The impact of spread on foreign exchange transactions
- 9월 04, 2017
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The impact of spread on foreign exchange transactions
In foreign exchange, spread is the difference between the buying and selling prices. Brokers or dealers always sell the currency at a higher price than the buy price.
Spreads allow intermediaries to spend money and generate revenue. In fact, spreads are a kind of commission to traders for each transaction.
In foreign exchange transactions, the lower the spread, the better. However, depending on the type of transaction, it may not be significantly affected.
If you focus on long-term investment, you can ignore the spread size. In this case, the total number of transactions for a given time period is small. This means that the total cost of spreading is low.
For short-term traders, the association with spreads increases dramatically. If the chosen Forex trading strategy requires a lot of transactions per day Spread size is the most important trading factor.
Spreads of financial instruments can be changed or maintained consistently. People call it variable spreads and fixed spreads.
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