Price Spreads

Lesson BO109: Price Spreads
Sometimes there can be a difference in our binary options quoted price and our charting software. For some traders this may be a concern and lead to doubting the transparency of their binary options provider. Sam teaches why there is no need to be concerned and gives details to why this can sometimes happen.
BO109 Lesson – Price Spreads Transcript

Welcome back to the Binary Options 100 training course. This is Binary Options 109, Price Spreads. This is Sam from binaryoptions.education. net Once you’ve chosen a binary options broker and some charting software, you may notice there’s a difference in the quoted price or rate between the broker and the price on the charting platform. This is quite common, and we call this difference price spread.

In this video, I’m going to show you that this should not be an issue if there is a difference in price, and that all the recommended charting platforms and brokers have a high reputation, and the price spread should be constant. And I’ll talk more about this consistency in the next slide and further on in this video.

If the difference may look something like this, we may have a broker, price, or rate. And then we have our charting software. We may be trading a currency pair, and the broker quoted price is 1.4589, but the charting software says 1.4590. So there’s a difference of one pip between the broker price and the charting software price.

But you should notice that this difference is consistent. If the broker price goes to 1.4595, the charting software should show 1.4596. If the broker price was then to go up by a pip to 1.4596, the charting software should show 1.4597. And then the same– 1.4571, 1.4572; 1.4573, 1.4574.

Because even though, there’s a difference in the broker quoted price and our charting software, as long as there’s a consistency in that price spread, there should not be an issue. The reason being, if the broker price is moving up, the charting software should move up. The charting software’s moving down in price, the broker price should also move down.

So we may have a one-pip spread between our broker price or rate and our charting software price. If our broker price opened here, there may be a one-pip price spread. So our charting software may open slightly higher, but it will close slightly higher. The movement in price will be the same.

This candle is the same size as this candle. The price movement is the same. There’s just that price spread. So there’s a pip difference in the opening price and a pip difference in the closing price. And once again, after a number of candles have closed or time has elapsed, there should still be a pip spread in difference between our broker and the charting software.

So the price movements are the same. If we see a signal on our charting software, that price is going to depreciate– and it does– the same will happen with our broker. The rates may just be slightly different.

Now, I’ve put a one-pip spread difference on this demonstration as the price spread should be consistent. But it may vary slightly. This may be a one-pip price spread, this may be 1.1, this may be 0.9. It may differ slightly, but there still should be that overall consistency.

In front of me, I have tradingview.com, that Euro-USD one-minute chart. And I also have the Euro-USD binary option from TradeRush. You’ll notice there’s a slight difference between the rate offered by TradeRush and the rate currently quoted on tradingview.com. The difference is about 1.3 pips.

First of all, if we look at the historic price data on TradeRush, one [? notes that ?] matches our one-minute chart here on TradingView. There will be a slight difference. This is a one-minute chart, and I think this chart’s updated every 15 seconds or so. So it won’t look exactly the same.

But you’ll notice we fall on the downside here, come up slightly, fall again, come up slightly again. And then we have this double bottom sort of pattern. This is the same here on TradeView. We come down, come up again, go down, come up. And here’s our double bottom. And now we’re heading on the downside again, which we are on the one-minute chart.

So I’ve paused the screen. The current rate offered by TradeRush is 1.36297. And on TradingView, it’s 1.36283. So a 1.4-pip difference. Once again, this can vary at certain times, especially at news events when price is very volatile. It may be a 1.6 difference or a 1.2 difference. But it is pretty much consistent and should not be an issue.

If we look at previous chart price– so at 12:42, price was at 1.36404. And on TradingView, it was 1.36391. So a 1.3-pip price spread.

So hopefully this video has helped you to understand price spreads better and dispelled any fear that binary options brokers are manipulating their price.