Should spread be a consideration

[HannesJoubert]

Hi Fam, I hope everyone is well? All the best for 2025 to the members, and their loved ones, may the year treat us all very kindly.

I have finally settled on a trading style that fits my personality, and have come up with a trading plan that also suits my personality and business/life requirements. I am currently in the process of forward testing and refining, with micro-lots, my personal system that will hopefully result in a hobby that might just be worth my while after many blown accounts and 17(!) or so years.

So, I manually, semi-nakedly, scalp the lower TFs' of XAUUSD. I can hear the howls now , but as I said, I have settled on this as it is suited to my personality and trading style. (I trade semi-naked as my butt sticks to the leather )

Anyway, in putting into place the refining & finishing touches to V1.2 of my system I have come to ponder the question as to whether I should take spread into account when placing initial SL's at trade entry. Something tells me I should, but, as of yet, my forward testing has not really shown this to be something to be concerned about, as for the time-being, I am not being slipped or nipped by the spread at trade entry, so to speak. I am concerned that this may become an issue if volume becomes "heavy". If I had been trading EU, spread is so little, I doubt that it would be a consideration to take note of, but, as I am focusing, for the time being on Gold, the spread is greater than for EU, hence my thoughts.

Does anyone have any thoughts or opinions on taking spread into account when placing their entry SL? I do realise that doing so would likely negatively influence R:R, especially in the long run, but, if doing so would improve the positive expectancy of my trading, and also improve my W/L ratio, it would all balance out in the end, wouldn't it?

Hmmm, questions, questions, as always, any feedback, even negative is appreciated.

Thanks in advance, take care of yourselves.

H

[TableTop]

Hi,

I'm sure someone can give a precise mathematical reason to do it one was or the other but I don't think it will make much difference when you trade live. I trade Gold on lower timeframes (entry on M1 or M5) and IMO this doesn't leave much time to worry about the precise placement of a SL. I do trade the NY session and so the spread is always pretty good (if not, find another broker). My preference is a hard stop at the 'my thesis is wrong' level, while using multiple entries to scale in (and out) if the trade isn't playing out as planned.

Hope this helps and good luck with the new-finally-settled-semi-naked trading.

[SteveHopwood]

So, I manually, semi-nakedly, scalp the lower TFs' of XAUUSD. I can hear the howls now , but as I said, I have settled on this as it is suited to my personality and trading style. (I trade semi-naked as my butt sticks to the leather )

This is a super pair -all that lovely volatility.

The attached scripts should help you with deciding to include the spread or not. There are options to include them in both TP and SL calculations.

[HannesJoubert]

Hi,

I'm sure someone can give a precise mathematical reason to do it one was or the other but I don't think it will make much difference when you trade live. I trade Gold on lower timeframes (entry on M1 or M5) and IMO this doesn't leave much time to worry about the precise placement of a SL. I do trade the NY session and so the spread is always pretty good (if not, find another broker). My preference is a hard stop at the 'my thesis is wrong' level, while using multiple entries to scale in (and out) if the trade isn't playing out as planned.

Hope this helps and good luck with the new-finally-settled-semi-naked trading.

Sorry for my late reply...I am not sure why I missed your post, thanks for your reply and thoughts...To be honest, I have found that if you are "on the right side of the market" upon entry, and your SL is placed beyond the proper market structure, then spread would probably not be a problem, especially if you are trading outside of news time. I am not naïve enough however to believe that the Cowboy won't widen my personal spreads upon entry, if I turn out to be successful. I have heard too many horror stories...On the other hand, if there is spread widening, adding spread space to the entry position would probably not help anyway.

For sure, I agree with your "thesis" SL level, as the way I trade, if that market structure protecting my SL is violated, then the trade would not have worked anyway and I chose the wrong zone for entry.

Thanks again. I always find edification in the opinion of others as they usually have a point of view that my narrow mind has not yet thought of.

P.S. if I finally get to making decent profit, I am investing in an Alcantara leather chair, much less sticky

Take care

H

[HannesJoubert]

So, I manually, semi-nakedly, scalp the lower TFs' of XAUUSD. I can hear the howls now , but as I said, I have settled on this as it is suited to my personality and trading style. (I trade semi-naked as my butt sticks to the leather )

This is a super pair -all that lovely volatility.

The attached scripts should help you with deciding to include the spread or not. There are options to include them in both TP and SL calculations.

Steve, my best, you have come to my rescue again, thank you very much for the scripts.

You making mention of the ability to add spread to the TP is probably equally as important as adding to the SL in the case of LTF scalping, as this will allow for a better summation of real R:R when only shooting for a handful of pips.

I do wonder though, what are your thoughts, is it possible to add commissions, in points/pips, along with spreads, to the TP to ensure that a "full R" is earned when TP is reached?

I am probably jumping the gun in asking that question and should rather concentrate on improving the consistency of my profitability, than trying to squeeze every drop of profit out of a trade?

I do believe that this is eventually something that I would look at seriously.

Thanks again.

Take care.

H