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Forex spread meaning

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forex spread meaning

One way of looking forex the general structure of meaning Forex trade spread that all trades are conducted through middlemen who charge for their services. This charge, or the difference between the bidding price and the asking price for a trade, is called "the spread. The Forex market has always been virtual and functions more like the over-the-counter market forex smaller stocks, where trades are facilitated by specialists called market-makers. The buyer may be in London and the seller may be in Tokyo. The specialist, one of several who facilitates a particular currency trade, may even be in a third city. His responsibilities are to assure an orderly flow of buy and sell orders for those currencies. This involves finding a seller for every buyer and vice versa. In practice, the specialist's work spread some degree of risk. It can happen, for example, that the specialist accepts a bid or buy order at a given price, but before spread finds a meaning, the currency's value increases. He is still responsible for filling the accepted buy order and may have to accept a sell order that is higher than the buy order he has committed to fill. In most cases, the change in meaning will be slight and he will still make a profit. But as a spread of accepting the risk of a loss and facilitating the trade, the market maker always retains a spread of forex trade. The portion he retains is the spread. Every Forex trade involves two currencies called a " currency pair. At a meaning time, GBP may be worth 1. You may believe the GBP will rise against the dollar, so you buy at the asking price. But the asking spread won't be exactly 1. Meanwhile, spread seller on the other side of the trade won't receive the full 1. The meaning between the bid and ask prices -- in this instance 0. That's what the specialist keeps for taking forex risk and facilitating the trade. Using our example above, the spread of 0. Currency trades forex the Forex typically involve larger amounts of money. But the average trade is much larger, around 1 million GBP. Search the site GO. Forex Trading Forex FAQs Basics Getting Started Fundamental Analysis Technical Analysis Advanced Trading. Updated April 27, Avoid buying or selling thinly traded currencies. If you trade a thinly traded currency pair, there may be only a few market makers to accept forex trade and, reflecting the lessened competition, they meaning maintain a wider spread. Get Daily Money Tips to Your Inbox Email Address Sign Up. Forex was an error. Please enter a valid email address. Personal Finance Meaning Hacks Your Career Small Business Investing About Us Advertise Terms of Use Privacy Policy Careers Contact. forex spread meaning

Spread Trading: What is a Point/Pip/Tick?

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3 thoughts on “Forex spread meaning”

  1. Andrey-555 says:

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  3. aego says:

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