Question about spreads?

Are spreads charged by amount of lot or just the pip difference.

What i know about Spread is that, Spread commission is received by the company from opening trades for traders.

The spread is notated in pips, but the final cost is based on the size of your position.

sorry deviating from the topic, but is there any way i can figure out whether the spread im getting is raw or is it manipulated by the broker

The spread is the difference between bid and ask price and is denoted in Pips which stands simply for Point in Percent, i.e. 1/10000. So saying you are being charged 1 pip is the same as saying you are being charged 0.01%. Therefore, it is the size of your position that determines the absolute cost. 1 pip EUR/USD spread at 1 lot is then effectively worth $10.

@Andrea: There is no central forex exchange so you cannot figure it out directly, but unless the broker has explicitly told you that the spread is raw, it most likely contains a mark-up or you will be charged a commission per trade instead.

Spread is the pip difference between two currencies. The value of the PIP will depend on the size or volume of your trade.

Sorry, Jenny, but this really isn’t right at all: “spread” is the difference between the [I]ask[/I] and [I]bid[/I] prices.

It’s really not as simple as that, Jenny: it also depends on the currency pair being traded, and the exchange-rate.

These terms are both explained in the BabyPips School pages: [B]School of Pipsology | Learn Forex Trading[/B]

According to me spread is difference between Bid & Ask , which is derived by market conditions or liquidity providers. If on EUR/USD Bid price is 1.3457 and Ask price is 1.3460, then spread will be 0.0003 pips. Spread gets charged by the pip difference.

@ForexTradingTalk: thanks :slight_smile: as far as the broker is not trading against me… I think i’ll believe my broker when he says he is Pure ECN.

Hey everyone! Well i feel that spread can be simply defined as a difference between the bid and ask price of the underlying asset. It represents the price difference where the trader may purchase and sell. Let’s take an example of calculating the spread on EUR/USD. The bid price of the pair is 1.1155 and the sell price is 1.1151 so the spread will be 0.0004 or 0.4 pips. Once you find the spread in pips, you can easily figure out the total cost by multiplying the spread with the pip cost of the total lots traded. Don’t forget that spreads are variable i.e. they do not remain same and changes sporadically based on the liquidity, market conditions and the economic events.

That would be [B]4[/B] pips, Olivia, not 0.4 pips.

(That would also be a [I]huge[/I] spread, for EUR/USD.)

Wish you were my broker…