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Should you pursue low margins?

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Such advertisements and the like are found all the time in banners when you browse Forex related sites. Some brokers even urge you to switch to trading with them solely for this reason. His argument is seemingly impenetrable: why spend money on spreads?

But let’s look at the situation from a different angle: why is commission called a loss? It is worth reconsidering your views and understanding that a broker cannot work for “thanks” either. It needs to exist at the expense of something in order to:

your software was working;
could receive real-time news directly at the terminal;
an economic calendar was available;
all traders can use specialist analysis;
and, in the end, that everyone has access to the most important service: the provision of leverage. Without which, we remember, all of us, that is, the traders, would go and trade through the bank with our ridiculous amounts…
Do you need to treat the spread as a robbery from brokers after that? Of course not. As for losses, let’s consider this issue in detail and objectively.

Spread: is the loss big for a trader?
Should he pursue low spreads, so for a normal broker on ordinary currency pairs (we won’t talk about little-known ones), the spread is from 2 to 4-5 pips. And for a normal trader, the smallest profit from a trade should be at least 10 points. And this is with the scalp. Do you have less? Then urgently review your analytics.

What’s wrong with low-profit trades? It’s simple: when you open any position in the Forex market, you take the risk. And, if you are already taking a risk, then the expected income must be good, the probability of loss must be minimal, and the number of possible losses is less than the size of the possible gain. If your profit from a position is less than 20-30 points, it cannot be called decent. At the same time, it is difficult to set a normal stop loss so that you do not get caught in the correction.

In short, the risk must be justified. The scalp is a rare exception, but even here it is not necessary to change it for crumbs of less than 10 points. In intraday trading, the normal income is 30 to 50 points and more than one transaction. In medium-term trading – from 100, in the long term, the profit is measured in hundreds and can go beyond 1000.

But let’s not go that far and focus on the most popular option: intraday trading. Your minimum goal is 30 to 50 points. Against 2-5 – commissions. Also, the calculations of the terminal are organized in such a way that this commission will be taken immediately and will not be deducted from the final amount. It’s just that the opening price will be different and you need to make up the spread first.

As you can see, in normal trading, which is almost professional, spreads are simply invisible to the trader. With unprofitable trades, the situation is the same: rarely someone closes on minus 10 points, often he throws last. That is why here, in the context of the general handicap, the spread will not play a significant role. Learn to be a specialist, and the commission will not be a terrible loss for you!

Brokers offering low spread
How to deal with offers from brokers who invite for small spreads? First of all, it is up to you to decide. Pay attention to a number of factors.

If you prefer scalping, then it is worth considering looking for a broker with a low spread. But it is not the first to be seen in an advertisement. Choose carefully.
If you are interested in this type of banners, first ask yourself: what can these companies offer besides a low spread? You don’t need to give an answer, just take a look at their website. Perhaps they are persistently pushing scalping by talking about how to trade this way. Then everything is fine: they strive to win by quantity. If not, it can be strange. Do you work at a loss or at a penny profit? So that? Perhaps the broker is completely new and in this way attracts clients. So you should not put large sums on the account, be careful.
And, most importantly, don’t choose a broker just because of the spread. There are many other, much more important indicators: reliability, work experience, reviews, etc.

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