Fixed spreads v variable spreads v commission

Just started demo trading and spotted a spread jumping up to 32 briefly, then dropping back down again. If this happens it means you are much more likely to stop out than expected. Even with a stop loss of 50, there is very little margin. Are fixed margins better or is there more problem of slippage? Seems a way for brokers to reduce your profit. Is this the way it is?

Hi @Lailu

Without more details, it’s impossible to tell whether such spread variation is normal or out of the ordinary. You said you just started demo trading, so it’s important to consider the following:

  1. Is it possible you were looking at tenths of a pip (the fifth digit to the right of the decimal point) instead of full pips (the fourth digit)?

  2. Which currency pair were you looking at, and at what time? The spread can widen to 32 pips with exotic currency pairs in normal market conditions and with major currency pairs in illiquid market conditions.

Open a Zero-spread account. :wink: Commission is extremely low and you don’t have to worry about spreads anymore.

You have to worry about a broker that tells you that you don’t have to worry about spreads anymore: Zero Account? Seems to be better... or not?

If volatility increases and/or liquidity decreases, then liquidity providers will respond by widening spreads. This is true for any market. Unfortunately, some people don’t accept that truth and are susceptible to those who make false promises to the contrary.

"Which say to the seers, See not; and to the prophets, Prophesy not unto us right things, speak unto us smooth things, prophesy deceits:" - Isaiah 30:10

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You might be right, but I’m trading EURUSD at the moment and the spread is 0.0 - 0.2, even when the market is volatile… I keep watching and checking it almost all the time. Anyway, I don’t trade during big news / events.