What is the meaning of spread in forex

Foreign exchange trading quotes report the purchase price (ask) and selling price (bud), the difference in the middle is the difference. In layman's terms, the difference between the bid price and the ask price. For example, Europe and the United States, the bid price is 1.3543, the selling price is 1.3546, Europe and the United States, the difference is 3 cents.

The spreads are as follows:

1. Fixed points

Whether the market is flat or intense changes, the gap will not be affected.

Advantage: the advantage of fixed spreads is that the transaction costs are fixed, regardless of the market volume, liquidity changes, the value of the difference between the purchase and sale is always fixed.

2, floating spread

Floating spread is based on market changes, that is, the trader charges a fee is based on changes in market conditions and changes. Trading highly according to their own costs to adjust the price gap between buying and selling, is the ECN method of traders to provide the service price model. Since ECN traders do not quote prices manually and do not modify data manually, they stop losing money. The transaction will be handed over directly to the other side of the customer or more than 12 large banks (customers and banks are like large pools of water), these banks provide market liquidity.

Advantage:Suitable for mature, large capital of foreign exchange traders, each transaction to charge a small amount of gold party