How is spread calculated when trading in the forex market?

 


Futures investors flock to spreads because they hold true to fundamental market factors. Results achieved on the demo account are hypothetical and no representation is made that any account will or is likely to achieve actual profits or losses similar to those achieved in the demo account. Develop your trading knowledge with our expert-led webinars and in-person seminars on a huge range of topics.

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There are several factors that influence the size of the bid-offer spread. The most important is currency liquidity. Popular currency pairs are traded with lowest spreads while rare pairs raise dozen pips spread. Next factor is amount of a deal. Middle size spot deals are executed on quotations with standard tight spreads; extreme deals — both too small and too big — are quoted with broader spreads due to risks involved.

On volatile market bid-offer spreads are wider than during quiet market conditions. Status of a customer also impact spread as large scale traders or premium clients enjoy personal discounts.

Nowadays Forex market characterizes high competition and as brokers are trying to stay closer to customers, spreads tends to be fixed on lowest possible level. Each trader should pay sufficient attention to spread management. Maximum performance can only be achieved when maximum quantity of market conditions is taken into account. Successful trading strategy is based on effective evaluation of market indicators and specific financial conditions of a deal.

Because spreads are subject to change, spread management strategy should also be flexible enough to adjust to market movement.

As a newcomer to the Forex market, there are several terms used that you may require a definition for. Both these terms are also a very important attribute of the Forex market as both represent the value of a currency pair to the trader and the broker. In the Forex market, the value of a currency is presented in pips. A pip is a number value; the majority of currencies are priced to four numbers after the decimal point. This page is part of archived content and may be outdated. What Influences the Spread in Forex Trading?

Please let us know how you would like to proceed. Simple and straightforward pricing that's ultra-competitive, reliable and fully transparent. You'll benefit from tight forex spreads plus, the opportunity to improve your results with automatic price improvement. When the market moves in your favor, we automatically pass the savings to you. Most Popular Forex Markets. We understand what traders need and offer sophisticated trading tools, competitive spreads and exceptional execution quality on over 80 currency pairs.

Typical Live Typical Live. Product Typical As Low As. Spreads will vary based on market conditions, including volatility, available liquidity, and other factors. MetaTrader spreads may vary.