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ABOUT VIDEO:
Today we will consider WHAT IS A FOREX SPREAD: How Does it Work!

The SPREAD is the difference between the best asking and bidding prices of an asset at a given moment.

Imagine a site with sellers on one side and buyers on the other. One seller is ready to sell product for US$15, the second one offers to sell at US$14, and the selling price offered by the third trader is US$13. In turn, one buyer is ready to buy product for US$10, the second buyer offers US$9, and the third is willing to pay only US$8. The best selling price is US$13, and the best buying price is US$10. Therefore, US$3 is the spread.

The following FACTORS affect THE SIZE OF A SPREAD:

1) Asset liquidity. The larger the trading volumes, the lower the trading costs;
2) Volatility. When there is an increase in volatility due to an uptick in market conditions, a sharp imbalance between the bid and ask orders accrues;
3) Broker's trade policy. Brokers have the right to change the amount of their markup;
4) Level of business activity. For example, at night, the activity of trading in European currencies decreases and, conversely, increases in Asia;
5) Types of account. There are brokers with fixed spreads, and there are professional ECN accounts with the smallest spreads, but each lot will have its own fixed commission.

THE SIZE OF A SPREAD does not depend on a trader, but there are few options for reducing it:
1. Choose accounts with the smallest spread. To do this, use comparative tables of the independent resources .
2. Select the most liquid assets with the highest trading volumes.
3. Do not trade when important market news first breaks because that is when the spread is most likely to widen for accounts with the floating spreads.
4. Use rebate services (Spread refunds). It is an analog of the classic cashback.

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