Spread — The spread is one of the most important terms

Spread

The spread is one of the most important terms in forex trading, which is the difference between the buying and selling or the Demand and Supply of any Trading Instrument, that is, the number of Pips between the two operations. 

The price of spread difference is determined according to the volume of demand and supply, the more it increases on a particular pair or currency, the price difference in this case is low due to the availability of high liquidity in the currency market, and Traders do not need to calculate the price of spread difference manually as the trading Platform calculates it automatically.

The price difference between the purchase price and the selling price is measured in a unit called a Pip. The spread is the main source of income for the broker in addition to the trading commission, but in TNFX there are no additional commissions calculated at all.

It must be known that the value of the spread depends on the Size of the Contract and the Pip Value of the size of this deal, and brokers usually take the price difference at the moment the deal is opened and this is why deals always start with a negative value.

There are Two Types of Spread:
Variable spread.
Fixed spread.

The difference between fixed and Variable spreads is when the spread is variable, it varies with market fluctuations and from one broker to another. As for the fixed spread, it is not affected by market fluctuations, but it varies from one broker to another.

Most of the traders who follow a short-term strategy such as Scalping and Hedging in their trading prefer accounts with fixed spreads, and traders who follow long-term trading prefer variable spreads.

Variable spread can trigger a pending order, buy limit or a stop loss order when the spread widens due to the nature of the market at times.

However, this action is not present in the fixed spread because the spread is predetermined by the broker and will not come as a surprise to the traders.

TNFX offers a range of Accounts with different features, including Fixed and Variable spreads, as well as the Zero-spread account! 

You can learn about the difference in the price of the pair in the various accounts of the company.

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Originally published 2022-01-11 on the previous TNFX site and republished here in full.