About spreads in clear words

 About spreads in clear words

Every year, the market becomes more and more volatile, making money becomes an order of magnitude more difficult. The risks of losing significant capital are increasing, and ordinary trading methods are no longer effective. But of course there is an alternative and stable method of earning. In this article, we will tell you about what a spread is and how to make money on it.


The spread is ...


In trading, the word “spread” refers to the difference between the price during the purchase / sale of the current asset. There are two types of prices on the Forex exchange: bit and ask, and the difference between them is the spread.


What is bid and ask:


bid - the amount for the financial instrument that the consumer is willing to pay;

ask - the amount of a financial instrument that was recorded by the seller.


Often, brokerage companies earn on the spread, which set a certain tariff for the sale of any assets. For most brokers, the spread is the main income, so the interest may seem dizzy.


What are the spreads?


It is worth noting that the spread is an indicator not only for the trader, but also for the investor. After all, when you invest in an asset, you understand that there is a possibility of potential delays, be sure to recount their size so as not to lose a share of your finances.


Spreads are:


floating - the price of the spread depends on market fluctuations;

fixed - the price has a certain stable value, which does not depend on the market fluctuation;

fixed with expansion - the price has a certain stable value, but can change due to fluctuations in the market.


How to trade spread on the exchange?


In order to trade the spread on the exchange, you need to use the currency pairs that are in demand on the market, if not, you can choose pair trading. Thanks to the many tools for sale, the earning system becomes accessible even for beginners. The main thing is to learn how to use these tools.


To get started, use exactly those tools that work with determining the level of correlation of currency pairs in the market. With a timely signal, you can reduce the risk of loss of invested capital by quickly opening or closing a transaction. These can be popular trading signals or market indicators.


Starting to spread trading, you need to learn how to conduct high-quality market analytics to determine the optimal entry points and the necessary financial instruments. If you are a beginner, then you should analyze the historical data - this will help you understand the future course course.

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