Bid and Ask, do I pay 2x spreads for each trade?

[CakaSukubog]

Exactly what a buyer is willing to cover - bid always less (10)
Exactly what a vendor is asking - ask always more (11) in this situation spread is 1,

We as traders enter the market on the opposite side so to buy we're finding a vendor ASK price, and to sell we find buyer BID price

It doesn´t really matter what the spread is if you observe the right prices

So at 1 long position is open BUY - ASK - 1.2500
in 10 long is shut SELL - BID - 1.3000

So basically yes you cover twice spread, also depends the way the machine is showing off the prices, if only bid is revealed, when launching position you cover disperse and if closure no, I am not actually certain how your broker indies this info but if you obey the bid and ask prices as I said before you get the result.
Anyway some brokers show always both prices even when you put in SL and TP, such as SL in 1,100 BID, therefore this missunderstanding is prevented, plus it calms the decision making, but it can be learned through training.

Its very easy to get this mixed up, I hope I got it right

David

[Nresncahjinctt]

If the long position is now closed, is it that the Ask or the Bid used to compute the profits? Ive been trading combined time too and it's still perplexing but here goes

The closing bid price is used used to calculate your profits over a long position. However you do not pay the spread double
You bought the ask price and then you marketed the bid price and paid the gap, the spread, only once.

If you'd bought and sold before price transferred, you would lose only 1 x the disperse, and that is all your broker could collect

you would buy the ask at 1.25 and sell the bid in 1.20. You'd realise a net loss of 500 pips, only 1 x disperse

But I wouldnt recommend entering with 500 pips of spread - just sayin

[NesisTk26]

So basically yes you pay two times disperse... This answers this question.


If you had purchased and sold before price moved, you'd lose only 1 x the disperse, and that is your entire broker could collect you'd buy the ask at 1.25 and sell the bid at 1.20. You'd realise a net loss of 500 pips, only 1 x spread Great example there.

Buy the Ask 1.25 instead of this Bid 1.20 means the broker already offsets 500 pips. (i.e. we, traders, inactively disadvantages 500pips spread but it is not showing in account balance)
After 10 hours, even if price stays the exact same and we close the position in Bid 1.20. A 500 pips reduction occurs but this time it shows into account balance.

Hence in total it is 2x the spread against the traders. One is hidden and one is directly revealing on account balance when trade is closed. Traders only need to cover the 2nd one. The 1st one is counted as disadvantage against the market, instead of a real spread pay.

We better become broker than trader.

[EsSCaworun]

1 time you cover the spread when you creating the order. Second time you paying the spread when you finish the order. Know, no.

[nesbuaSz23]

Most charts use the Bid Price ( also called offer price), to reveal current price of this instrument. Here is the price you can get when you market the tool, either to open a Sell trade or to close a Long position.
The Ask Price, maybe not necessarily shown on charts, is that the higher price you will be billed when launching a very long trade or closing a Short position.
The difference between both prices shown at the time is that the spread. The higher the spread, the more illiquid the tool.

eg. If you opened a trade then closed it instantly and the Bid price hadn't moved, you will have paid the Ask price once you bought it ( higher price) then provided the Bid price (lower value) if you shut. You have paid the spread only the once, perhaps twice. If you opened Short vice versa.

You could of course, wait for the Bid price to rise, then moving long you receive the difference between the Ask Price you paid without the new Bid Price on offer.
This is why you often add the spread to your impending Buy orders, yet get the market price or chart price when Promoting.

[esndrosxx99]

One time you cover the disperse when you making the order. Second time you paying the disperse when you finish the order. Know, no. Nope, you're wrong.

If the quotes on EUR/USD are 1.3512/1.3514 and I wish to go long, I receive the ask price of 1.3514. If I wish to escape, I need to close my trade at the bid price of 1.3512.

You only cover the disperse ONCE.

[katudoSbttqw]

Only once and that is it..but I guess spam brokers could go down this route to pad their take up, you can't know. .

[Curoyescesnuzesros]

quote This answers the question. quote Great example there. Buy the Ask 1.25 instead of the Bid 1.20 means that the broker offsets 500 pips. (i.e. we, traders, inactively disadvantages 500pips spread but it's not showing in account balance) After 10 hours, if price stays the same and we shut the position in Bid 1.20. A 500 pips reduction occurs but this time it reveals into account balance. Hence in total it's 2x the spread against the traders. One is hidden and you is directly revealing on account equilibrium when transaction is closed. Traders only need... Hey I see what you are saying but there is something you are missing. The actual market or market price are found between the bid and ask quotes. It is only logical that if the broker supplying you an agency and liquidity buy the currency at say 1.100 they then may quote a price for customers to SELL under 1.100 and a price to buy ABOVE 1.100.

In effect you cover half the spread on your ENTRY along with the other half of the spread on your EXIT. In total you paid that the distribute ONCE. .

[EsSCaworun]

quote Nope, you are mistaken. If the quotes on EUR/USD are 1.3512/1.3514 and I need to go long, I receive the ask price of 1.3514. If I wish to escape, I have to close my trade in the bid price of 1.3512. You only pay the spread ONCE. Exactly. Great you paying attention. Not stress I best trader on this, I seeing whether anybody is paying the interest. Looking like blind leading the blind, you know. Not worry I reveal soon I making the good trades.

[JesndruTk17]

You do not pay the spread or twice... but half every time.

If we're bid 15 and provided 17, and you would like to buy the offer, you buy 17s. If you would like to sell out right away and the market has not moved, you sell at 15s. Your spread has been two pips. If you think about the difference between the bid and the theoretical centre of the bid/offer (that in this case will be 16), then it is one pip to 15 and a single pip to 17. So you pay one pip when buying and one when selling.

Carrying on this line of thought, state the market is 15/17 and you buy 17. Then news hits and the market is now 25 bid 30 offered. You would like to sell out so you hit the bid at 25. How much spread did you pay for this transaction? You paid 1 pip on entrance, and 2.5 on exit (midpoint of 25/30 is 27.5, so 2.5 pips to every side), for a total of 3.5 pips.

So I do not think it's accurate to state you pay it merely on entry or exit, because you want to factor both entry and exit spreads into account to find out what you're actually paying through the entire trade. You lock in half of the spread on entry and half on exit, so you don't really know how much spread you're paying before both sides are completed. At least that's how I look at it.

[EsSUXXITEsI]

To make it simpler to understand:
you will always buy (open long trade) at higher price(ask) and market ( close long trade) in a lower price(bid).
You only pay the spread after. When launching the order.

[NesisTk26]

Cant believe after so many years trading I don't get this straight. Can somebody please help to clarify the Bid and Ask price in the next scenarioAt 1 o'clock, the Bid for EU is 1.2000 and the Ask is: 1.2500. A long position is made at 1.2500. The disperse sent to the broker is 500pips. At 10 o'clock, the Bid price for EU is 1.3000 the Ask is: 1.3500. If the long position is currently shut, is it that the Ask or the Bid used to compute the profits?
In case Bid is used, then profits is ony 1.3000 - 1.2500 = 500pips; compared to 1000 pips when Ask price is used.
Hence the total spread sent to broker with this transaction is 500pips at receptive 500pips at close = 1000pips??? Mean I had to pay 2 times the spread for one order?

Thanks alot.