What a difference a (low spread) broker makes.
Ok, mates, I've done the figures on my scalping results, having switched brokers to LMAX and here is how the cookie crumbles.
Average number of scalp trades per day 100 on the Euro, and yes I am talking Euro here, as it has highest liquidity and doesn't usually bounce around like the GBP. I do also scalp the AUD/USD sometimes. But all data below is Euro related.
- Average number of winners 60%
- Average spread with old broker 0.8 pips
- Average spread with LMAX 0.4
- Saving per trade 0.4 pips
So, what does this boil down to? Simple, at the end of the trading day I am 40 pips better off than before. Now if you are still scalping $1 per pip, that's $40 a day or $800 a month. If you're trading $10 a pip that's $400 a day of $8,000 a month.
Worth switching for? You bet your rear end. Few traders really stop to consider and do the number crunching properly, we scalpers, live and die on these spreads.
So how does LMAX do it? Simple, LMAX is an exchange not a market maker and therefore traders are able to place bids and offers inside the prevailing spread, that means that the spreads tighten as more and more traders place their orders. It also means, that you can place an order right on the inside of the spread, and I've seen the spreads narrow down to zero.
Bottom line is, if you are a scalper, you must do the maths, you must understand the implications of minimizing the spread, more and more. The difference is amazing. I am scalping for 2-5 pips at a time with a 2-3 pip stop, so with these tighter spreads, I can make 0.4 pips more on a win and narrow my loss by 0.4. Worth shouting about? Man, I am screaming here. Now, don't get me wrong, I like LMAX, I have become an IB for LMAX and hell yes, I am going to make a few bob if you join through me. However, I don't really care if you do or don't, I am happy with the results and am simply telling you about them.
If anything, do the maths with your own brokers, and if your average spread is more than 0.4 go find another broker, put up a spreadsheet and calculate, see for yourself. Imagine paying your mortgage just on the spread profits, or any other bill, or a holiday in the sun.
Want to open an account with ==> LMAX <==
Have a good weekend and trade well good next week. Sparks could be flying again as the Euro trades through lows and makes new enemies.
PS Like this? then tweet or Facebook it. Hate it, leave me a nasty comment and I'll publish it.
Note: Widget below only works when markets are open. Click on Live Prices tag to change the instrument and see the spreads.