Why Did My Order Open With a Negative Value? – MH Markets

When you open a trade, you might notice that your position begins with a small unrealized loss. This happens because of the spread, which is the difference between the BID and ASK prices.

For a Buy order, Spread is the difference between the bid price (the price you can sell at) and the ask price (the price you can buy at) for a trading instrument. In simple terms, it’s the transaction cost applied immediately when your order is placed, and it appears as a floating loss until the market moves in your favor.

How Is Spread Calculated?

Let’s break it down with an example:

You place a buy order for 5 lots of EUR/USD. At that moment, the price is shown as 1.04620/1.04630, where 1.04620 is the bid price and 1.04630 is the ask price.

Here’s the calculation:

Spread= (Ask Price – Bid Price)Pip Size = (1.04630 – 1.04620)0.0001 = 1 pip

Pip Value = Lot Size × Contract Size × Pip Size = (5 × 100,000 × 0.0001) = $50

Cost of Spread = Spread (in pips) × Pip Value = (1 × $50) = $50

So, the cost of the spread for this trade is $50, which means your order will initially show a negative floating profit of -$50.