Placing Orders

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  1. Hanuman says
    September 25, 2014 at 9:46 pm

    Hi Alwin

    why do you add spread on both sides of the trade…?

    Spread is only paid once in a turn-around trade, always on the buy… i.e. in a long trade on the Entry, in a short trade on the SL….

    Reply
    • Alwin says
      September 26, 2014 at 3:14 pm

      Hi Hanuman,

      I think there’s a slight confusion here. Unless I misread your question, the calculation above is not for calculating the cost of trade but to identify a price level that is safe to place your orders.

      Having said that, you are right in that you don’t really need to add the spreads on both sides of the trade. The correct calculation should have been

      Long Entry = Ask Price + Buffer
      SL = Bid Price – Buffer

      Short Entry = Bid Price – Buffer
      SL = Ask Price + Buffer

      I have included the spread calculations in the course because, unless you contact your brokers, some brokers do not mentioned if the charts are Bid Price charts or Ask Price charts

      Hope that make sense?

      Reply

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