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Size is Everything..

The first cut is the cheapest… never be afraid to take your profits… Santa Rally!

Three very common phrases you hear in the City’s trading rooms. One that is rarely spoken about in trading rooms, but more often in the bedroom is that size is everything! Size in this case is referring to the size of the bid offer spread that you are trading.

Here is an example of two traders trading the same FX pair (EUR/USD) at two different brokers at exactly the same time.

Trader A BUY SELL
20.00 1.18019 1.18074 £110.00
20.00 1.18210 1.18330 £240.00
20.00 1.18574 1.18542 -£64.00
20.00 1.18758 1.18431 -£654.00
20.00 1.18989 1.18886 -£206.00
20.00 1.18452 1.18664 £424.00
20.00 1.18325 1.18434 £218.00
20.00 1.18723 1.18669 -£108.00
20.00 1.18298 1.18457 £318.00
20.00 1.18710 1.18757 £94.00
£372.00
 
Trader B BUY SELL
20.00 1.18022 1.18071 £98.00
20.00 1.18213 1.18327 £228.00
20.00 1.18577 1.18539 -£76.00
20.00 1.18761 1.18428 -£666.00
20.00 1.18992 1.18883 -£218.00
20.00 1.18455 1.18661 £412.00
20.00 1.18328 1.18431 £206.00
20.00 1.18726 1.18666 -£120.00
20.00 1.18301 1.18454 £306.00
20.00 1.18713 1.18754 £82.00
£252.00

Both traded 10 times throughout the day, executing the trades at exactly the same time. This highlights how important it is for traders to use a broker that really benefits them. Every broker will try and sell themselves as the market leader and offer their users the best charting packages, but really as a trader the spread is all that matters.

As you can see, Trader A made a profit of £372 during the day and Trader B made a profit totalling £252. The resulting difference of £120 in a day is further magnified when trading over a week and even a month. This would mean a whopping £840 per week and almost £3.5k a month. It’s hard enough making money trading the markets without having to worry about trying to save £3.5k a month in spread differential.

>We are all happy to compare prices when buying our next TV and saving £20, but we should all be comparing spreads when trading because the difference you can achieve over a year is amazing.

Would you rather be Trader A or Trader B? Compare now and find out what extra profits you could make on a daily or monthly basis.

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