What causes Spreads to change?

Sarah12

Newbie
Aug 12, 2015
29
2
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Dear Friends,I m kind of confused to what would cause spreads to change second by second,My broker offers both the fixed and variable spreads but would trigger the variable spreads to change with time? I would appreciate any help
 

Fxpipper

Master Trader
Oct 26, 2011
1,132
1
49
Spreads vary, depending on the quotes from the other traders, financial news, global cues and the demand..I could provide a long explanation but essentially, this is why spreads vary by the second.
 

Enivid

Administrator
Staff member
Nov 30, 2008
13,233
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Odessa
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Variable spreads depend on the price feed generated by your broker's liquidity providers. The feed is based on the actual limit and stop orders placed in the market + broker's markup (profit).
 
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jameswilliam

Trader
Jan 31, 2017
32
1
7
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Spreads usually vary due to the liquidity and the upcoming economic events which causes volatility in the market. As at the time of major data releases like interest rate decision, inflation rates etc. volatility in the market increase, hence spreads widen.
 

ashouq

Active Trader
Feb 21, 2017
167
13
34
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Is there any change of spreads in fixed spread account offered by brokers.. ? sorry just a silly question i think.
 

hedgescalp

Newbie
Apr 11, 2017
1
0
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hello,

Spread is the difference between bid and ask price which a broker quotes you. bid price is where buyers are sitting willing to buy and ask price is where sellers are sitting willing to sell. So basically it depends on the liquidity and volume in that particular instrument. If liquidity is high spread will significantly narrow down and if liquidity is less, you will see a wider spread. Now there are two types fixed and variable, fixed is when spread is fixed at one point, it does not vary, generally the brokers who are market maker can provide you the fixed spread which you will see around 1.5 to 2 pips and even more than that. While, an ECN broker will not provide you fixed spread as they provide price feed directly from LP which can never be fixed, they will be variable only.
 

ashouq

Active Trader
Feb 21, 2017
167
13
34
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It seems to me that if they are fixed, they don't need to change...
Thanks for clarifying.. actually i was reading somewhere that many traders can't make money or either looses due to spread widening issues. Is that also happens in this fixed spread case!
 

forxprotrade

Newbie
Apr 18, 2017
2
0
1
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hello Ashouq,

Yes in case of fixed spreads also, traders can lose money. In normal trading hours, they tend to remain fix however in news time, they can also vary depending on volatility in the market. For example, if you take the case of news time, spread can widen significantly when important news is released due to increased volatility in the market. So if your broker is providing you fixed spread in that case he is probably a market marker because a pure ECN broker will always provide you the spread he is getting from the LP side which can never be fixed. And moreover, in this case, chances are high that you will see fixed spread on your side however your order will be executed at a different price which you can term as slippage. So either you will see variable spreads or you will get complete different execution.
 

Martin Gaptil

Trader
Mar 5, 2017
58
10
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Volatility is a big fact here; I see maximum Forex brokers increase their trading spread during high voltage news session like FOMC, NFP! Besides, transparent Forex brokers are different, they never break their promise; frankly this type of honest brokers are very rare! You can judge a Forex broker according to their news session’s activities!
 

Ary Barroso

Active Trader
Jul 9, 2017
908
61
39
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Variable spreads depend on the price feed generated by your broker's liquidity providers. The feed is based on the actual limit and stop orders placed in the market + broker's markup (profit).
I see, few brokers increase the number during the high voltage session! Of course, I don’t like this kind of situations.
 
Mar 30, 2020
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I have never got the advertised spreads when I traded. I understand that if I intend to trade during the meeting of the European Central Bank, I should not start from the assumption that the spread will be the usual one.

Dear Friends,I m kind of confused to what would cause spreads to change second by second,My broker offers both the fixed and variable spreads but would trigger the variable spreads to change with time? I would appreciate any help
I know spreads depend on market conditions. There may be large gaps during macroeconomic news and in periods of volatility. Is it possible to trade without spreads?

Dear Friends,I m kind of confused to what would cause spreads to change second by second,My broker offers both the fixed and variable spreads but would trigger the variable spreads to change with time? I would appreciate any help
To choose the best broker, I suggest you do a thorough search and compare the offers of different brokers, depending on the instruments you want to trade.

Some brokers require a minimum account opening balance or a minimum trading size before giving me access to the tightest spreads.

I think the spreads should be the same, regardless of whether the order size is $ 5 or $ 5 million. Unfortunately, the only way to truly test the broker is to try a live account since demo may differ in terms of spreads. I might be wrong…
 

Enivid

Administrator
Staff member
Nov 30, 2008
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Odessa
www.earnforex.com
I think the spreads should be the same, regardless of whether the order size is $ 5 or $ 5 million. Unfortunately, the only way to truly test the broker is to try a live account since demo may differ in terms of spreads. I might be wrong…
How can that possibly work if the liquidity at each price point is limited?
 
Mar 30, 2020
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How can that possibly work if the liquidity at each price point is limited?
I was talking about ticket size. Am I still wrong ? Why can't I make my trades as fragmented as I need. Why should I worry about lot sizes or laddered pricing? I would appreaciate an explanation )
 

Enivid

Administrator
Staff member
Nov 30, 2008
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I was talking about ticket size. Am I still wrong ? Why can't I make my trades as fragmented as I need. Why should I worry about lot sizes or laddered pricing? I would appreaciate an explanation )
If you are talking about spreads being higher for $5 orders and lower for $5 million orders, then that's only the case of a broker's discretion. Perhaps, they prefer to be paid extra for small orders to compensate higher load on servers and support/compliance teams. However, it is certainly possible not to charge higher spreads on low volume orders, market-structure-wise.

But if you are talking about spreads being lower for $5 orders and higher for $5 million orders, then that's how the market functions. If the liquidity for the current spread is only $3 million, you cannot get your $5 million order executed at that spread, it has to be wider. There is little a broker can do in that case (except taking the loss for itself).