Monday, April 30, 2012

MT4 indicator (FXRM_Spread_History.mq4)

How to trade with FXRM_Spread_History indicator

FXRM_Spread_History sole purpose is to monitor & document brokers' spreads.

An average Forex trader doesn't know about spread spikes that happen during low market liquidity and/or at night, yet this can mean a difference between profits and losses.

Just leave FXRM_Spread_History running, and it'll show you:

- the average spread for each price bar (green)
- the maximum spread ever occurred on each price bar (purple bars)
- the spikes - the tallest purple bars that stand out

FXRM_Spread_History can be used on any time frame, no spike will slip away.

On the chart above we've witnesses a few spread spikes that registered around 4-4.2 pips (not much), while the lowest average spread stayed at 1.6-2 pips, and once dropped as low as 1.2 pips.

Spreads are known to spike up to 5-10+ pips at times, which could cause all sorts of trouble to strategies and EAs which assume that spreads should stay within 2-3 pips range all the time. This is where stops are hit and plans go wrong. 

If you also think about EA backtesting - the same problem arises - your backtesting will show results that won't account for spread spikes, instead a regular spread will be applied all the time. This is one of the reasons why you won't be able to duplicate the same results in live trading.

Forex MT4 indicator Download indicator: FXRM_Spread_History.ex4


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