Trading spreads

A spread is simply defined as the price difference between where a trader may purchase or sell an underlying asset. Spread trades are the act of purchasing one security and selling another related security as a unit. It is imperative that new forex traders become familiar with spreads as this is the primary cost of trading between currencies. I got fixed or variable trading spreads with my broker called AGEA.

There is a high spread when, at the moment of a trade, there is a large difference between the bid and ask prices. It is bad because the trader starts the trade with a somewhat larger loss. Trades are always entered at a loss, unless a trader is lucky enough to enter a trade with an ECN broker during a very rare moment when the spread is "inverted". An inverted spread occurs when the bid price is momentarily lower than the ask price, and it only happens at an ECN broker.

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