Spreads for Getting Started in Forex Trading

　　There are many terms used in foreign exchange exchanges.Forex Spreads What you need to know to get started with Forex.So what is a spread?

　　Before explaining the spread,you need to know what a point is:in order to express the exchange rate accurately and conveniently,it is generally represented by 5 digits,and the unit of the smallest change is usually called a point.

　　For example,the minimum unit of quotation of USDJPY(USDJPY)of 120.00 is 0.01 yen,or 0.01 yen is 1 point.The smallest unit of 0.9800 quoted in GBPUSD is 0.0001 USD,or 0.0001 USD is 1 point.

　　What is the spread:When the exchange rate changes,the difference in the number of points fluctuates is the spread.For example,when USDJPY changes from 120.00 to 121.00,121.00-120.00=1.00 yen,and the spread is 100 points.When GBPUSD changes from 1.0000 to 0.9800,the spread is 200 points.

　　Spread of quotation:When trading foreign exchange,there is a difference between the buying price and the selling price.For example,when USDJPY(USDJPY)is quoted at 120.00/120.10,120.00 is the selling USD price,120.10 is the buying USD price,and 120.10-120.00=0.10 is called a spread of 10 points.When GBPJPY is quoted at 185.50/185.60,the spread is 10 points.

　　Spread of handling fee:Convert the handling fee charged for each transaction into a spread.Regardless of the currency traded,the commission is converted into the spread of that currency.

　　Point Value:Each point is converted into the value of the currency.

　　What is the difference between floating spread and fixed spread?

　　Floating spreads indicate that foreign exchange brokers(currently the formal large platforms are basically floating spreads)themselves do not participate in customer transactions,but directly take customers'orders to the international market for trading.They only charge delivery fees and serve Fees are just to provide customers with a trading platform.Therefore,no matter what order the customer has,as long as someone is willing to take it in the international market at that time,it will be completed immediately,and there will be no human intervention,and everyone can make ultra-short-term orders.Their spread is not fixed.When the market transaction is very light,because people do not have much interest in trading,then the BID/ASK(spread)may vary greatly,but this is the real market price.

　　The spread of some companies is fixed,but their quotation is given by them,not the real price in the international foreign exchange market at that time.If the customer makes a lot of money,because the customer trades directly with them,then the customer earns It means that they lose money,so they can go bankrupt,and when they go bankrupt,the client's funds are not guaranteed.Refco is an example of this and it is precisely because of this that orders that are beneficial to customers are not easy to be traded,or there are losses that cannot be settled,so there will be human intervention,and scalping is not allowed,because if customers use the platform Seeing the difference in price to gain profits will inevitably lead to losses for market makers.Although their spreads are fixed,generally in order to prevent risks,the spreads will be relatively large.If the difference is small,they will lose money.And when the data is released,the spread will also be very large.

　　The spread in foreign exchange margin trading often determines how much service fees customers need to pay,so the choice of foreign exchange trading platforms and traders should fully consider this issue.