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Trade
Spread / spread / spread
What is the spread (spread) is known to every experienced trader. Indeed, without this notion is now rarely complete some trade. Most often they say that the spread is some Commission earned by the broker, the broker for their services. If you look at the definition, the spread is the difference between the prices of purchase and sale - Bid (Bid) Ask (Ask) - in two way monetary. If the broker trader as their profits considering that is spread, we can assume that this is a payment services company, which is charged with every transaction.
Spread is measured in points. When a speculator makes a trade when it is opened it is possible to observe on account of zero and a negative value means. Because when you open a deal to acquire the trading instrument, the spread is immediately taken from the account. If the deal on sale, here it is necessary to consider some nuances. For example, a trader opened a position at 1.4550 and Take Profit he set the value of 1.4520. So, the transaction order is closed not at the moment when the price on a chart will affect the order, and when you come through on the spread.
Thus, the spread can be viewed as an analogue of the Commission. Each transaction is withdrawn a few points in favor of the company. The more committed transactions, and the greater the volume of positions, the higher the level of earnings a broker that provides services. Therefore, this broker is always beneficial to the client was committing a major transaction and as often as possible. What types of spreads are described below.
The types of spread
there are three types of spread:
• Fixed spread. In this case, the company sets some prices for every currency pair. Anyone can read them. During operation, the trader will always observe the same spread one by one and the same instrument. Under any circumstances the value will not change.
• Fixed spread with an extension. In this case there are several values of the spread that can be changed at the discretion of the company, for example, one currency pair almost all the time spread 3 pips. But during the Asian session (at night Moscow time) expanding the index to 5 points. The same may be increased value during the release of important news relating to the trading instrument.
• Floating spread. This option offered an unpredictable value deductions. During a quiet market spread may be only a couple of points, but if the situation becomes calm, then the Commission may be increased ten times. The index value changes all the time, this is the feature of variable spreads depending on market volatility and other factors.
The variability of the values of the spread
Of course, it is primarily the value of the liquidity of the currency. The more exotic trading instrument, the greater the likelihood that the Commission will be big. Is also affected by the state of the market. The more hectic bargaining, the higher the likelihood that disadvantageous, large values of spread. It is possible that one factor may be the importance of the customer to the company. For VIP clients spread may be reduced.
All of these factors are more relevant in the case of a variable spread. At a fixed value of a fee on the account all these factors as virtually no play at all. At the moment it is possible to find deposits that will any of these variants of calculation of the remuneration of the broker.
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| Category: Forex | Added by: (06.11.2017)
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| Views: 343
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