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Forex Blog Great info to have on a lazy afternoon of trading!
Forex Blog Great info to have on a lazy afternoon of trading!
| Great info to have on a lazy afternoon of trading! |
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| Tuesday, 16 September 2008 11:24 | |||||||||
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Knowing when you should open a trade is one of the biggest decisions you will make that affects your trade. One of the important factors in planning the trade should be your spread. Sometimes spread will be wider than other times. These wide spreads tell us something about the market. What they say specifically is that the market is a bit thin of capital. High spreads indicate that not as many orders are crossing desks as in times when spreads are low. Therefore brokers can charge more, and you see it in widened spreads. Here is a screen shot of spreads form one broker on the afternoon of the day before the FED  rate announcement. Lehman Brothers announced their bankruptcy filling in the morning and Merrill Lynch had to sell to Bank of America. No wonder the markets a bit thin this afternoon. If you r charts were calling for a position to be opened you may want to wait until spread tightened up a bit, and make sure your charts still indicate in the direction of your trade. The danger of trading a Thin Market is that wild swings happen and though you might be right in the overall direction of your trade you may be stopped out before it has a chance to mature.If you have questions or comments about this blog, you can visit us at tradingintl.com. You can also send an email to This e-mail address is being protected from spambots. You need JavaScript enabled to view it or you may call us at 801-794-3021.
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| Last Updated on Friday, 19 September 2008 09:51 |