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Forex Foreign Exchange Spreads
By Paul Bryan

Forex trading is one of the most popular and fastest growing financial trading opportunities. Exchange rates for currencies in the market are quoted as 'bid/ask' rates. The difference between the purchase (ask) and the sale (bid) rates is called the 'spread'. spread is one of the most important single parameter to make the difference between a successful and losing trading.

Forex spread is expressed in percentage in point (pip) which is the smallest measure of price move. For example, if the currency pair EUR/USD is trading at 1.3000 and then changes to 1.3020, the pair is said to move by 20 pips. A pip in most currencies is 1/10,000 of an exchange rate, but in USD/JPY, it is 1/100.


The bid/offer spread is the difference between the buying (bid) and selling (offer) price. The ask price is the immediate execution prices for quick buyers or traders and bid price is for quick sellers.

In market brokers generally do not charge any commission from you. But they get their money by charging you a spread. As the spread is the difference between the bid price and the ask price for any currency being traded, the broker adds this spread onto the price of the trade and keep it as their fee for service.

Therefore, for you, lower the pips and spreads, higher the profits. If the spread is big, you have to pay more when you buy and get less when you sell. spread is charged only on one side of the transaction, usually on the "buy" side of the trades. So, as a trader your aim should be to buy low and sale high.

If the quote between EUR/USD

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is said to be 1.2222/5, the spread equals 3 pips (5-2). Although it seems to be small, spread difference of one pip can make significant difference in your profit. You may find the difference to be as high as 25% on your trading costs.

Therefore, we advise you to choose a low spread broker. Most brokers offer different spreads for different currencies. For the most popular currency pairs like the EUR/USD or GBP/USD, you get the lowest spreads, while less popular currencies are traded with higher spreads.

The trade can also vary with the type of your account and volume of trades. But there are brokers who offer same spread to all accounts and any trade volume. You can even opt for fixed foreign exchange spread, but they are generally higher than floating spreads.

It should always be remembered that spread is the difference between bid prices and ask prices as determined by the free market and therefore can never be guaranteed. Spreads are generally tighter when there is good market liquidity but it widens as liquidity goes down. Find a broker, who is honest and transparent with the operations. Make sure there is no hidden spread and the execution is fast and accurate.

By: Paul Bryan

Article Directory: http://www.articledashboard.com

To find out more about trading with currencies online visit Forex Foreign Exchange Spreads




forex license articles:
Gone are the days when stock market was limited to the rich who paid brokers to manage their portfolios. Thanks to online investing, now there is a multitude of business savvy middle class individuals who indulge in the trading game. Web sites like Forex offer opportunities to nearly anyone to start investing in the stock market and earn money as a stock or currency trader.

It is important to note that Forex is a Web site that is used by investors who are self directed. It is not for the weak of stomach, and all investors need to be comfortable with some amount of risk. And, unlike other trading sites that trade in stocks, Forex is mainly a currency trader. Access to the foreign exchange market is given through an account, and you can invest in one form of currency or another, hoping to make money off of the way currency values fluctuate.

While the main point of Forex is to allow access to the foreign currency market and allow you to make trades, the Web site does provide many tools to help you make better-informed decisions. That said, it is important to realize that trading Web sites will not take responsibility for losses, and most of them charge commission or charge a flat rate for each transaction.

Forex has a learning center for users. It provides exhaustive information about the foreign currency market. It is particularly useful for people who are not familiar with the currency trade. It helps them by explaining how the market works and how to read the market.

Another more advanced tool is the Forex trading section. This builds on the knowledge gained from the learning center and helps you learn specifically how to use Forex. In addition, Forex offers tools such as tutorials on how to read the quote board, how to understand bid and ask, and the method to figure out the high and low. The training is comprehensive enough to help you watch and understand the market trends and decide what to do.

The free practice account offered on the Forex Web site is one of the most helpful features. It opens up a mock account stocked with practice money to help investors get started without much apprehension. As you read the charts and quotes, and buy and sell you get an idea of how much money you have made or lost. It is like a warming up exercise before you actually get going in the currency market.

The Forex website makes available all the charts and investing tools to the investor along with comprehensive real-time charting and research to get on with the investment process. The training tools at the Forex help you better understand and use the charts and the research. You can set up an account with Forex with amount as little as $250 in your account and once you become member of the website you get access to more advanced charts and tools to foray in the market.

If you are looking to learn how to trade better and earn money for a vacation, or even for retirement, you can do so with the help of Forex and its direct access to the currency exchange.

Article Source: http://www.ArticleJoe.com

About the author: Jimmy Jooves writes exclusively for Forex Fun, there's a wealth of knowledge on the website, plus their free newsletter is well worth signing up for too. If you want to read more Forex articles go to: www.forexfun.com/articles
Click here for other unique forex articles.


By Gone are the days when stock market was limited to the rich who paid brokers to manage their portfolios. Thanks to online investing, now there is a multitude of business savvy middle class individuals who indulge in the trading game. Web sites like Forex offer opportunities to nearly anyone to start investing in the stock market and earn money as a stock or currency trader.

It is important to note that Forex is a Web site that is used by investors who are self directed. It is not for the weak of stomach, and all investors need to be comfortable with some amount of risk. And, unlike other trading sites that trade in stocks, Forex is mainly a currency trader. Access to the foreign exchange market is given through an account, and you can invest in one form of currency or another, hoping to make money off of the way currency values fluctuate.

While the main point of Forex is to allow access to the foreign currency market and allow you to make trades, the Web site does provide many tools to help you make better-informed decisions. That said, it is important to realize that trading Web sites will not take responsibility for losses, and most of them charge commission or charge a flat rate for each transaction.

Forex has a learning center for users. It provides exhaustive information about the foreign currency market. It is particularly useful for people who are not familiar with the currency trade. It helps them by explaining how the market works and how to read the market.

Another more advanced tool is the Forex trading section. This builds on the knowledge gained from the learning center and helps you learn specifically how to use Forex. In addition, Forex offers tools such as tutorials on how to read the quote board, how to understand bid and ask, and the method to figure out the high and low. The training is comprehensive enough to help you watch and understand the market trends and decide what to do.

The free practice account offered on the Forex Web site is one of the most helpful features. It opens up a mock account stocked with practice money to help investors get started without much apprehension. As you read the charts and quotes, and buy and sell you get an idea of how much money you have made or lost. It is like a warming up exercise before you actually get going in the currency market.

The Forex website makes available all the charts and investing tools to the investor along with comprehensive real-time charting and research to get on with the investment process. The training tools at the Forex help you better understand and use the charts and the research. You can set up an account with Forex with amount as little as $250 in your account and once you become member of the website you get access to more advanced charts and tools to foray in the market.

If you are looking to learn how to trade better and earn money for a vacation, or even for retirement, you can do so with the help of Forex and its direct access to the currency exchange.

Article Source: http://www.ArticleJoe.com

About the author: Jimmy Jooves writes exclusively for Forex Fun, there's a wealth of knowledge on the website, plus their free newsletter is well worth signing up for too. If you want to read more Forex articles go to: www.forexfun.com/articles
Click here for other unique forex articles.


Gone are the days when stock market was limited to the rich who paid brokers to manage their portfolios. Thanks to online investing, now there is a multitude of business savvy middle class Read more...