Fri. Dec 9th, 2022

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Spread in Forex Trading

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The exchange spread (or bid-ask spread) refers to the difference within the bid and ask prices for a given currency pair. The price refers to the utmost amount that a far off exchange trader is willing to pay to shop for a particular currency, and therefore the ask price is that the minimum price that a currency dealer is willing to simply accept for the currency.

The foreign exchange spread is usually represented as a percentage, and is calculated using the formula below:

Spread (%)= (Ask Price – Bid Price)/ Ask Price * 100

Ask Price – Refers to rock bottom price that a currency dealer is willing to sell units of the currency for
Bid Price – Refers to the very best price that a currency trader is willing to shop for units of the currency for

Factors that influence the foreign exchange spread are:

  • Trading Volumes
  • Economic or Political Risks
  • Currency Volatility

Although every spread type has one purpose of earning the broker some income they still are available different shapes and sizes. There are way too many to mention here, but the ones that are most important to know about are the following:

i.   Bid/ask spread
ii.  Yield spread
iii. Option adjusted spread
iv. Negative spread
v.  Z spread

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Forex trading and any instruments related to Foreign Exchange Market are Speculative and carry substantial risk of loss of either partial equity or the entire deposit amount. Leverage adds up to the risk, before considering to invest in this venture, you should first consider your financial position and may seek the help of an independent financial advisor. FXtriangle dis-recommends the usage of loan instruments to trade in this market as it can hamper financial position. Please do not invest the money that you cannot afford to lose. FXtriangle provides all its services throughout the Globe Excluding (Nigeria, British Virgin Island & the Islamic Republic of Iran) and also provides limited service in some jurisdictions where investment in Overseas markets / Fx Exchanges are prohibited by Law If you are not sure to contact us before using any of our services. FXtriangle acts as an Independent Corporate Financial Advisor and connects you to various overseas exchanges and cannot be held liable for any financial damage occurring through their side. All of our partnered institutions are regulated in various jurisdictions.FXtriangle conducts an independent background check before partnering with any institutions to fulfill your investment objectives smoothly. The usage of our Business name, Logo or any trademark in any financial forum, website, review website, complaint arena, Billboards without our written permission will attract lawsuits.