Hi there,
I was wondering how much spread you’d pay in the following circumstances (just an example) ;
- trading on the ftse mini during 10pm – 2am timeframe so the ig spread = 4
- assume you buy 10 contracts at 10.000 and assume you just want to break even on your trade; what would be the earliest market level at which you would trade even, taking into account the spread costs of the trade as well?
- would that be 10.008? (4 spreads to enter the market and another 4 spreads to exit the market so 10.008)
- say you’d sell at market at 10.001.. (not sure that would be possible if the spread was of 4 but let’s assume, and correct me on this one too if I’m wrong)
- gross profit of 1 x 10 = 10 ?
- spread costs of 10 x 4 x 2 = 80 (buying and selling taken together assuming you stayed in the aforementioned timeframe)
- net profit of – 70 ?
Thanks for the replies,
Cheers!
If spread = 4 then that is 4 over 2 trade executions – Buy and Sell (exit / close the buy).
Have you enabled your ‘PRT Demo Account’? has to be enabled on the IG Platform under ProRealTime. Demo is a good way (with virtual money) to try trading scenarios and see spread working in practice.
You mention 10 Contracts and 10pm, the killer would not be spread, but overnight fees.
Not sure what overnight fees are on FTSE mini, but, for example, on a 10 Contract DJI held through 10pm (i.e. before and after 10pm) we would be paying £90 overnight fees.
I’m mentioning above for benefit of anybody who does not know above.
I did actually but you can’t see what you’re paying as a spread, that why I thought best to ask directly on the forum..
Yea, I already settled the overnight fees problem 😉
oh I thought you paid the spread commission at both the entry and the exit..
So you’re saying that I’d only pay 40 in above example then and that the net profit would be -30 (not taking into account the overnight fees)?
Albaran wrote: net profit would be -30
Yes, if spread = 4 and you could buy and sell in an instant without price moving at all then the Sell Price would be 4 points less than the Buy price.
See attached for Buy / Sell buttons you can show on Charts.
Aha , spread on DJI is 2.4 during market hours! I’m sure a few weeks back it was 2.6.
Oh my bad, forgot to mention that I work with automated strategies; that’s why I said you don’t see the spread you pay..
Am I correct in stating that you pay the spread commission on exiting your position? Assume you started a position in the 10pm-2am timeframe and you exit your position in the 8am-9am timeframe where the spread = 2; then you’d only pay the spread of 2?
The price you see on a bar / candlestick is the mid-price (halfway between Buy and Sell).
- With a spread of 4 at 10pm, you would buy at mid + 2 points.
- With a spread of 2 at 9am, you would Sell at mid – 1 point.
Spread is built into the price at which you Buy and Sell. Spread is NOT a commission or fee which is charged as an add-on / deducted from profit / shown separately in your IG Account.
It is integrated but my understanding of it is that it’s still a charge (commission was maybe the wrong choice of word in what I wanted to express) you pay since it is stated as such in your annual summary of fees and commissions; they explicitly mention that spreads are included in your total annual transaction costs ..
Albaran wrote: spreads are included in your total annual transaction costs
A transaction being a Buy then Sell or a SellShort then an ExitShort.
So spread is ‘built into / part of / included in’ above transactions and is an unavoidable cost of doing the above transactions.
We are in Agreement btw. 🙂
Yes we are 🙂
Thanks so much for your responsiveness, it’s very very appreciated!
