We finished another week of intraday spread trading with excellent results that bring us back to +116 pips since the beginning of the month and +2157 pips YTD. We are below the monthly average, but the goal is to close in profit also the month of October.
Spread trading and spread Ratio: differences
Many argue that the spread forex trading is like trading the ratio, for example, the spread between EURUSD and GBPUSD is as if the trader working on EURGBP.
From my point of view it is totally different for two reasons:
- it is true that EURGBP is the ratio of EURUSD and GBPUSD but it is not true that it is the spread. The spread is in fact the difference in value and not the division. Also in the correct calculation of the spread takes into account the ratio of the values of pips of 2 cross concerned;
- the second reason is operational; the directional trading on the ratio involves the search for levels of stop loss and take profit and is subject to market volatility, while spread trading in the SL and TP are global and volatility is more manageable (it is sometimes also aid the trader because it creates or destroys correlation);
I also found that the spread trading between currencies has a seasonality that is rather difficult to recognize the single ratio.
From next month we will also study also index spread trading using CFDs and will work alongside the forex.
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