market maker is willing to buy the base currency (USD in our example) in exchange for the counter currency (CAD). Using the example above, the spread.0004 British Pound (GBP) doesn't sound like much, but as a trade gets larger, even a small spread quickly adds. It can happen, for example, bitcoin diamond mining that the specialist accepts a bid or buy order at a given price, but before finding a seller, the currency's value increases.
You can do that in two ways: Add your TP value to your open value and subtract your SL value from the same level. Fixed Spread, in this type of spread, you find that the difference between the asking price and the bid price is constant and does not depend on the market condition. Status of a customer also impact spread as large scale traders or premium clients enjoy personal discounts. Obviously, your cost goes up by the number of currency lots you are trading. In practice, the specialist's work involves some degree of risk. As a retail trader, you may be trading only one 10,000-unit lot of GBP/USD. The minute you drive it off the lot, the car depreciates, and if you wanted to turn around and sell it right back to the dealer, you would have to take less money for. EUR/USD spread with 5 decimal points in"s: Ask.31023, Bid.31004; spread.31023.31004.0019 which can also be called.9 normal pips or 19 fractional pips. The forex market has always been virtual and functions more like the over-the-counter market for smaller stocks, where trades are facilitated by specialists called market makers. Because spreads are subject to change, spread management strategy should also be flexible enough to adjust to market movement. Sometimes the buying price may be a bit higher which may result in losses at the beginning of your trade. The.0004 spread in this larger trade is 400 GBP, which is a much more significant commission.