Community Forex Questions
What is fixed spreads?
Fixed spreads, as the name suggests, remain constant regardless of market conditions. The spread remains constant whether the market is volatile or not.
As previously stated, these spreads are typically offered by Market Makers.
Dealing Desk brokers acquire a large number of positions from liquidity providers and then sell them to traders (clients). Because the brokers will own these positions, they will be able to control and display fixed spread prices to their clients.
As previously stated, these spreads are typically offered by Market Makers.
Dealing Desk brokers acquire a large number of positions from liquidity providers and then sell them to traders (clients). Because the brokers will own these positions, they will be able to control and display fixed spread prices to their clients.
Fixed spreads refer to a specific type of pricing model used in financial markets, particularly in forex trading. A fixed spread means that the difference between the bid (selling) and ask (buying) prices for a particular financial instrument remains constant under normal market conditions. Unlike variable or floating spreads, which can widen or narrow based on market volatility, fixed spreads offer consistency to traders.
Traders using fixed spreads benefit from a predictable cost structure, as they can calculate transaction costs more accurately. This stability is particularly advantageous during times of market uncertainty when variable spreads might widen significantly. However, it's essential to note that fixed spreads may be slightly higher than variable spreads during periods of low volatility. Traders often choose between fixed and variable spreads based on their trading strategies, risk tolerance, and market conditions.
Traders using fixed spreads benefit from a predictable cost structure, as they can calculate transaction costs more accurately. This stability is particularly advantageous during times of market uncertainty when variable spreads might widen significantly. However, it's essential to note that fixed spreads may be slightly higher than variable spreads during periods of low volatility. Traders often choose between fixed and variable spreads based on their trading strategies, risk tolerance, and market conditions.
Aug 24, 2022 07:26