What is spread?

 

  1. ·        The spread is the difference between the buy (ask) and the sell (bid) price of an instrument.
  2. ·        The spread is one of the chief costs of a trade
  3. ·        The tighter (smaller) the spread, the lower the cost of the trade

·        We offer both ‘fixed’ spreads and ‘floating’ spreads, so you can decide which account best suits your trading style and strategy

The spread on financial markets is the difference between the buy (ask) price of an instrument and the sell (bid) price of an instrument. When placing a trade on the market, the spread is also the main cost of the position. The tighter the spread, the lower the cost of trading. TradeXn The wider the spread, the higher it costs. You can also view the spread as the minimum distance the market has to move in your favour before you could start earning a profit.

 

For example, let’s say our EURUSD market is quoted with a buy price of 1.0984 and a sell price of 1.0983, so the spread is calculated by subtracting 1.0983 from 1.0984 – giving a total spread of 0.0001 or 1 pip. Once you’ve placed a trade on the EURUSD Rnage of markets and the market moves at least 1 pip in your favour, that’s when your position can begin generating profits. This is also the reason that when you first place the trade, you’ll start off making a small loss.

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