A note on paying the spread

Posted by Scriptaty | 1:09 AM

Unlike many other financial markets, retail spot forex trading is almost always a spread market — that is, you buy at the offer and sell at the bid, always paying the spread between the two as a transaction cost. For that reasonal one, successful scalping is extremely difficult in spot forex.

For example, assume you enter a long scalp trade with an expected profit of 10 pips and a stop-loss 10 pips below the entry point. If you pay a typical three pip spread, you could earn only seven pips profit but you stand to lose 13 pips if the trade goes against you.