Original subtitles

long long way so yeah you'd really don't need to spend too

such as stocks and what not Forex you know in today's one

take into account daylight savings when that changes twice

age is probably the cheapest market there is to trade by a

Forex especially compared to kind of other asset classes

don't need to be doing that so just make sure that is in your

or back for you so also just keep an eye out on that so that

but the spreads are actually 10 pips and then you know they get

daily rollover happens on the market close at 10 PM GMT each

start to ship away at your PNL so you know it's not something

weekday night because at that time a lot of market

be aware of with swaps is that if you are planning to hold a

participants they don't want to pay the swap on their

kind of slowly eat away at your profit you know if the trade's

consideration because after a while it really can start to

swing trader this doesn't really apply so much to kind of

broker for this if you do want to check it out but the

because when you are long the currency that pays a higher

broker will have a lot of detailed information on how you

will earn nought. 65% interest on your position each day

out nought. 75% interest so if you are short pound dollar that

you are short, right? Because you're borrowing that currency

trading on margin, so you know, we are leveraged trading,

short pound dollar and let's just say for example that the

got an open position on day one. If you decide to hold this

the two currencies in the pair that you were trading. So, at

PM GMT every weekday. The broker rolls your position over

same. Now, aside from spreads and commissions, there is one

prefer those narrow spreads but then you'll kind of have that

of the fee that you should be aware of in your trading

a commission of $3 for a round trip now round trip all that

means is it's essentially the full cost for both entering and

but generally when they do that the majority of their revenue

let's say the spread at the time of the instrument that you

automatic cost of doing business to enter a trade. Now,

tighter the spreads will be generally, right? You'll get

sellers that have their orders in the market, then, the

So, the more liquidity that there is, the more buyers and

why you're instantly at that loss the size of the spread is

because for you to exit the trade right you need to sell

the bid so the moment you enter the market you're going to be

the spread right that's the difference between the ask and

if you were to look at your brokerage platform you will

the bid and to exit out of your position you need to sell at

remember we buy at what the market is asking now the very

know they get slippage as well yeah it's just you know you

instantly at that very second you entered you'll instantly be

dollar right so let's say you buy Euro dollar then you would

difference in the micro pips there right so it's a spread of

this it would just show the mid price so halfway between which

some pairs widen as much as 30 pips so a general rule that I

show is one spot 18359 now if you were to go long on Euro

a year in terms of when daily close may shift an hour forward

close market liquidity is extreme thin so the spreads

through the end of the trading day, you will either be paid

trade around this time let's say with the five pips stop but

traders do this where you know they just have no idea that

when you're looking at your price chart you will only ever

plan so just wait at least an hour after the daily close

brokers you know generally all of the major regulated brokers

widen dramatically now again this varies from broker to

are looking at a price quote on trading view for example right

think is really important to have in your trading plan is to

much time worrying about the fees but obviously it's you

know pretty prudent to be aware of what they how they work and

unnecessarily because you know I I've seen a lot of new

in they instantly take a loss and sometimes even worse you

at and that is essentially the market price or in other words

brokers they don't actually charge a disclosed commission

thing that you should be conscious of is that when the

long term as it's nearly still always very minimal but you

position a long time you know if you're if you're more of a

never enter positions between 9 and 11: 00 PM GMT because you

the bid. Now an easy way to remember this is to ask

wraps up the fees that you should be aware with your

know they calculate swap fees for each pair so just ask your

will often see where price kind of gaps are or down to

reality it is slightly harder to calculate the exact carry

preference which style you prefer whether you kind of

you'll see them start to narrow and come in a bit so obviously

positions. So what they'll do is they'll exit the market and

until you see those spreads start to calm down again and

this means is that about an hour each side of the daily

sideways for a long time you know that's going to really

are extremely competitive on their fees and you're trading

the end of each trading day if you keep your trade open

sell button so it's almost impossible to get it

know you should be definitely aware of it. Now one last final

pay or receive swap on your open position. Now, when you're

interest, but maybe the U US Federal Reserve they are paying

key key takeaway that I kind of want you to learn and kind of

quoted with two figures where we have the bid price and we

are trading is nought point6 pips now if you have a position

tend to have much wider spreads than the brokers who actually

view the full depth of the order book instead our broker

then a lot of orders are also temporarily pulled. So what

this happens or or they forget and you know they even enter a

to execute that position now what you'll find is that some

them they tend to have narrower spreads but generally the total

that is if the net carry is negative then obviously it is

but you're in a position where you're paying a negative swap

is added directly to your account but in the flip side to

carry and traders are seeking to profit from this are known

charge a very small markup fee for overnight swaps and there

those narrow spreads, the more liquidity that there is. So,

interested in learning a little bit more about this I will post

times the monetary pip value and that will give you your

massively to worry about but unless you're kind of a really

flat commission rate or whether you're kind of you know happy

just do not want to be paying a ridiculously widespread

brokers who don't charge a flat commission rate they generally

interest fee that is either paid or it's charged to you at

you are long but you will pay interest on the currency that

are short then that is why it is a net positive carry now in

for or the market is bidding at because you can only buy at

receive more in interest than you were required to pay and it

a link to an article in the lesson notes for you also each

to the next trading day. So for example, let's say that you've

trade over into the next trading day, you will either

broker and currency pair to currency pair but I have seen

that you will earn pay because most brokers they tend to

subtracted from your account. So for example let's say you

see one price on the right hand corner right that the price is

right? You will receive interest on the currency that

then you're obviously going to want to take this into

overnight. So, in Forex, when you keep a position open

deliberately wrong and one thing to note is that the ask

to have the wider spreads but generally the car will be the

would actually be a net positive carry trade and you

as carry traders. So positive carry that results when you

size of 10 lots on that trade remember one lot is $10 a pip

different types of brokers so it's just down to your

of smaller and more obscure exotic pairs so therefore the

to calculate the total transaction cost you can use

business and that is something called Swap. So, Swap is the

interest or you will be charged interest on that position but

price is always slightly above the market price and the bid

are a few more steps to the calculation so if you are

be $100 so that means that the total transaction cost is $63

interest than the interest charge of the currency that you

total transaction cost so let's say for your broker may charge

for us as traders so that's why we stick to the major pairs now

Bank of England at that time is paying out not one nought. 1%

try to think of it like eBay where essentially you sell to

trip plus the spread of nought. 6 pips and then you multiply

it will depend on the underlying interest rates of

this formula so it's the commission plus the spread

means that the cost will be the $3 commission right at round

the major have a higher trading volume then you know those sort

nought. 6 pips so on trading view if you were to look at

transaction cost will still be the same between those

day trade but if you are kind of you know swinging that trade

that spread by the monetary pit value which in this case will

your house up for sale, there will not instantly be someone

to go short. Now, the net between those is known as the

so they they might tell you that they have zero commissions

nature of the Forex market, spreads are obviously, you

do charge flat commissions and those brokers who do charge

will come just from the spreads alone so what that means is

will just show us the current best market bid and ask price

have the ask price. Now the bid price is the price at which you

just that total sort of cost in terms of your commission now

majors generally have those lower and narrower spreads and

then also executing your position so essentially it's

outside your front door, you know, ready to buy with the

your position at the bid price remember we can only sell at

if you are a retail order and you're not trading with you

and the difference between both of those is the spread now the

market would be the housing market. You know, if you put

you've gone long at the ask price at that very very second

know, constantly changing because the market's dynamic

price is always slightly below the market price so when you

in a minus nought point 6 pip floating loss Now the reason

be buying at the ask price so you go long at one spot 18362

example the bid price for Euro dollar is at 1 spot 18356 and

one method by which brokers make their money. So, given the

the seller is asking for it now most brokers make it extremely

on a USD pair so that means 10 lots is $100 per pip so that

obviously lower spreads that means lower transaction cost

and price and volume are fluctuating throughout the day.

in that nought point six pip loss because that's the size of

primary way bro make their money in the forex market is on

slightly increasing the spread beyond the cost price, that is

the bid which is nought point6 pips lower than the ask price

it's it's it's the mid price so that's halfway between the bid

every buy order in the market to be filled it must be matched

price that is obviously known as the spread and the spread is

that you bought in at so that's why the spread is your

essentially the transaction cost of trading so in this

the ask price is at 1 spot 18362 so just really the

can sell to the market and the ask is the price at which you

the spreads of currency pairs. So it's wise to develop a solid

affecting its price. So this diagram illustrates what

what the market is asking so you buy on the ask price and

second that you actually execute that trade right so

not really going in your favor and it's kind of just going

is essentially the amount of demand and supply in a market.

yourself what is the market doing. So the market is asking

lower too. So, a typical example of quite in a liquid

understanding of spreads. So obviously all Forex prices are

So, in the FX market, a liquid market conditions are where you

levels and or the quantity of supply and demand may be much

with an equivalent sell order and vice versa for every sell

and the offer and it's this between the bids and the ask

at the bid price now if this is a bit confusing at first just

know absolutely massive size However, with the liquid

because it's an extremely liquid market and there will

you can only sell at what the market is bidding so you sell

the highest bidder or you buy from the market at the price

So it's the ease to which a market can be traded without

can buy from the market. So you buy at the ask and you sell at

an equivalent buy order for a trade to occur now we do not

simple these days anyway they literally just have a buy and a

exact asking amount in cash in their hands, would they, right?

Now to understand how spreads work first we must have a basic

markets, there may not be any bids or offers at certain price

fill the next best available order because remember for

and offers at every price level but also with a large amount of

and fees that are associated with trading a live account

order in the market to be filled it must be matched with

the market so the market is very liquid there will be bids

So each of the horizontal lines they represent a price level in

your order to instantly fill your trade you know especially

liquidity looks like in terms of an order book in the market.

click buy or sell with a market order on a very liquid

pretty much always be enough liquidity on the other side of

instrument you know let's say you're a dollar via your broker

volume at each of those levels so for example if you've ever

then you likely would have got instantly filled and that is

namely commissions, spreads and swap during the daily rollover.

In this lesson we're going to cover the main trading costs

understanding of market liquidity. So market liquidity

there are certain times of the day to avoid placing trades.