Logging the spread you saw at entry against your broker's typical spread

[Fairman]

Logging the spread you saw at entry against your broker's typical spread

I've added two columns to my journal: the spread at the moment of entry, and the typical spread for that pair at that hour.

The typical figure comes from my own records. Over a couple of weeks I noted the spread at fixed times, say every 15 minutes through my trading hours. That gives an average by hour for each pair. For EURUSD on my account, the London morning is usually a fraction of a pip and the early Asian hours a bit wider. Each broker and account type will be different, so I'd measure your own.

At entry I write down the actual spread. If it's more than twice the typical figure for that hour, the row gets a flag.

What I want to learn is whether flagged trades do worse. My guess is they do, since a wide spread means either low liquidity or something happening. But it's better to see it in the data.

The practical rule that might come out of it is a spread filter: no entries if the spread is more than twice the typical figure. That's easy to follow manually and easy to code in an EA.

How do you all handle spread at entry? Do you check it, or just trust the account type?

[FXS HongKong Scalper]

Measuring your own typical spread by hour is the right approach. One addition is to also record the spread at exit, since a trade entered with a normal spread can be closed during a spike. For scalps that end at a target this is less important, but for trades closed by hand or by a time stop, the spread at exit can be a hidden cost. Having both numbers makes it clear whether the total cost of a trade was in line with what the plan assumed.

[Fairman]

For manual trading, showing the spread on the chart helps. MT5 can display it in Market Watch, and some free indicators show it in a corner of the chart. Seeing it before clicking makes the journal column easy to fill and makes it harder to ignore a wide spread in the moment. Seeing the number in front of you before every click is simple and works. Some indicators can also colour the display when the spread is above a set level. That turns the check into a glance rather than a calculation.

[Fairman]

Spreads can change in the second between looking and clicking. For accuracy, the fill price compared with the mid price at the time gives the actual spread paid, half on entry and half on exit. That's harder to calculate manually, but an export of fills and tick data can do it. For most manual traders, the spread at the moment of clicking is close enough. For automated systems, the difference matters more, and tick-level analysis gives the accurate figure. Either way, the column gives a starting point and shows whether the issue is common or rare.

[Fairman]

The typical spread table needs updating occasionally. Brokers change pricing, and market conditions shift. I'd redo it every few months or after any broker announcement. Otherwise the comparison drifts and the flag becomes meaningless. Brokers sometimes widen spreads at certain times of the year, like holidays or end of year. Spreads also change with general market volatility, which shifts over months. Updating the table keeps the flag useful, since a typical spread from six months ago might not match today's conditions. A quick redo every quarter is usually enough to stay accurate.

[Fairman]

Some pairs have predictable wide spread periods, like rollover around 22:00 London or the first minutes after the Sunday open. Excluding those hours from trading altogether is simpler than flagging them. The spread column is most useful for catching the unpredictable cases during normal trading hours. Rollover is predictable enough to schedule around. The first minutes after the Sunday open too. Unexpected widening during normal hours, like on a sudden headline, is where the flag matters most. Over time, the flagged trades might show a pattern you can act on, like avoiding certain pairs at certain hours.

[Shadow Trader]

Some brokers run a different markup depending on the hour. The raw feed is the same, but the added spread changes. It's tighter during the London and New York sessions, when competing brokers are watching, and wider late at night when few clients are trading.

Nobody announces this. The "typical spread" in the marketing is an average taken over the best hours, and the worst hours aren't mentioned.

Logging the spread every minute for a week gives a clear picture. Plot it by hour. The shape of the curve, and especially the height of the late-night hump compared with a competitor, says plenty about the pricing policy.

The stepped pattern is also revealing: spreads that jump from 0.4 to 0.9 exactly at a certain minute, then back, suggest a rule rather than a market condition. Real liquidity changes more smoothly.

Does the hourly spread chart for a broker here ever show a step that looks like a rule instead of a market?