How much commission is actually taken out of my trade? I have been trading for sometime, and I never really cared about it, until now. I never expected it to be so important.
The book that I read and introduced a few posts ago, the author is a Stock trader. The methods of the commission that are being charged for our trades are different! Therefore, some of the strategies, even the though technical aspects of it is relevant, there are still some adjustments that have to be made for a Forex trader. For example the Candlestick periods! Using the 5 min candlestick time period in his instructions might not be too relevant to me, because of the chunk of commissions being taken away by the Spread!
The first graph is a 5 min candlestick chart, and below it is a 1 hour candlestick chart. Take note of the right axis! And look at how much value each grid on the Y-axis covers!
Above is an example of a spread for AUD/USD. The selling price is 0.90622, and the buying price is 0.90662. The spread (difference), which is also the commission is 0.90662 - 0.90622 = 0.0004.
And using this commission, 0.0004, you take a look and compare how much it matters to the 2 charts above! If your buy trade rises 1 grid in the 5 min Candlestick chart, the commission eats up close to 1 grid of your winnings!
For the 1 hour Candlestick chart, the commission will eat up less than 1/3 of a grid. 1 Hour candlestick charts are still considered quite short term to some. I know a professional trader during my national service, and when he uses 1 Hour Candlestick, he considers it gambling lol.
The longer the period of the Candlesticks you set, the less the commission matters. For now, I will be using the 1 hour candlesticks for the Bread N Butter strategy.
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