Broker prices are sometimes late by a fraction of a second. This lesson shows how OnlyForex uses that pause and what the result depends on. You do not need to know anything about trading beforehand.
Picture a currency exchange booth. The dollar rate around the world has already gone up, but the board still shows the old number: nobody has changed it yet. Whoever learns the new rate first buys at the old price. A minute later the board is updated, and that purchase is worth more.
OnlyForex is built on this kind of delay. It is a program that trades on the currency market by itself, following the rules you set.
On the currency market the role of the booth is played by the broker: the company through which you buy and sell currency. Its prices are sometimes late too, only not by a minute but by a fraction of a second. A person cannot do anything in that time, the program can.
For this it has a fast source of prices, the fast feed. The program constantly compares two prices: the one on the fast feed and the one at your broker.
Usually the two prices move together. But sometimes the price makes a sharp jump. The feed shows it at once, the broker shows it late.
The feed already shows the new price, the broker still has the old one.
The program buys from the broker at the old price.
What was bought is now worth more. The program closes the trade and takes the difference.
The program's chart has two lines. The solid blue one is the fast feed, the dashed yellow one is the broker. At the moment of the jump the blue line is already up and the yellow one is still down, and the program buys. A third of a second later the broker catches up with the feed, and the trade closes with a profit.
The journal below the chart records this step by step: a buy opened, the buy closed, the result is positive. It all took about a second.
The result depends above all on the broker: with some brokers the prices lag noticeably, with others less.
In the next lesson we take the trade from this video apart: what it means to buy and to sell and where the profit came from.
Do by hand what the program does: buy before the broker updates the price. Change the broker's delay and compare your reaction with the speed of the program.
Press “Start” and watch the blue line. When it jumps up, press “Buy”: you have to make it before the broker updates its price.
The model is simplified: the price stands still after the jump, and the trade has no costs. Later lessons cover them.
Questions on the lesson. You can change an answer.
We take the trade from this lesson apart: price, spread, point and lot.
Open the next lesson