One term with which experienced Forex traders are well acquainted and with which new traders need to become well acquainted with is spread. Simply defined, spread is the difference between the buying price and the selling price of a currency pair. It is the cost paid by the trader to the broker in exchange for access to the currency trading market. In two very practical senses, the spread means that every Forex transaction initiated will be losing by the amount of the spread the moment the trade is executed and that the amount of the spread is added to losing trades, but deducted from winning trades. Whether the broker is of the market maker variety, or is an Electronic Clearing Network type, a low spread means that the cost of trading is also low. Depending where a broker is based, the spread for a particular currency pair might be higher for one broker versus another, so it is a good idea to look at the spread for currency pairs that you intend to trade and not just the EUR/USD, which typically has the lowest spread offered by any broker.
via Forextra - Forex Trading Explained: Tips, Strategies + More For FX Currency Trading http://ift.tt/1FWOmXQ
via Forextra - Forex Trading Explained: Tips, Strategies + More For FX Currency Trading http://ift.tt/1FWOmXQ