All language subtitles for 3. trading costs

long long way so yeah you'd
really don't need to spend too

such as stocks and what not
Forex you know in today's one

take into account daylight
savings when that changes twice

age is probably the cheapest
market there is to trade by a

Forex especially compared to
kind of other asset classes

don't need to be doing that so
just make sure that is in your

or back for you so also just
keep an eye out on that so that

but the spreads are actually 10
pips and then you know they get

daily rollover happens on the
market close at 10 PM GMT each

start to ship away at your PNL
so you know it's not something

weekday night because at that
time a lot of market

be aware of with swaps is that
if you are planning to hold a

participants they don't want to
pay the swap on their

kind of slowly eat away at your
profit you know if the trade's

consideration because after a
while it really can start to

swing trader this doesn't
really apply so much to kind of

broker for this if you do
want to check it out but the

because when you are long the
currency that pays a higher

broker will have a lot of
detailed information on how you

will earn nought. 65% interest
on your position each day

out nought. 75% interest so if
you are short pound dollar that

you are short, right? Because
you're borrowing that currency

trading on margin, so you know,
we are leveraged trading,

short pound dollar and let's
just say for example that the

got an open position on day
one. If you decide to hold this

the two currencies in the pair
that you were trading. So, at

PM GMT every weekday. The
broker rolls your position over

same. Now, aside from spreads
and commissions, there is one

prefer those narrow spreads but
then you'll kind of have that

of the fee that you should be
aware of in your trading

a commission of $3 for a round
trip now round trip all that

means is it's essentially the
full cost for both entering and

but generally when they do that
the majority of their revenue

let's say the spread at the
time of the instrument that you

automatic cost of doing
business to enter a trade. Now,

tighter the spreads will be
generally, right? You'll get

sellers that have their orders
in the market, then, the

So, the more liquidity that
there is, the more buyers and

why you're instantly at that
loss the size of the spread is

because for you to exit the
trade right you need to sell

the bid so the moment you enter
the market you're going to be

the spread right that's the
difference between the ask and

if you were to look at your
brokerage platform you will

the bid and to exit out of your
position you need to sell at

remember we buy at what the
market is asking now the very

know they get slippage as well
yeah it's just you know you

instantly at that very second
you entered you'll instantly be

dollar right so let's say you
buy Euro dollar then you would

difference in the micro pips
there right so it's a spread of

this it would just show the mid
price so halfway between which

some pairs widen as much as 30
pips so a general rule that I

show is one spot 18359 now if
you were to go long on Euro

a year in terms of when daily
close may shift an hour forward

close market liquidity is
extreme thin so the spreads

through the end of the trading
day, you will either be paid

trade around this time let's
say with the five pips stop but

traders do this where you know
they just have no idea that

when you're looking at your
price chart you will only ever

plan so just wait at least an
hour after the daily close

brokers you know generally all
of the major regulated brokers

widen dramatically now again
this varies from broker to

are looking at a price quote on
trading view for example right

think is really important to
have in your trading plan is to

much time worrying about the
fees but obviously it's you

know pretty prudent to be aware
of what they how they work and

unnecessarily because you know
I I've seen a lot of new

in they instantly take a loss
and sometimes even worse you

at and that is essentially the
market price or in other words

brokers they don't actually
charge a disclosed commission

thing that you should be
conscious of is that when the

long term as it's nearly still
always very minimal but you

position a long time you know
if you're if you're more of a

never enter positions between 9
and 11: 00 PM GMT because you

the bid. Now an easy way to
remember this is to ask

wraps up the fees that you
should be aware with your

know they calculate swap fees
for each pair so just ask your

will often see where price
kind of gaps are or down to

reality it is slightly harder
to calculate the exact carry

preference which style you
prefer whether you kind of

you'll see them start to narrow
and come in a bit so obviously

positions. So what they'll do
is they'll exit the market and

until you see those spreads
start to calm down again and

this means is that about an
hour each side of the daily

sideways for a long time you
know that's going to really

are extremely competitive on
their fees and you're trading

the end of each trading day if
you keep your trade open

sell button so it's almost
impossible to get it

know you should be definitely
aware of it. Now one last final

pay or receive swap on your
open position. Now, when you're

interest, but maybe the U US
Federal Reserve they are paying

key key takeaway that I kind of
want you to learn and kind of

quoted with two figures where
we have the bid price and we

are trading is nought point6
pips now if you have a position

tend to have much wider spreads
than the brokers who actually

view the full depth of the
order book instead our broker

then a lot of orders are also
temporarily pulled. So what

this happens or or they forget
and you know they even enter a

to execute that position now
what you'll find is that some

them they tend to have narrower
spreads but generally the total

that is if the net carry is
negative then obviously it is

but you're in a position where
you're paying a negative swap

is added directly to your
account but in the flip side to

carry and traders are seeking
to profit from this are known

charge a very small markup fee
for overnight swaps and there

those narrow spreads, the more
liquidity that there is. So,

interested in learning a little
bit more about this I will post

times the monetary pip value
and that will give you your

massively to worry about but
unless you're kind of a really

flat commission rate or whether
you're kind of you know happy

just do not want to be paying a
ridiculously widespread

brokers who don't charge a flat
commission rate they generally

interest fee that is either
paid or it's charged to you at

you are long but you will pay
interest on the currency that

are short then that is why it
is a net positive carry now in

for or the market is bidding at
because you can only buy at

receive more in interest than
you were required to pay and it

a link to an article in the
lesson notes for you also each

to the next trading day. So for
example, let's say that you've

trade over into the next
trading day, you will either

broker and currency pair to
currency pair but I have seen

that you will earn pay because
most brokers they tend to

subtracted from your account.
So for example let's say you

see one price on the right hand
corner right that the price is

right? You will receive
interest on the currency that

then you're obviously going to
want to take this into

overnight. So, in Forex, when
you keep a position open

deliberately wrong and one
thing to note is that the ask

to have the wider spreads but
generally the car will be the

would actually be a net
positive carry trade and you

as carry traders. So positive
carry that results when you

size of 10 lots on that trade
remember one lot is $10 a pip

different types of brokers so
it's just down to your

of smaller and more obscure
exotic pairs so therefore the

to calculate the total
transaction cost you can use

business and that is something
called Swap. So, Swap is the

interest or you will be charged
interest on that position but

price is always slightly above
the market price and the bid

are a few more steps to the
calculation so if you are

be $100 so that means that the
total transaction cost is $63

interest than the interest
charge of the currency that you

total transaction cost so let's
say for your broker may charge

for us as traders so that's why
we stick to the major pairs now

Bank of England at that time is
paying out not one nought. 1%

try to think of it like eBay
where essentially you sell to

trip plus the spread of nought.
6 pips and then you multiply

it will depend on the
underlying interest rates of

this formula so it's the
commission plus the spread

means that the cost will be the
$3 commission right at round

the major have a higher trading
volume then you know those sort

nought. 6 pips so on trading
view if you were to look at

transaction cost will still be
the same between those

day trade but if you are kind
of you know swinging that trade

that spread by the monetary pit
value which in this case will

your house up for sale, there
will not instantly be someone

to go short. Now, the net
between those is known as the

so they they might tell you
that they have zero commissions

nature of the Forex market,
spreads are obviously, you

do charge flat commissions and
those brokers who do charge

will come just from the spreads
alone so what that means is

will just show us the current
best market bid and ask price

have the ask price. Now the bid
price is the price at which you

just that total sort of cost in
terms of your commission now

majors generally have those
lower and narrower spreads and

then also executing your
position so essentially it's

outside your front door, you
know, ready to buy with the

your position at the bid price
remember we can only sell at

if you are a retail order and
you're not trading with you

and the difference between both
of those is the spread now the

market would be the housing
market. You know, if you put

you've gone long at the ask
price at that very very second

know, constantly changing
because the market's dynamic

price is always slightly below
the market price so when you

in a minus nought point 6 pip
floating loss Now the reason

be buying at the ask price so
you go long at one spot 18362

example the bid price for Euro
dollar is at 1 spot 18356 and

one method by which brokers
make their money. So, given the

the seller is asking for it now
most brokers make it extremely

on a USD pair so that means 10
lots is $100 per pip so that

obviously lower spreads that
means lower transaction cost

and price and volume are
fluctuating throughout the day.

in that nought point six pip
loss because that's the size of

primary way bro make their
money in the forex market is on

slightly increasing the spread
beyond the cost price, that is

the bid which is nought point6
pips lower than the ask price

it's it's it's the mid price so
that's halfway between the bid

every buy order in the market
to be filled it must be matched

price that is obviously known
as the spread and the spread is

that you bought in at so that's
why the spread is your

essentially the transaction
cost of trading so in this

the ask price is at 1 spot
18362 so just really the

can sell to the market and the
ask is the price at which you

the spreads of currency pairs.
So it's wise to develop a solid

affecting its price. So this
diagram illustrates what

what the market is asking so
you buy on the ask price and

second that you actually
execute that trade right so

not really going in your favor
and it's kind of just going

is essentially the amount of
demand and supply in a market.

yourself what is the market
doing. So the market is asking

lower too. So, a typical
example of quite in a liquid

understanding of spreads. So
obviously all Forex prices are

So, in the FX market, a liquid
market conditions are where you

levels and or the quantity of
supply and demand may be much

with an equivalent sell order
and vice versa for every sell

and the offer and it's this
between the bids and the ask

at the bid price now if this is
a bit confusing at first just

know absolutely massive size
However, with the liquid

because it's an extremely
liquid market and there will

you can only sell at what the
market is bidding so you sell

the highest bidder or you buy
from the market at the price

So it's the ease to which a
market can be traded without

can buy from the market. So you
buy at the ask and you sell at

an equivalent buy order for a
trade to occur now we do not

simple these days anyway they
literally just have a buy and a

exact asking amount in cash in
their hands, would they, right?

Now to understand how spreads
work first we must have a basic

markets, there may not be any
bids or offers at certain price

fill the next best available
order because remember for

and offers at every price level
but also with a large amount of

and fees that are associated
with trading a live account

order in the market to be
filled it must be matched with

the market so the market is
very liquid there will be bids

So each of the horizontal lines
they represent a price level in

your order to instantly fill
your trade you know especially

liquidity looks like in terms
of an order book in the market.

click buy or sell with a market
order on a very liquid

pretty much always be enough
liquidity on the other side of

instrument you know let's say
you're a dollar via your broker

volume at each of those levels
so for example if you've ever

then you likely would have got
instantly filled and that is

namely commissions, spreads and
swap during the daily rollover.

In this lesson we're going to
cover the main trading costs

understanding of market
liquidity. So market liquidity

there are certain times of the
day to avoid placing trades.