Spread, Loss and Take profit

Spread: If you open a trade you will see that it has been opened in loss. This loss is called spread. Every broker house takes a charge to open a trade. That’s why every trade opens in loss. Opening any trade is impossible without spread. You are bound to the broker house to give them their fees.

Suppose, you have opened a buy trade in the price 1.2655. But it opened in the price 1.2652. This means that 3 pips fee is applicable. If you open your trade in $ 3 pips value, $3 is applicable. Different currency pair has different spread. The fees also depend on the broker house. Like, in INSTAFOREX spread fee for EUR/USD is 3 pips or in Fxoptimax spread fee for EUR/USD is 2 pips. It is also seen that, 30 pips spread fee is applicable for some pair. So, you should be careful about trading in unknown pairs and you should check the spread fee for that pair.

Stop Loss: Through stop loss you can fix that in which price you want to close your trade. This fixes that how much loss you will have to bear.

Take Profit: This is the same thing as stop loss. Through take profit you can fix that in which price you want to close your trade. This fixes that how much profit you will get.

Think that you have opened a new trade. You don’t want to take profit more than 50 pips or don’t want to loss more than 50 pips. So, you should set stop loss, take profit o close your trade at the price which you want. If the price increases for any spike or your pc suddenly turns off or for any reason you stay out of the market, the stop loss take profit will automatically close the trade at your fixed price. This provides a safe trading.