Forex Spreads

When it comes to understanding the Forex market there are many confusing terms out there. As one does research on Forex trading you will definitely come across the term spread. In its simplest terms the spread refers to the buying price and the selling price of a particular currency pair all so known as the bid and the ask. When comparing different Forex brokers many times they will use the spread as a barometer. The most common of the currency pairs that is used is the EUR/USD. This currency pair is by far the most active and most liquid of all the major pairs. The new currency pairs are measured in what are known as PIPS or (point in percentage).

The Forex spreads among various Forex brokers are measured over the three main trading sessions. These would include Asia, Europe, and the United States. The reason for these being the main trading sessions is that all of the major global banks are headquartered in cities like Tokyo, London, and New York. Spreads and liquidity may fluctuate throughout the sessions from their respective openings to their close.

When comparing Forex brokers one will also come across fixed spread brokers versus variable spread brokers. Basically what this means is that a fix to spread broker will fix his spread to a certain level. For example the EUR/USD would be fixed at 1.3 PIPS. A variable spread broker just as the name describes means that the spreads will fluctuate as the market and liquidity fluctuates. Usually what this means is that the variables spread broker is a non-dealing desk broker and the pricing of that broker is that of the interbank market. Fixed spread brokers may be more likely to be market makers.

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Trading Forex and Derivatives carries a high level of risk, including the risk of losing substantially more than your initial investment. Also, you do not own or have any rights to the underlying assets. The effect of leverage is that both gains and losses are magnified. You should only trade if you can afford to carry these risks. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Financial Services Guide (FSG) and Product Disclosure Statements (PDS) for these products are available from Core Liquidity Markets Pty Ltd to download at this website or here, and hard copies can be obtained by contacting the offices at the number above. Please also note that your call may be recorded for training and monitoring purposes. Any advice provided to you on this website or by our representatives is general advice only, and does not take into account your objectives, financial situation or needs. You should therefore consider the appropriateness of our advice before making any decision about using our services. You should also consider our PDSs before making any decision about using our products or services. Note that the information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Disclaimer: Core Liquidity Markets refers to Core Liquidity Markets Pty Ltd. Core Liquidity Markets is an Australian firm registered with ASIC, ACN 164 994 049. Core Liquidity Markets is a Corporate Authorised Representative Number 443832 of GO Markets Pty Ltd AFSL 254963 the Authorizing Licensee and Principal

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