spreads, When trading forex, the spread is simply the difference between the bid and ask prices of a forex currency pair or another trading market. This spread is sometimes how nearly all of the major forex brokers generate a marginal profit by having their own modest markup, while being as competitive as possible.
Forex Brokers in South Africa
What exactly is a fixed spreads?
When it comes to forex spreads, there are normally two categories. Variable or floating spreads and fixed spreads The latter is usually more prevalent, and it means that the spread might alter (or float/vary) depending on market demand or volatility. As previously said, this may present a chance for a broker markup.
Fixed spreads, on the other hand, do not move, as the name implies. These are determined by the broker and generally never alter, at least not in a short period of time. Fixed spread brokers are sometimes known as market maker brokers.
Fixed spreads vs. floating spreads
When it comes to forex spreads, you may be wondering which one is ideal for you as a trader. This is entirely dependent on the market and the time. Some may argue that floating spreads are often lower, but this is not always the case, and the fact that they can alter provides you with some amount of unpredictability as a forex trader. If you prefer trading with extremely low floating spreads rather than fixed spreads, have a look at our top 10 list of forex brokers with the lowest spreads.
Many people in the forex trading sector like to avoid this uncertainty, therefore they will accept a slightly higher fixed spread in exchange for the ability to easily comprehend the exact cost of their trade.
That being said, when selecting a market maker broker for forex trading, you are relying heavily on that broker’s honesty and reputation to set the fixed spread in a fair and acceptable manner. As a result, you should always aim to go with a highly regulated broker, such as those listed above. If you can do this, you may find that in the long run, depending on your forex trading style and market movements, you can save money and trade more economically with the fixed spread in place.