Why are the spreads so big?

#1

Couldn’t help but noticed the bid/ask spread on the forex pairs makes it extremely difficult to make a profit. It seems every trade I enter starts off in a $5-8 deficit. Even if the market moves 20 pips, I’ve only made $8 or so, and even that can quickly eaten away by the clock. In fact, I’m watching a trade I made just now for a single contract. 1 hour to go, 4 minutes into the trade, it has moved 3 pips, and I’m already $21 in the red. And this is an ITM binary, which is still ITM :confused:

It seems I not only have to be correct, I have to be EXTREMELY correct to even make pennies on the dollar (slight exaggeration, but you get the idea). The market really has to rocket in my favor on OTM trades in order to collect anything worthwhile. Likewise with ITM trades, even on the winners, I’m generally in the red until the closing moments of the trade, unless I happen to be very very very ITM.

How does one overcome? Are there times of day, or certain currency pairs for which the bid/ask spread is smaller? Does it shrink/grow depending on time remaining til expiry?

Any wisdom would be appreciated. Cheers.

#2

I’m curious as to which system you are using to place your trades. Are you using Spike Striker, Boomerang, MVP, APEX? Whatever system you are using, be sure you are following the rules. One of the basic rules that Darrell teaches is not to focus on the Profit/Loss. This just messes with your head! Of course, when you enter any trade, there’s going to be a deficit because of the difference in the bid and the ask. But if you are following your system and the rules, you should be able to take profit as the system is designed. This may not be the wisdom you were hoping for and I am hoping that someone else will also give you some more wisdom, but maybe it will give you something to consider. View or review the courses and follow the rules for entry and exit. Hope this helps!

#3

Superherobyday,

Sherrie brings up some great points and questions.

Remember, Nadex binaries are true and false statements and you only need to be in the money by one tick to have a winning trade regardless of what your P/L says.

For example, if you buy (go Long) on an ITM strike for $75 on say Natural Gas on a 3.800 strike price, your P/L will automatically show you are down the spread cost, this doesn’t mean you have a losing trade yet. The market is probably trading above your bought strike price by 7 or 8 ticks, lets say at 3.807. This means the market can go all the way down and expire at 3.801 and still be profitable. Your P/L may show the binary valued at $50 and a P/L loss of -$25 but when you expire ITM you will collect the full $100 dollar contract and make back your $75 risk +$25 profit.

When the market moves in your favor say NG moves from 3.807 to 3.815 and now your binary is valued at $93 you can wait and hope it expires in the money, or if your are smart you set a profit order to get out somewhere in that range, lets say $93. That’s a $18 profit not counting fees.

With ITM binaries they can go against you a little, stay flat, or go in your favor and you can be profitable.

If you haven’t done so already, take the time and go through the free training course on everything, binaries, spreads, and then start with the Spike Striker system. Practice in demo until you are profitable and then get going! :slight_smile:

Spread are awesome for mirroring the markets and doing long trend trades and or certain new trades like Straddles and Iron Condors. A little more advanced but trust me you can make good money if you apply the right strategies and systems with Spreads.

I had two profitable Straddles with Spreads last week. One on the AUD/USD and one on the GBP/USD. Both netted me a 1:1 risk to reward. It can be done. have faith, hang in there, you can do it.

Christopher

#4

I personally suggest watching the binary webinars i have under education recorded webinar binaries - ie binary mistakes assumption etc…

Also check out the articles i have on binaries on what influences their price.

Also we would need much more clear examples of what binary was chosen when it was chosen and for what reason it was chosen to help you.

Your assumptions would be correct if the wrong choices where being made. It comes down to why and what choice you are making.

To lump it all into ITM/OTM without all the facts would be to make a major mistake in understanding binary price movement.

If you can provide more details we would be glad to help.

A binary contract can move from 10 to 90 in a matter of a few ticks so honestly i could care less about the bid/offer spread. But again it matters what binary your choosing the strike in relation to price. When the binary expires (how much time left), how far OTM or ITM it is etc… etc… etc… I need a lot more information so I can help you as I can guarantee you have some false assumptions that i can’t clear up till i know specifically what y our doing and your line of logic.