The art of hitting the SL without hitting the SL

[TraderGT1]

Hi guys,

I thought I would share another experience on my trading journey and it's one that appeared from nowhere like a Tyson uppercut. I'm hoping you can share your experiences so other may benefit.


= ENTRY =
I identified a solid entry for a short trade on GBPNOK. Even with my broker spread of 80 pips it was still worth the entry.

My execution chart was the H1 so SL was placed on the safe side of the 200EMA on a bearish correction from earlier volatility. TP was placed just less that half way into previous price's supply and demand zone. (See bottom pic).

While I was filling in my trading record I heard the broker ping indicating the trade had closed. I checked and indeed it had. The chart did not display a hit on the SL so I rang the broker. During this time I noticed the spread was erratic and fluctuating from 80 to more than 200.


= BROKER COMMENT =
The broker informed me that because it was a sell trade the relevant price to view was the ASK price and not the default MID price. (See top left pic). I switched price views and I saw significant bullish spike on the M15 chart which had exceeded my SL. (See top right pic).

And then this morning the TP was hit.

= DISCUSSION POINTS =
Has anybody experienced this before? Do you switch candle views before you trade long and short? How can we prepare for this on our entries? What is your broker spread on GBPNOK?

Thank you for reading and sharing your experiences if you do.

[Caseynotes]

16 minutes ago, TraderGT1 said:

= DISCUSSION POINTS =
Has anybody experienced this before? Do you switch candle views before you trade long and short? How can we prepare for this on our entries? What is your broker spread on GBPNOK?

Thank you for reading and sharing your experiences if you do.

Hi, you've got a number of issues going on there;

1/ variable spread.

2/ exotic pair.

3/ time of trade.

 

The variable spread system gives tighter spreads in normal market conditions but widen if volatility creeps into the market. Solution is to watch the spread and keep away from volatile times, keep an eye on the number between the buy/sell price.

Spreads are always wider on the less traded pairs so always need to take that into consideration, maybe the EUR or US  NOK pairing has less spread?

Outside EU, UK, US normal trading hours causes a jump in spread as the normal liquidity providers have closed so brokers need to look further afield to find prices and so the spread is also inevitably going to be higher during those times.

 

[TraderGT1]

Hi Casey, 

Thank you. Come to think of it the phone trade only icon kept flashing up. I didn't notice this at the time of execution. I've never seen this happen before so I thought it was some kind of graphical bug. What you said makes sense and I will follow your advice on not entering when it's flapping around like a winged bat. Thanks again. 

EDIT: Right now there's a steady 80 pip spread. It's still a lot and has got me looking for a new broker for comparison. 

Edited September 21, 2021 by TraderGT1

[Caseynotes]

You're welcome, when and what to trade are important considerations. As said the variable spread model does have it's advantages.

Be wary of choosing a broker on spread alone, there are many ways for a broker to cut the cost of business and offer very low spreads but the cuts are always at the expense of the client experience.