There are 2 kinds of brokers:
- Brokers which offers FIXED spreads – like Finsa Markets
- Brokers which offers VARIABLE spreads – virtually all other brokers
The spread is the difference between the SELL price and the BUY price. The smaller the spread, the better for the trader. If you are unaware about what a spread is, you can read more about it here.
A broker with a variable spread policy may state that their Euro Dollar price is “from 0.30”, which is a very low price to trade at. However, when you come to trade with this broker, you find that you are rarely able to trade at 0.30. It is more of a marketing ploy than a price you can expect to trade on.
A broker with fixed spreads always offers the stated spread. This spread may vary within certain time frames. For example, at Finsa Markets our spreads are fixed during the trading day, but in certain markets we increase the fixed spread during the night, due to low liquidity in the market.
What you pay in spread is significantly more important than you think. You can read more about the importance of the spread and the savings you can achieve when trading at lower spreads.