What is Spread in Forex

WHAT IS SPREAD IN FOREX?

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WHAT IS SPREAD? T h e fo r e i g n e xc h a n g e s p r e a d ( o r b i d - a s k s p r e a d ) r e f e r s t o t h e d i ff e r e n c e i n t h e b i d a n d a s k p r i c e s fo r a g i v e n c u r r e n c y.

T h e b i d p r i c e r e fe r s t o t h e m a x i m u m a m o u n t t h a t a f o r e i g n e xc h a n g e t r a d e r i s w i l l i n g t o p a y t o b u y a c e r t a i n c u r r e n c y, a n d t h e a s k p r i c e i s the minimum price that the currency dealer is w i l l i n g t o a c c e p t f o r t h e c u r r e n c y.

For Best Forex Signals w w w. e q u i d i o u s re s e a rc h . c o m

For Best Forex Signals w w w. e q u i d i o u s re s e a rc h . c o m

BID-ASk SPREAD DEFINED The Forex spread represents two prices: T h e B u y i n g ( B i d ) P r i c e fo r a g i v e n c u r r e n c y p a i r, and The Selling (Ask) Price.

Tr a d e r s p a y a c e r t a i n p r i c e t o b u y t h e c u r r e n c y a n d h a v e t o s e l l i t fo r l e s s i f t h e y w a n t t o s e l l b a c k i t r i g h t a w a y.

For Best Forex Signals w w w. e q u i d i o u s re s e a rc h . c o m

HOW TO mANAgE SPREAD

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Tr a d e o n l y d u r i n g t h e m o s t f a v o u r a b l e t r a d i n g hours, when many buyers and sellers are in the m a r ke t .

A s t h e n u m b e r o f b u y e r s a n d s e l l e r s fo r a g i v e n c u r r e n c y p a i r i n c r e a s e s , c o m p e ti ti o n a n d d e m a n d fo r t h e b u s i n e s s i n c r e a s e s a n d m a r ke t m a ke r s o ft e n n a r r o w t h e i r s p r e a d s t o c a p t u r e i t .

For Best Forex Signals w w w. e q u i d i o u s re s e a rc h . c o m

HOW TO mANAgE SPREAD

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Avoid buying or selling thinly traded c u r r e n c i e s . M u l ti p l e m a r ke t m a ke r s c o m p e t e fo r business when you trade popular currencies, such a s t h e G B P/ U S D p a i r. I f y o u t r a d e a t h i n l y t r a d e d c u r r e n c y p a i r, t h e r e m a y b e o n l y a fe w m a r ke t m a ke r s t o a c c e p t t h e t r a d e . R e fl e c ti n g t h e l e s s e n e d c o m p e ti ti o n ; t h e y w i l l m a i n t a i n a w i d e r spread.

For Best Forex Signals w w w. e q u i d i o u s re s e a rc h . c o m

HOW TO mANAgE SPREAD

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E c o n o m i c / P o l i ti c a l r i s k s : N a ti o n s t h a t e x p e r i e n c e t u m u l t u o u s p o l i ti c a l climates or unstable economies will typically have their currencies associated with high risk.

As a result of this, the bid-ask spread will become l a r g e r. I t i s b e c a u s e d e a l e r s w i l l p e r c e i v e t h e currency as a high-risk investment, and thus will have no choice but to sell the currency at a p r e m i u m i n a n ti c i p a ti o n o f h i g h e r i n v e s t o r returns.

For Best Forex Signals w w w. e q u i d i o u s re s e a rc h . c o m

For Best Forex Signals w w w. e q u i d i o u s re s e a rc h . c o m