Spread Indicator for MT5

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Spread Indicator for MT5

Introduction to the Spread Indicator

Many traders consider scalping and even day trading as difficult. However, it is not that trading using these methods is impossible. It is usually just because traders find it difficult to overcome the trading cost while trading on such low profits in pips.

The Spread Indicator is a tool that can help scalpers and day traders identify whether their trade setups has the potential to beat the trading cost on the spread or not.

What is the Spread Indicator?

The Spread Indicator is a simple indicator which displays the spread between the ask price and the bid price on the upper left portion of the price chart. This indicator displays spreads in points rather than the traditional unit which is pips.

Spread Indicator for MT5

How the Spread Indicator Works?

The Spread Indicator has a simple program script which simply retrieves the ask price and bid price data and calculates the difference between the two in order to arrive at the spread. It then displays the spread in points on the upper left corner of the price chart.

It also has the option to provide alerts whenever the currency pair has a spread of 1.0 pips and above.

How to use the Spread Indicator for MT5

The Spread Indicator has several options within its settings which are mostly for aesthetic purposes.

It allows users to modify the color, size, and type of font using the “font color”, “font size”, and “font face” options.

It also allows users to change which corner of the chart the spread would be displayed using the “corner” option.

Users can also opt to have the spread displayed in the classic “pips” rather than “points” using the “normalize” option. Selecting “true” toggles the indicator to display the spread in pips. This would then move the decimal one place to the left.

It also has the option to provide alerts whenever the spread has reached 1 or more. It would prompt the indicator to provide an alarm sound whenever this condition is met. This can be modified using the “Alert If Spread Above” option.

How to use the Spread Indicator for MT5

The Spread Indicator simply provides the spread between the ask and bid price. Day traders and scalpers who trade on the lower timeframes should incorporate this information within their trading strategy as the spread is usually their main cost to trade the currency pair.

To compute for the spread portion of the trading cost traders should multiply the displayed spread by two. This is because traders incur costs on the spread when opening and closing a trade.

Some brokers place all the trading cost on the spread itself. However, some brokers also add commission on top of the spread. This is especially true with brokers who allow for very tight spreads. Traders should also add the commission cost on the spread and should also take note that commission costs are also incurred twice, both when opening and closing a trade.

As soon as the total cost to trade is computed, traders should then assess if their trade setup has the potential to go over the trading cost. If so, then the trade can be considered an efficient trade.

Conclusion

The Spread Indicator is not the type of indicator that would provide trade setups based on trend, momentum, or mean reversal indications. However, the information it provides is crucial for traders who trade on the lower timeframes. Traders who can go over the hurdle which is the trading cost has a higher probability of trading profitably over the long-term.

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Spread Indicator for MT5

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