. Now I am going for much larger moves with smaller size and using 20-30 pip stops minimum. Total newb tho but that has been my experience so far.
At most market makers and ECNs you are not able to trade on the weekends; i.e. you can only trade 24/5. Oanda allows you to trade on the weekend, but at higher spread costs because they take on more risk (not able to hedge your trades effectively, etc). See the link below for IB trading hours: http://individuals.interactivebrokers.com/en/trading/products.php?pdt=FX&ib_entity=llc
Thanks GaryN, TradingWise and TL Trader! I very much appreciated your responses. Sorry to ask a question so basic as to be answered with a citation of IB's trading hours. Also, thanks for the trading advice. Best