What is spread in trading?
A spread in trading is essentially the difference between the buy and sell price that is quoted for an asset. It helps determine the direction you should take for trading. Buy more of the asset if you expect the market prices to rise and sell the asset if you expect the market to fall.
How do you trade spreads?
Spread trading is the act of simultaneously purchasing one asset and selling another related asset as a unit. In most cases, spread trading can be done through future contracts or options.
Why do people trade spreads?
The biggest advantage of trading long spreads is that the total net risk of the trade gets reduced.
You can make a profit despite the market conditions, by going long or short.
Trading on margin is high risk.
Can you day trade spreads?
Absolutely. Most day traders tend to prefer small spreads as these allow them to place orders at the prices that they want. Many day traders also prefer to temporarily stop trading in case the market develops a large spread as that can cause market orders to be filled with unwanted prices.
What does high spread mean in trading?
A high spread simply means that there is a big difference between the bid and the ask price of the asset. A higher than normal spread can indicate either low liquidity in the market because of out-of-hours trading or high volatility.
How do you calculate spread in trading?
To calculate spread in trading, you just have to subtract the buy price (or the bid price) from the sell price (or the ask price). The spread is calculated in PIP (percentage in point). Let's assume you want to trade EUR/GBP and the broker quotes the trade position at 1.1800/1.1802, now the spread in this example is the difference between the bid price and the ask price of the currency pair, which is equal to 1.1802 - 1.1800 = 0.0002. So the spread, in this case, is 2 PIP.
What broker offers the competitive spreads?
Blueberry Markets is a trade broker that provides tight spreads, fast executions, and attractive market conditions. You can trade forex, CFDs, commodities, cryptocurrencies, and more with Blueberry Markets.
Rated by Australia’s largest and independent comparison site finder.com.au, Blueberry Markets was a finalist for the Best Online Customer Service in both 2020 and 2021.