Spread Forex by Linda Green

Hey! Spread Forex, sounds triggering am I right.

Oh! Don’t get confused - I am just mentioning the article topic of Forex spreads.

There are two values for a currency pair, while marginal Forex trading one price for bid and other for ask.

The bid price is the pre-set price for selling the currency and the ask price is the buying price of the currency.

The bid price is the rate which a trader decides to sell the currency to the interested traders and the ask price is the rate that trader asks for buying a particular currency.

Now, where is this spread?

The spread lies in between these two prices. That is, the difference between the bid and the ask price is the Forex spread.

This currency trading spread makes the base of cost of trading. All the FX trading instruments like stocks, futures, currencies and bonds have spreads.

For instance, there is a price quote for each currency pair like in case of EUR/USD is 1.2881/1.2884, the bid price is 1.2881 and the ask price is 1.2884. This means traders have selling price of 1.2881 and the buyers buy that currency at 1.2884.

There is a case, if both the currencies are traded on the same price exchange, then there are two types of spreads.

1. Intra-commodity Spread - This is also called calendar spread and one spread is in long position while other one is in short position having similar derived value but different maturity periods.

2. Inter-commodity Spread - This is the case where both the spreads have similar maturity periods with different values for long positions of the spreads.

The spreads provide investors the ability to trade at minimum risk, as the long and short positions of the spreads that indicates the correlation among the spreads, so they support each other.

Thus, spreads are helpful in Forex trading, as it provide safe trading with fewer risks.



I am Linda Green and have keen interest in financial investments and matters related to Forex trade.
I am working in forex trading and financial investments for Finexo.com.

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