Category: 2.How Do You Trade Forex?

Variable spreads eliminate experiencing requotes. This is because the variation in the spread factors in changes in price due to market conditions. (But just because you won’t get requoted doesn’t mean you won’t experience slippage.) Trading forex with variable spreads also provides more transparent pricing, especially when you consider that having access to prices from multiple…

As the name suggests, variable spreads are always changing. With variable spreads, the difference between the bid and ask prices of currency pairs is constantly changing.Variable spreads are offered by non-dealing desk brokers. Non-dealing desk brokers get their pricing of currency pairs from multiple liquidity providers and pass on these prices to the trader without…

Requotes can occur frequently when trading with fixed spreads since pricing is coming from just one source (your broker). And by frequently, we mean almost as frequently as Instagram posts from Kardashian sisters!There will be times when the forex market is volatile and prices are rapidly changing. Since spreads are fixed, the broker won’t be able…

Fixed spreads have smaller capital requirements, so trading with fixed spreads offers a cheaper alternative for traders who don’t have a lot of money to start trading with. Trading with fixed spreads also makes calculating transaction costs more predictable. Since spreads never change, you’re always sure of what you can expect to pay when you…

Fixed spreads stay the same regardless of what market conditions are at any given time. In other words, whether the market is volatile like Kanye’s moods or quiet as a mouse,  the spread is not affected. It stays the same.Fixed spreads are offered by brokers that operate as a market maker or “dealing desk” model.…

The type of spreads that you’ll see on a trading platform depends on the forex broker and how they make money. There are two types of spreads: Fixed spreads are usually offered by brokers that operate as a market maker or “dealing desk” model while variable spreads are offered by brokers operating a “non-dealing desk”…

The spread is usually measured in pips, which is the smallest unit of the price movement of a currency pair. For most currency pairs, one pip is equal to 0.0001. An example of a 2 pip spread for EUR/USD would be 1.1051/1.1053. Currency pairs involving the Japanese yen are quoted to only 2 decimal places (unless there are fractional pips, then it’s…

Forex brokers will quote you two different prices for a currency pair: the bid and ask price. The “bid” is the price at which you can SELL the base currency. The “ask” is the price at which you can BUY the base currency. The difference between these two prices is known as the spread. Also known as the “bid/ask spread“.…

So now that you know how to calculate pip value and leverage, let’s look at how you calculate your profit or loss. Let’s buy U.S. dollars and sell Swiss francs. Bid/Ask Spread Remember, when you enter or exit a trade, you are subject to the spread in the bid/ask quote. When you buy a currency, you…

You are probably wondering how a small investor like yourself can trade such large amounts of money. Think of your broker as a bank who basically fronts you $100,000 to buy currencies. All the bank asks from you is that you give it $1,000 as a good faith deposit, which it will hold for you but…