Fixed or variable spreads ? :


Spread is the spread between the proposed price for the purchase and the proposed price for the sale of a pair of forex currencies. It serves to pay the broker with which the trader negotiates in the markets. Generally, it goes from 2 to 4 pips. Specifically, if you trade on the EUR-USD and the applied spread is 3 then this means that you will return $ 3 per lot of 10,000 units to your broker. In percentage, this represents between 0.02 and 0.04%, which remains relatively modest.
When you do the research necessary to choose your broker, you will discover that some of them offer fixed spreads and others variable spreads. In other words, you will find brokers who always apply the same spread and others in which the spread will be very low at times of the day and higher at other times. Generally, it is when important economic announcements are programmed that the brokers who apply variable spreads increase them. With a spread of 10 pips for example, the cost of trade is no longer the same! For day trading enthusiasts who negotiate many lots, an intense day can cost between 200 and 1,000 euros anyway.

Note that in general brokers that offer very low spreads are also those who practice variable spreads. Many traders come to markets precisely to negotiate an important economic event. They will then find spreads rising which is not really the best news!

When you choose your broker, the spread is an important element to take into account but it is not the only one. You are also interested in the quality of the service, the speed of execution, the security of your funds, the currency pairs available, etc. If after all these investigations, your choice is on a broker practicing variable spreads make sure that the latter proposes a framed variation, between 0.5 pips and 2 pips, for example.

Finally, before you actually decide and make your first deposit in real money, open a demo account to test the effectiveness of the services offered and the impact of the spreads that the broker applies.
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