What is a spread on the stock exchange?

Good day, friends! Last month, my friend Maxim actively persuaded me to go with him to a course where they teach the basics of stock trading.

I didn’t have much free time, so I had to refuse. But then, at every meeting, Maxim told me about stock exchange terms.

Now I know almost everything they teach there. And saved a lot of time. I even had a desire to tell you something. For example, about the spread on the stock exchange - what it is and how it is determined. In fact, now it will be very interesting. Let's begin!

Any exchange asset has two prices at any given time: the price announced by the nearest seller and the price appointed by the nearest buyer. The difference between these prices is called the spread.

Warning!

The lower the spread value, the better liquidity the instrument has, and vice versa, the wider the spread, the less liquid the exchange asset is.

For example, for GAZPROM shares at the best buyer price of 128.72 rubles. and the seller's best price is 128.73 rubles. the spread is 0.01 rub. For the USD/CHF pair, with a seller price ASK=0.9298 (you can buy at this price) and a buyer price BID=0.9297 (you can sell at this price), the spread will be 0.0001 points.

The spread can be fixed or floating

A fixed spread is a constant value and therefore does not change depending on the current market situation.

It is installed by the broker individually for each instrument and is found only on the FOREX market in the section where trading is carried out on micro and mini accounts (service for which is carried out automatically).

The vast majority of instruments are characterized by a floating spread, the value of which varies under the influence of prevailing market factors.

However, its “width” is not completely chaotic and is always controlled by the exchange (the spread is regulated by market makers, whose task is to reduce it to a minimum).

Why is the spread widening?

However, the difference between the best buy price and the best sell price is not always kept within a narrow range; there are times when the spread widens. This happens most often during periods of crisis, when prices drop sharply, or during periods of rapid growth, when quotes decisively go up.

As noted above, the concept of “spread” is directly related to the concept of “liquidity”. So, the greater the difference, the worse the liquidity.

Attention!

Those. when the spread is wide, traders will always buy or sell assets at worse prices than they would like. Accordingly, such transactions will not be profitable for them, and they will not strive to trade such instruments.

During periods of collapse, the exchange deliberately widens the spread, and it becomes unprofitable to make sales, and accordingly the price stabilizes. The same thing happens with unreasonable growth: the widening of the spread makes purchases unprofitable and the influx of buyers decreases.

What is a spread on FOREX

For the foreign exchange market, a spread is a form of broker's commission, and when making a purchase, the trader receives a price worse than the market by exactly the amount of the difference between the purchase and sale prices, this difference is “taken away” by the broker. In order to attract new clients, Forex brokers are constantly striving to reduce the spread.

source: http://stock-list.ru/spread.html

What is a spread in trading

During exchange trading, a trader is constantly surrounded by charts of various assets, quotes of exchange instruments, as well as various types of technical and basic research carried out with these assets.

If the charts represent the history of transactions made with an asset, then the quotes show at what prices this asset traders are ready to buy/sell and in what volume.

Quotes are reflected in a special table, which in stock exchange jargon is called a “order book”. In the “glass”, buyers and sellers wait their turn to execute orders, and the prices for purchasing an asset are always lower than the prices for selling.

In the “glass”, prices are arranged from top to bottom, that is, at the very bottom there will be the lowest price to buy an asset, and at the very top – the highest price to sell.

As soon as the buyer’s price matches the seller’s price (or vice versa), a deal will be concluded for the corresponding volume - this is the principle of a two-sided impersonal auction, on the basis of which transactions are made at exchange auctions.

What does the term "spread" mean?

The “glass” always contains the best buy price (also called Bid), which is slightly lower than the best sell price (also called Ask). The spread on the exchange is precisely the difference between the Ask price and the Bid price. It is present in any order book and will have a different value, which will also characterize the liquidity of the asset.

Advice!

The fact is that each asset has its own price step (the minimum difference in price currency by which one order must differ from another).

For liquid assets, the spread is approximately equal to the price increment (but can increase, especially during periods of high volatility), while for illiquid assets, the spread can be much larger.

The spread is not a fixed value, but only shows the temporary consensus of buyers and sellers regarding the price of an exchange asset.

The spread can be compared to the situation in a classical market, when the seller is ready to sell his product at a certain price, and the buyer wants to buy it cheaper. And until the buyer and seller agree on a single price, they will be divided by the spread, and the transaction will remain invalid.

But exchange trading is, first of all, trading where it makes sense to bargain, especially since spreads allow you to get more favorable prices when used correctly.

Previously, there was a whole group of intraday traders - spreaders, who traded liquid assets. If the spread increased, then they placed their order with a minimal difference, and if it was executed, they tried to immediately close the deal at a slightly more attractive price.

For example, if they want to buy an asset for 100 rubles and sell it for 101 rubles, then the minimum price step is 1 ruble. And if suddenly the best price for sale was unexpectedly 105 rubles, and not 101 rubles, spreaders put on sale at 104 rubles, expecting a buyer at their price.

Options for working with spreads

Spreads exist not only in stocks, but also in other exchange instruments. The spread exists in any “glass”.

But if trading using the above-described system on highly liquid assets is quite difficult (an extremely high reaction is required), then on assets with slower behavior, the presence of a spread allows you to realize one of the main properties of the market - the ability to trade.

Warning!

There are a lot of assets (for example, among bonds) that may have sale prices, but there may be (almost or completely) no purchase prices. In this case (the bond meets the reliability criteria), you can set your purchase price in the “glass” and calmly wait to see whether it will be fulfilled or not.

Also, this behavior can be used if there is a large spread in an asset - you can bargain and offer a slightly better price by placing your order as Bid or Ask.

In this way, unused funds can be “stored” (money is also reserved for applications) in applications at attractive prices, so that if they are sold, profit is practically guaranteed.

Moreover, in addition to spreads in the “glasses” there are also calendar spreads. A calendar spread means the difference in prices of distant and nearby derivative instruments (often we are talking about futures) by expiration date, but for the same asset.

Such spreads can be either a result of seasonal demand or a feature of the instrument. For example, dividend spreads between a stock and the corresponding futures.

Because futures do not pay dividends, they are often traded as the stock price minus dividends. Calendar spreads can appear as a type of inefficiency during the evening session if there is strong news that moves the market during the evening session.

The fact is that in the evening session, all activity is mainly focused on the futures that are closest in terms of expiration date, and further ones may be deprived of attention, which allows, if there is an increased difference in prices, to buy a cheaper and sell a more expensive asset, thereby receiving a financial difference and carrying out an arbitrage transaction.

Spreads exist in any asset, but you can make money on them different ways. The spread on the stock exchange is the difference between the sale and purchase prices, which, in turn, is the basis of any market.

source: https://www.opentrainer.ru/articles/chto-takoe-spred-v-treydinge/

What is a spread when trading on the stock exchange?

Difference - this is the translation from English of the word spread. What is this in economics? Spread is an American term and has an economic meaning.

In simple terms, a forex spread is the difference in the prices - (ask) purchase and (bid) sale of a pair of currencies. The criterion for market liquidity is the size of the spread. With its high value, liquidity is low.

Is a spread a loss?

When opening a deal, the trader buys lots, which immediately leads to a loss with the spread value. This transaction can be moved to the point where it becomes break-even if there is a change in quotes in the direction of the transaction by at least 3 points. Well, to get income, even more.

That is, the spread commission is withdrawn automatically at the time the transaction is opened. The spread from an honest broker is the main source of income. Stock exchanges To regulate market liquidity, the spread is limited. When it reaches the maximum, trading with the machine stops.

In the foreign exchange market, spreads are calculated in points for any period of time for each specific product. This is done to unify calculations various options financial instruments.

Accurate calculation of the spread requires taking into account its features. Forex spreads are fixed and float. The broker provides the client with a choice of spread type.

Fixed

This is a constant value and does not depend on market changes. These types of accounts are used when trading with robots or advisors.

Another option for a spread with fixation is the possibility of expanding it (ECN accounts). By warning of significant news, brokers have the right to increase the spread value.

The formation of a fixed spread does not occur chaotically. When thinking about it, they resort to the help of dealing companies and apply it primarily to two types of foreign exchange market accounts: micro accounts and mini accounts.

Floating

The spread that floats is the most common. Its fluctuations under the influence of market conditions occur within a certain range. The broker indicates only its lower limit. Typically, the floating option, when the market is calm, has a value of 2-5 points for popular pairs.

Advice!

But the news release can excite him up to 50 points or more. The floating type is typical for most monetary institutions and brokers on behalf of electronic systems.

It is clear that it is the spread value that is the most powerful criterion when choosing a broker. According to the rule of logic, which you cannot go against, choose a broker for business relations you need one that offers a lower spread value. It's more profitable for you.

The spread (its value) has become a stumbling block here and one can note a persistent tendency towards a decrease in its indicators by several times. Nowadays it is quite difficult to find a broker who would differ greatly from others in terms of the quality of services provided, including the size of the spread.

The trading conditions on the currency exchange are approximately the same for everyone. However, with patience and time, you can find among the reliable ones that, albeit slightly, provide slightly better conditions.

How to return part of the spread

There is a chance to return a certain part of the broker's commission. Many traders use this.

The meaning of such an operation is to register a trader and enter his data into the client database on one of the spread return services.

This service from your broker receives royalties as an affiliate. Just part of these funds will be used to compensate you for your loss. The refund amount will depend on the specific agreement between the broker and the refund service.

source: http://fx-binar.ru/chto-takoe-spred-na-birzhe/

Spread is the difference between the purchase and sale prices

A spread (spread from spread “scatter”) on the exchange is the difference between the best prices of orders to sell (ask) and to buy (bid) at the same point in time for any asset (stock, commodity, currency, futures, option).

The word "spread" is also called:

1. The difference in prices of two different similar goods traded on open markets(for example, the difference in prices for oil of different grades).
2. A synthetic derivative financial instrument (DFI), typically consisting of two open positions that have opposite directions and/or different underlying assets and/or different expiration dates.
3. Difference in yield levels for various financial instruments.

On the exchange

In exchange practice, spreads are measured in points, not in money. For example, if the current quote of the euro against the US dollar (EUR/USD) is indicated as 1.2345/1.2350, then the spread will be $0.0005 or 5 points.

Warning!

Measuring in points makes spreads on different trading items more comparable.

To ensure market liquidity, exchanges usually set a maximum spread. If this limit is exceeded, trading may be stopped. The smaller the spread, the more liquid asset, and vice versa.

Fixed

In some cases, when one market operator provides both purchase and sale simultaneously, he creates a fixed spread that does not change when the quote fluctuates.

The more liquid the market, the more often a fixed spread occurs. This is most often observed in currency trading (a fixed difference between the purchase and sale price of a currency), especially with intermediaries in the international foreign exchange market.

In the stock market, fixed spreads are found when trading CFD contracts on margin. There is often a caveat that the spread may be widened in certain market situations.

source: http://whatismoney.ru/spread/

What is a spread in trading

The difference in the price of various assets, be it currencies, stocks or precious metals, is the only and unique source of earnings on the exchanges. It is from price fluctuations that traders make serious money, using various statistical tools and information channels for accurate investment forecasting.

At the same time, you can make money both by increasing and decreasing the value of the trade item. In any case, such an important concept as a spread will be involved in such operations - the difference between the best purchase and sale price of an asset at the moment.

In simple words

In order to understand what a spread is on the stock exchange, it is enough to imagine any trading operation - for example, buying clothes with further resale.

Attention!

The difference between the original price paid and the money received through speculation is commonly called profit or income. The spread is an analogue of this difference, and in this case the income is received by brokers.

In the foreign exchange market, transactions are not carried out on all positions. Therefore, to evaluate specific trades, the concept of spread is used, which, in essence, reflects the liquidity of a given market.

The greater the difference between the purchase (ask) and sale (bid) prices of a currency, the lower the liquidity of the market. In the sense that it will be very difficult to sell this position quickly and profitably.

By analogy with the above example, if you raise the price of a resold coat too high, then it will be quite difficult to sell this product.

What is a spread in trading

Spread on the Forex exchange is the difference in the purchase and sale of each currency from currency pair. In essence, this is the trader’s direct initial loss, which must be covered in the process of further trading.

Let's give an example on the popular EUR\USD pair with the current quote 1.2668/1.2672. From the difference in the prices of these currencies, it is clear that the spread in this case for one lot is 4 points, that is, $40.

Therefore, when you open an order, for example, for 4 lots, your “minus” will be $160. To compensate for this loss, it is necessary for the currency pair quotes to change in your favor by at least 4 points.

And only further progress will bring you net income. Therefore, the spread on the Forex exchange is sometimes compared to the inevitable mandatory commission, which is the main income of large brokerage companies and private brokers.

Unlike currency exchanges, in stock markets the maximum allowable spread value is always set, upon reaching which trading ends.

What are they?

In the Forex currency market, the spread appears in the following forms:

• a fixed fee, which is a constant value regardless of currency fluctuations. In some cases, an expandable spread is used, which can be increased manually by the broker depending on investment, economic and financial forecasts;
• floating spread - indicated by the broker within the lower limit and can fluctuate under the influence of changes in the value of currencies in a wide range upward.

In most cases, Forex uses a floating spread, which in emergency situations can reach 50 points or more. The average range of this parameter in a calm market is from 2 to 5 points.

What factors influence its value?

Liquidity (popularity) of a currency pair. In the most popular tandems, the spread size usually does not exceed 3-5 points, and when trading rare currencies, for example, the Canadian dollar or Swedish krona, this figure can reach 50 points or more.

Advice!

Current market situation, which in turn depends on economic and political factors in different countries and in the world community as a whole. Any “hot” news that can affect the rates of leading currencies significantly affects the size of the spread.

Availability of affiliate programs, the participants of which receive compensation precisely due to the spread. By the way, the rapid growth of affiliate programs in this segment contributes to an increase in the size of this fee, which is an inevitable “headache” for any trader.

By taking into account and tracking the spread in trading, you can more accurately calculate the profitability of each transaction. This parameter is also actively used to estimate volatility, which allows you to make accurate predictions about the most profitable rates.

But most importantly, the size of the spread is one of the important criteria when choosing a brokerage company on whose platform you will work on the Forex exchange.

source: https://www.avatrade.ru/education/trading-for-beginners/chto-takoe-spred

What is a spread in the foreign exchange and stock markets?

Quite often we can see a loss in the MT4 terminal. Beginners can be confused and don’t understand why they entered at the same price and then found themselves in the red. But before you familiarize yourself with and understand the prices for opening orders, you need to study and understand the basic concepts of online trading.

Spread is the difference between bid (buyer's price) and ask (seller's price). It's rare that their prices match. After all, the buyer wants to purchase the goods at a lower price, and the seller’s interest is to sell at an inflated price.

On the market, goods are sold at a price that both parties agree upon. If the buyer agrees to the seller's offer, then a transaction occurs.

To make it easier for you to understand, I’ll give you an example: trading is held on the stock market. Sergey wants to buy shares of a huge famous company and offers for one piece - 145 rubles. Then he submits an application and indicates the number of shares (for example, 750). If no one has offered a larger amount, then the price designated by Sergey becomes the bid price.

At this moment, there is no seller who would agree to give up the shares at the bid price, but there is a person who would sell the goods at their established price, let’s say 144 rubles.

Warning!

He submits his bid, and the price indicated in it becomes the ask price, since it is the lowest of all those offered.

Now you can determine the difference between these two prices, it is called the spread, which in this case is equal to 1 ruble. If there is a person who buys shares for 144 rubles and sells them to Sergei for 145 rubles, then for each share there will be a loss of 1 ruble.

Kinds

There are 2 types of them in the foreign exchange market:

• floating;
• fixed.

Floating characterizes the difference between the sale and purchase prices of the exchange rate, where the broker keeps the minimum spread until volatility increases.

Fixed is the difference between buying and selling, which the broker specifically sets at a particular value, and this does not depend on the current volatility of the currency pair.

Also, with a fixed spread, you see the number of points that make up the cost of each trade.

But not everything is as smooth as it seems. There is also a drawback: the cost of trading operations constantly high.

This option is perfect for traders who sell through automated systems.

What is a floating spread? It is chosen mainly by scalpers and ECN brokers. They receive a small income with a fairly high degree of probability.

Factors that influence size

One of the most important factors, on which the size of the spread depends is currency liquidity. More well-known currency pairs are traded with low spreads. As for rare ones, they rise to tens of points.

Attention!

It is very important to remember that the difference between prices on the exchange is closely related to the monetary units that are used.

Another, no less significant factor is the transaction amount. The high cost comes with the usual tight spreads.

How to ensure profitable trades

Every trader should focus his attention on changes in the spread. The greatest productivity will occur if the maximum number of market conditions are fully taken into account.

The success of a trading strategy is based on effective assessment market odds and certain financial terms of the transaction. You have to analyze everything possible risks and estimate the cost of the transaction.

To ensure that you do not lose, be sure to do a comprehensive analysis, and in addition to this, you must clearly understand what a spread is.

Since its value can change, the strategy must be quite flexible. In this case, it will be possible to adapt to market movements.

source: https://investbro.ru/spred-na-birzhe-chto-ehto-takoe/

What is a spread in Forex and stock exchange

This is the difference between the Ask purchase price and the Bid sale price, comes from the English. spread – increase, expansion. This difference is income, a broker's commission, a kind of service fee for the trader.

The simplest example: when you go to an exchange office to buy currency, the bank sells it at a higher price than it buys. The difference between the purchase and sale prices is the spread, the bank's commission, and its income.

Advice!

It’s the same with spreads on the stock exchange, Forex, cryptocurrencies, whatever. The meaning of this concept is financial world united.

Thus, the spread is your direct cost for opening each transaction, and knowing what it is and how to work with it is simply necessary, because you must know your costs, this is the basis.

How to find out the spread

By default, the spread is not displayed anywhere in the MT4 terminal. To find out, you can:

As for setting up the terminal, we will do this right now, fortunately, it will only take a few seconds.

In the MetaTrader terminal window, right-click on the chart, call up the context menu and select the last item “Properties”, or simply press F8 on the keyboard.

In the “General” tab, check the “Show Ask line” checkbox, as shown in the picture.

By default, only the “Bid” price is shown in the terminal, we have enabled the display of “Ask” as well, the distance between these two lines is the spread and now we can see it visually.

When a trader opens a buy position, he enters the market at the “Ask” price, and when he makes a sale, he enters the market at the “Bid” price. Remember the exchanger analogy? There are also 2 prices posted there - Demand and Supply, everything is the same here. In other words:

• Bid – the price at which we open a sell order
• Ask – the price at which we open a buy order
• The difference between these prices is the spread

And so, you can find out the spread on Forex either using an indicator, or configure the terminal accordingly.

Types and which one is better

There are two types of spreads – floating and fixed. The easiest one to trade is fixed. Everything is very clear with him; at any time of the day or night, his meaning does not change. This has its pros and cons.

Advantages of a fixed spread:

1. Unchangeable and therefore predictable. Easier for beginners.
2. Easier to manage risks. You will not be at all worried about the widening of spreads during news or other disturbances in the market; you will be insured against such situations. Your pending orders are not activated due to the widening of the spread, and stops are not knocked out either.

For trading with advisors, in most cases a fixed spread is more convenient.

Cons: Among the disadvantages, I would highlight the fact that the trader’s expenses when using a fixed spread are often higher.

Warning!

The fact is that if your trading strategy gives a lot of signals and you enter the market often (several times a day), then the costs of a fixed spread will be much higher than for a floating one. At the same time, if you trade rarely and open trades on higher timeframes, then the type of spread plays virtually no role for you.

Therefore, when choosing a trading account, consider what your strategy is and how often you open trades to save on spreads.

Now about the floating spread. It is constantly changing. In a calm market there will be less, shortly before and during the release of important news, the spread can increase sharply and opening a position at this time can be very unprofitable.

In addition, the width of the spread depends on the currency pair. On popular currency pairs such as EURUSD, GBPUSD and other majors, the spread is usually minimal. At the same time, on exotic, rarely traded currency pairs, it can be many times higher. This also needs to be taken into account.

Advantages of a floating spread:

• You can choose the moment when it is narrowest and enter the market, thus saving your money
• Better suited for those traders who open positions frequently, this also allows them to save significantly

Cons: An unexpected spread widening can knock out your stops or activate pending orders; this introduces an additional risk factor into trading and therefore complicates money management somewhat. This expansion is not uncommon during important news releases.

So which spread is better, floating or fixed? It depends on your trading style. If you like to trade intraday and open a lot of transactions, then a floating spread will be more profitable for you, because you can choose the moment when it is narrow and save money this way.

But, at the same time, you get risks associated with a possible widening of the spread at the wrong time.

If you are trading medium or long term, then this issue is not particularly important for you, since in any case the costs will be only a fraction of a percent of your transaction. But, in general, in terms of financial costs, a floating spread will still be more profitable.

If you prefer high-frequency intraday trading (scalping, pipsing), then the costs when using a floating spread will be much lower. Simple example:

Attention!

With a fixed spread of 2 points and 10 completed transactions, the trader will pay the broker 20 points.

With a floating spread, the range of which usually fluctuates between 0.4 – 0.8 points in a calm market and popular currency pairs, the expense will be approximately 6 points.

A fixed spread is the choice of those who prefer predictability and want to eliminate the risks associated with expansion. And for many trading advisors, a fixed spread is also preferable for the same reason. But you will have to pay extra for these amenities.

My advice: if you want less risk and are willing to overpay for it, choose a fixed spread. If you are willing to bear additional risks associated with widening the spread in order to save money or make many intraday transactions, choose a floating one.

Check with your broker for the availability of the Rebate program – partial return spread on the Forex market, so you will cover part of the costs.

List of currency pairs with small spreads

Different brokers have different spread values, including depending on the type of trading account. Below I will give a small list of currency pairs with traditionally small spreads.

EURUSD
GBPUSD
USDCHF
USDJPY

The euro-dollar is in the lead, as it is the most popular currency pair among traders. The remaining three are inferior in popularity, but are also actively traded. As a result, they have fairly narrow spreads.

USDCAD
AUDUSD

Two more dollar pairs are Canadian and Australian.

EURGBP
EURCHF
EURJPY

This is not an exhaustive list; more specific information can always be found in the trading terminal. And let’s touch on one more point that confuses many beginners.

Why is any order opened immediately at a loss?

Beginners sometimes move, how is this possible, I just opened an order, and it is already in a slight minus, although the price has not yet moved even a couple of points?

The whole point, again, is in the spread, it is automatically added to our deal and you receive a minus equal to the size of the spread at the time the position was opened.

It turns out that when opening any deal, the trader first earns money for the broker, because he needs to cover the spread, and only then starts earning money himself.

Spread return on Forex

But high costs are partially compensated by the so-called rebate - the return of part of the costs of the spread or commission. This is such a bonus for a trader, so ask about the availability of a similar program at your broker, you can directly ask technical support: -Do you have a rebate?

Or look for it yourself, usually this information is somewhere in the bonus section or something similar.

Many people believe that the spread is a low-quality analogue of oil, but they are mistaken. In fact, it is a very healthy and low-calorie product with high nutritional value.

Spread and its types

This combined oil substitute appeared in wide production only in 2003. The name comes from the English word “spread”, which literally translates as “smearing”. Since 2008, in Russia, a spread has been understood as a food product that is made from milk and vegetable fats (at least 39% of the total weight). The substitute has a plastic consistency and is easily spread on bread.

There are three types of spread:

1. Vegetable fat.
2. Vegetable-creamy.
3. Creamy and vegetable.

Each of these substitutes differs in milk fat content. In the first type of product, this substance should be less than 15%, in the second - from 15 to 50%. The most high-calorie spread is the creamy vegetable spread - this is a product with a milk fat content of more than 50%. In dietetics, all three types are allowed to be consumed.

We cannot ignore the concept of returning the spread to the oil state. If you wish, you can make a full-fledged fatty product from the substitute, but this is impossible at home.

The difference between spread and oil

The only thing these two products have in common is that they are made from dairy cream. If natural fats (at least 64%) are used for production, then it will be butter. The spread is a combined product. It should consist of at least half vegetable fats.

To make a substitute, oils such as palm, sunflower, and coconut are used. Most often, the spread includes all three types, but sometimes manufacturers skimp on quality, limiting themselves to one of the cheapest ingredients. It is worth noting that the consistency of the product depends on the concentration of coconut and palm oils, and the enrichment of the substitute with polyunsaturated acids depends on sunflower oil. Olive is often added to the composition.

The production of the spread is based on the hydrogenation of oils. This method eliminates the inclusion of trans fats in the substitute. No more than 8% concentration of these substances is allowed, otherwise the product will be unsafe for the body. In the future it is planned to reduce this figure to 5%. As for butter, butter contains about 10% trans fats, so its excessive consumption, especially in the summer, is strictly prohibited.

Spread is a food product created artificially. However, it is enriched not only with vitamin complexes and microelements, but also with phospholipids.

Advantages

One of the main advantages of the butter substitute is that due to the low concentration of milk fat, it practically does not contain such a harmful substance as cholesterol. When creating a spread, many manufacturers use transesterification technology, thanks to which the final product is enriched with positive acids, for example, Omega-6. This substance is necessary for the body to normalize the functioning of the cardiovascular system and reduce cholesterol levels.

It is immediately worth noting that the spread is the only fatty product allowed for first and second degree obesity. This is not to say that it has few calories, but their amount is significantly less than in the same butter. Also, this substitute can improve metabolism by removing excess acids from the body. The spread is allowed even with strict diets. In addition, it is useful for the prevention of many heart diseases, such as ischemia.

The results of numerous studies have repeatedly demonstrated the organoleptic properties of the product, due to which the substitute does not cause allergies and is quickly absorbed in the body.

Vegetable-creamy type

This type of butter substitute has a slightly sweet taste. Its consistency is plastic, therefore it spreads well on bread. In addition, the product has high biological and nutritional value and is widely used in dietetics.

The indicator of the vegetable-cream spread, which distinguishes it from all other types, is its combined composition. A truly high-quality substitute must include oils such as palm, coconut and soybean. Cow's milk is used only in skim form. This spread also contains emulsifiers, natural colors, flavors and sorbic acid.

Most of nutritional value substitute is allocated to fats - up to 82%. The remaining portion is equally divided between proteins and carbohydrates. As for calorie content, it should not exceed 670 kilocalories per 100 grams. The shelf life of the product depends on the method of its creation and varies within 120 days. It is recommended to store it in the refrigerator only.

Vegetable fat spread

This type of food substitute contains fats of both plant and animal origin. The product also contains a small amount of butter, so it contains virtually no cholesterol. An indicator of a spread of vegetable-fat origin is its minimum calorie content. Per 100 grams of product the energy value will be about 360 kcal. As for the chemical composition of the substitute, it is similar to regular margarine.

This type of spread is the lowest in calories, but it is also less nutritious than all the others. The fact is that there is practically no milk fat in it. In production, they are replaced with oil from sunflower seeds or soybeans. This minimizes the amount of trans fats, which impair metabolism and prevent beneficial substances from being fully broken down and absorbed into the blood.

The vegetable fat spread contains groups of vitamins such as A and D, as well as phytosterols and vital minerals. The product is most widely used in dietetics, as it contains several times fewer calories than butter. In addition, the substitute is recommended in the prevention of serious heart diseases associated with obesity.

It is not possible to return this type of spread, as its chemical composition is significantly different from oil. The shelf life of the product varies within five months.

Creamy vegetable variety

The quality of this type of substitute directly depends on the fat content. The composition contains mainly oils of vegetable origin. That is why this product is so rich in polyunsaturated acids, which help normalize the activity of the cardiovascular and digestive systems.

Creamy-vegetable spread is used less often than other types of substitutes in dietetics, since its fat content significantly exceeds 50%. Sometimes the figure reaches 85.5%. This type of substitute is produced only by transesterification, due to which a large amount of trans fats is removed from the product. The creamy vegetable spread tastes a little sour. The consistency is noticeably harder than other types. The milk fat ratio in the product can reach 11%.

The creamy vegetable substitute contains many biological fibers, as well as pectin and inulin, which are extremely beneficial for the body. The first strengthens the ionic bond of metals, and the second normalizes digestion. Shelf life in the refrigerator is up to 3 months.

Calorie content of creamy vegetable spread

The energy value is determined by the amount of fat included in the substitute. Both vegetable and animal oils are taken into account. The ratio of these components is approximately 3 to 1. That is why this spread is a herbal product.

The substitute can have either 50% fat or 80%. The most common creamy vegetable spread contains about 72%. There are manufacturers that produce a product with a fat content of 85.5%.

The calorie content of this spread is from 900 kcal. Recommended for people with high blood lipid levels.

Benefits of creamy vegetable spread

This substitute is allowed to be included in the daily diet, as it helps normalize the functioning of almost all internal organs person.

Its main advantage is its low cholesterol content, which leads to the destruction of arterial walls (the result of the disease can be an ischemic stroke or myocardial infarction).

The creamy vegetable spread contains special fatty acids that improve the functioning of the central nervous system. It also contains a whole complex of vitamins such as A, D, E and K.

Alexander Gushchin

I can’t vouch for the taste, but it will be hot :)

Many people consider butter and spread to be homogeneous products, which is not true. Products differ in composition, beneficial and harmful properties, and effects on the body. Since 2004, GOST has meant that a spread is not an oil; the product is not included in this category, but has its own requirements for taste and appearance. A distinctive feature of the oil is the price (at least 200 rubles per package). The substitute costs two or three times less.

What is a spread

A food product based on milk and vegetable fats (from 39 to 95%) is called a spread. Translated from in English the word spread (read “spread”) means smearing or stretching. The product is not margarine or butter, since it is not made from natural cream, but based on fats. Additionally, flavorings, flavoring additives and vitamins are used to make the substitute.

Before the appearance of Russian GOST on July 1, 2004 “Refined spreads and mixtures. General technical conditions" (GOST R 52100-2003) the product was named together with the word oil: “light”, “soft” or “combined”, etc. With the adoption of GOST, the spread got its name, product category, which must be indicated on the packaging. This is the general name for all spreadable products (including mixtures of vegetables, cottage cheese or other products), the word "spread" is rarely used.

A quality product can be distinguished by its taste and appearance, which have certain requirements. According to GOST “Refined spreads and mixtures. General technical conditions" (R 52100-2003) spread oil must:

• be plastic, even when chilled, retain the property of being easy to spread on bread;
• have a color ranging from completely white to yellowish, glossy;
• have a slightly shiny, shiny, dry cut;
• be of uniform consistency;
• have a taste and smell of sweet cream, sour cream, creamy or the taste of aromatic additives;
• Milk and cream that have not passed a veterinary and sanitary examination and are not documented are not allowed for the production of spreads;
• the composition should not contain antioxidants: butyloxyanisole, tert-butylhydroquinone, butyloxytoluene, gallates.

Compound

The substitute consists of vegetable and milk fats (its type depends on their percentage: vegetable-creamy, vegetable-fat or creamy-vegetable). The chemical composition consists of saturated fatty acids (monounsaturated and polyunsaturated) and vitamin A, and does not contain cholesterol in large quantities. The composition of the ingredients consists of:

• milk fat;
• natural or modified vegetable oils: coconut and palm;
• milk or cream;
• food additives (preservatives, dyes, flavor enhancers) and antioxidants (E310-E313, E319-E321).

Kinds

The spread differs in the percentage of fat per product with a low (from 39 to 49.9%), medium (from 50 to 69.9%) or high (from 70 to 90%) percentage of fat content. There are three types of this product:

• Vegetable-creamy. A sweetish substitute for a creamy product (closer to it) with high nutritional and biological value. Its consistency is plastic, soft, and spreads well on bread. The product is combined in composition, so it includes: palm, coconut, soybean oils, emulsifiers, natural colors, flavors, sorbic acid. Fats make up up to 82% of the total nutritional value. Calories: less than 670 kcal per 100 grams. The shelf life of the product is within 120 days.
• Vegetable fat. The composition of this product substitute: fats of vegetable and animal origin, vitamins A, D, phytosterols, minerals and a small amount of butter. The latter indicator affects the fact that the product has almost no cholesterol. The substitute contains a minimum of calories: 360 kcal per 100 grams. A vegetable fat substitute for butter, spread, is used in the prevention of heart diseases associated with obesity.
• Creamy and vegetal. The composition is enriched with vegetable oils. The slightly sour solid product is rich in polyunsaturated acids, which help normalize the activity of the cardiovascular and digestive systems, biological fibers, pectin, and inulin. Fat content is up to 85.5%. Shelf life: up to 3 months in the refrigerator.

Benefit

A high-quality spread that complies with all GOST rules leads to improved health. The positive qualities of an oil substitute include:

• low calorie content;
• a small percentage of cholesterol (replaces a creamy product for people who monitor their indicators);
• high nutritional value;
• surrogate products can be included in meals when losing weight on a diet;
• the composition contains vitamins (E, D, A);
• the composition is rich in minerals;
• high-quality compositions are enriched with acids (Omega-6);
• the substitute improves health;
• regulation of digestion;
• slowing down the aging of the body;
• does not contain harmful preservatives;
• preventing diseases;
• has a long shelf life.

Harm

Negative consequences The spread is consumed if the product contains cholesterol, trans isomeric acids and trans fats (hydrogenated). Excessive consumption can lead to diabetes, problems with blood vessels and heart, infertility, Alzheimer's disease, oncology (in complex cases). Doctors strongly recommend consuming the product if the percentage of trans fats is no more than 8%.

Spread manufacturers solve this issue by replacing the oils with palm or coke oil, which do not contain dangerous fatty substances. Doctors focus on the content of sunflower and soy in the product, which pose a health hazard after processing. The composition of a safe product does not include these types of product. Substitutes obtained by enzymatic transesterification from several fats are recognized as harmless.

How is spread different from butter?

GOST states that the spread does not belong to the “butter” category. This is explained by the difference between them in a number of properties:

• Fats. Butter is made from natural fats ( percentage not less than 64%), spread – half consists of vegetable fats.
• Supplements The substitute can contain palm, coconut, and sunflower oils (together or one type). Saturated fats predominate in creamy products. In 2005, the WHO (World Health Organization) recommended reducing saturated fat to avoid the risk of heart disease.
• Method of production, corresponding indicator of trans fats. The production of the spread is based on hydrogenation, which eliminates or minimizes trans fats in the composition (this distinguishes the product from margarine). The permissible safe norm for the body is no more than 8% concentration. In a creamy product, trans fats occupy about 10% (excessive consumption, especially in summer, is prohibited).
• Calorie content. A distinctive feature in the store will be that the substitute is on average 100 kcal less in calories than the oil product.
• Package. The easiest way to understand what kind of food is on the counter. It must be indicated on the front or back side whether the product is an oil or a spread (often the word “butter” is indicated in large letters on the packaging, and “spread” on the back side in small font). For the latter, the variety is indicated on the packaging.

Video

Spread (English spread "spread") - the difference between the best prices for the purchase (ask) and sale (bid) of any asset (currency, shares, futures, options, etc.) at the same point in time on the stock market or currency exchange.

Buy cheaper - sell more expensive. This rule has been familiar to people since 687 BC. e. – the time of the appearance of the first gold money. Even then, clever merchants managed to pay less for goods.

They ground the coins in a circle, keeping some of the gold for themselves. And full-fledged banknotes were accepted from buyers. This is how the precious metal ended up in the pockets of traders. Over time, to protect the coins, their edges began to be jagged. This made it possible to recognize money with less weight by touch and stop fraud.

And although coins have not been minted from gold for a long time, the tradition of making the edge ribbed has been preserved. Just like the rule of buying and selling at different prices, which is actively used in the Forex market. The difference between the purchase and sale prices is called a spread.

Ask and Bid – learning the Forex alphabet

Before studying the spread in detail, you need to understand how it is formed. The Ask and Bid lines will help you with this. It looks like this on the graph (Figure 1).

Enlarge image

In the Forex market, there are two prices at the same time: supply and demand. The best price at which traders are willing to buy an asset is called Ask. And the one for which you can sell it is Bid.

And here lies the first trick of brokers: the Ask price is not reflected on the chart by default! Thanks to this, the trader successfully forgets about the price difference and... makes money. You can enable the line in the Properties tab (F8 – General – Show Ask line). (fig2)

Enlarge image

Let's look at an example. Trader Kolya wants to sell €1000, but there are no people in his town willing to buy the currency. A broker (intermediary company) gives him access to a huge market with thousands of buyers. And he offers to sell the euro for $1,175.

Meanwhile, elsewhere in the world, trader Petya wants to buy just €1000. And that same broker sells him currency to Colin for $1,221.

Broker's income: $1,221 – $1,175 = $46. This is the spread. Only it is measured not in currency, but in points. Why? We'll tell you further.

How the spread is measured - convert points into money

What is a clause? This is the change in the last digit of the quote. Note! There are 2 calculation systems: according to the old one, the quote can have 2 or 4 decimal places. For example, 108.57 for USD/JPY and 1.1987 for EUR/USD. And according to the new one - 3 or 5 digits (108.578 and 1.19878, respectively). A point is a change in the 2nd or 4th digit after the decimal point. (Fig.3)

Enlarge image

The size of the spread depends on the amount you are trading. The higher it is, the more deductions to the broker. Depending on the transaction amount, 1 spread point can be equal to $1, or maybe $1,000!

For example, when trading 1 lot, each point (that is, 0.0001) will be multiplied by 100,000. When entering the market with 2 lots - by 200,000 and so on. Therefore, if you calculate the spread incorrectly, you can lose your entire deposit. More on this below in the Leverage section.

Calculating the true size of the spread is difficult. After all, it depends on several conditions:

1. Spread type (fixed or floating). The fixed spread is equal to the number of points pre-agreed in the trader’s agreement with the broker. Floating – can change every second. The first one is better suited for trading on news and at night. And the second is for long-term transactions (for a week, a month, etc.).
2. Lot size. A lot is a portion that you trade. Standard 1 lot = $100,000 (99 of which are given by the broker under the terms of leverage 1:100). But no one prohibits the “diet regime”! You can trade 0.1 and even 0.01 lots (10,000 and 1,000, respectively).

Attention! The floating spread “for convenience” is indicated by 0,000 points. But this does not mean that commissions are not charged on the pair! This is a signal to clarify the current size further.

Leverage and spread calculation

And now about leverage. Entering Forex with a hundred bucks is an unrealistic idea. After all, central banks and corporations will not buy trillions bit by bit! The minimum transaction amount here is $100,000.

But what if 99% of traders do not have such free money? In this case, a broker – an intermediary company – is ready to lend its shoulder. And this is called “leverage” - credit. Its size can be 1:1, 1:10, 1:50 and even 1:500.

What does it mean? The broker adds the missing amount to your deposit to reach the required 100,000. And the number after the colon indicates how much the trader himself should invest.

For example, 1:100 means 1 lot (100,000) divided by 100. That is, you open a trade by investing $1,000 (100,000/100= 1,000). The broker adds another $99,000. You can already trade with this amount!

But don’t worry, out of the 99 thousand credit you won’t lose more than your deposit. As soon as the loss approaches the amount of the initial investment, Stop Out will work. And the broker will take his money. Got it? Now let's get back to calculating the spread.

Example: EUR/USD transaction (rate 1.1920), 1 lot (remember that this is $100,000). 1 point according to the terms of the transaction will be equal to: ($100,000*0.0001)/1.1920 = $8.4.

Where did the number 0.0001 come from? This designates 1 point in a four-digit quote (4 digits after the decimal point). 0.0001 – price movement step on the chart. For example, 1.1920 – 1.1921 – 1.1922, etc. Each time the amount changes by exactly 0.0001.

The spread for the euro/dollar pair at Forex brokers is 0.5–3 points. This is stated in the Contract Specifications sections on company websites. We multiply this number by $8.4 (the cost of a pip in our trade) and get $4.2–25.2.

Second example: USD/JPY (dollar/yen), also 1 lot, but at the rate of 110.65. 1 point here would be equal to ($100,000*0.01)/110.66 = $9. 1 point is indicated by the number 0.01, since the quote has 2, not 4 decimal places. The USD/JPY pair has a spread of 2–4 points. These are the numbers you will find in broker documents approved by the exchange. In our case, it’s $18–36.

You can compare spread sizes in points for different brokers using the following table.

Comparison of spread sizes for TOP brokers in points

– the spread size is not specified in the Contract Specifications;
* floating spread during the European session (10:00 – 17:00 Moscow time);
** floating spread, minimum value indicated;
*** fixed spread on a cent account.

Note! The floating spread can change significantly on the news and at night (increase by 10 - 15 times).

Insignificant amounts, you say? Yes, for assets with high liquidity (those that can be bought and sold well) it can be ignored. But there are only about 10 such assets! Their full list you will find below. And now it’s time for the third truth.

Liquidity comes first

What is liquidity? This is the ability of a product to sell and buy well.

Let's take an example from life:

Which car do you think will be more liquid on the secondary market, Hyundai Solaris or Porsche Cayenne? Answer: Solaris. Let's look at the process of selling both cars through the eyes of the seller. There are more Korean cars on the market than German ones. The price of a Hyundai is much lower, which means there will be an order of magnitude more buyers for this brand. In other words, if you had both brands and decided to sell them, then it would be easier for you to find a buyer for Solaris at the right price. Cayenne will be sold for a long time at the price you need. And to sell it faster, you will have to greatly reduce the price, which will be unprofitable.

Now let's look at the same example, but through the eyes of the buyer. Let's say you have 500,000 rubles. for a used Solaris for his wife and 2 million rubles. for a used Caen for your loved one. There will be 100 Solaris at this price, of which it will be easier for you to choose a car that is not damaged and technically sound. But there will be about 20 Caen at this price, but upon closer examination, many of them will disappear, since they will either be broken, or repairs will require considerable investment, in other words, it will be much more difficult to find an unkilled Caen.

On the Forex market, the equivalent of Solaris is the euro/dollar pair. Every 3rd trader in the world (37%) trades this asset. This means that it has high liquidity and brings regular income to the broker. Therefore, the spread here is minimal.

Unlike the USD/ZAR pair, which in Forex is the equivalent of Caen (dollar/South African rand). Have you heard of the rand before? Now imagine how often they buy it, even if the name of the currency doesn’t tell you anything. It is clear why the spread here is 80–250 points (taking into account the low exchange rate, this is $60–190 with a volume of 1 lot). However, liquidity depends not only on the type of asset! (Fig.4)

Enlarge image

Influential factors include time of day, holidays and news releases. Let's remember the Swiss franc, which collapsed during the New Year holidays! And let's talk about how the spread changes in different periods.

How to protect your deposit from spread jumps - 2 “golden rules”

Spread (even fixed) tends to expand. Your agreement with the broker always states that in cases of force majeure it may increase. This is exactly what happened to the Swiss franc in January 2015 due to the National Bank’s decision to stop cash injections to support the currency. Then the spread widened from 3 to 300 points in 1 hour and traders suffered enormous losses due to the execution of Stop Out.

And with a floating spread, jumps occur 90% more often than with a fixed spread. The gap between bid and ask widens:

• at night up to +50 points (especially from 21:00 to 00:00, until the Tokyo Stock Exchange is open);
• on holidays (liquidity drops due to the small number of players on the exchange);
• when important news is released (the ask price rises sharply, but the bid remains in place, or vice versa).

What follows from this?

Rule #1: If you want to win by using a lower floating spread, close trades before important news comes out. Here are some examples of such important news:

• Nonfarm every last Friday of the month,
• speeches by heads of central banks;
• presidential election results,
• decisions on joining/leaving the EU, etc.

Rule #2: always check the current spread. This can be done on the broker’s website or by installing a program that displays this parameter in the MetaTrader window.

The following video will help you consolidate your knowledge.

Spread or commission - 3 assets on which you can get rich or lose everything

Have you heard of zero spread accounts? Tempting stuff! Up close, everything turns out to be not so rosy, because the 0 spread points are compensated by the commission. And you pay the same amount, only it is called differently. But there are assets for which the commission and spread levels are strikingly different (you can save up to 50%):

1. USD/CAD (Canadian dollar): on accounts with zero spread the commission is 2 points, and on traditional ones the spread is 4.
2. XAG/USD (silver). This is the opposite option, when on accounts with zero spread the commission is 2 times higher than the traditional spread. Accordingly, the commission is 10 points versus 5 points of the spread.
3. BTC/RUB (bitcoin/ruble): commission – 0.1%, spread – 0.8%.

In what cases is commission also more profitable than spread?

1. If a trader trades pending orders. That is, it sets a condition to automatically open a deal when the price reaches a certain level. In this case, spread may cause the order to fail. For example, news is expected on the UK's exit from the EU. The trader assumes that the pound will fall against this background. But he knows that at such moments the servers are overloaded, and it is almost impossible to open an order. Or is at work, away from the computer. The way out of the situation is to trade on GBP/USD. According to it, if the price falls below 1.3398, a Sell order is opened. But there is still a spread of 8 points! And in fact, the trade will not open until GBP/USD reaches 1.3390. But the quote may not reach this level.
2. Pips traders (scalpers) also prefer commissions. After all, if a trader makes a profit of 3–5 points, paying 4 for a spread is simply not profitable for him! Whereas the commission will be equal to 1 point.
3. When trading intraday (when orders are not left overnight). Due to the spread, the price often does not reach the Take Profit or knocks down the Stop Loss. After all, this is a kind of “trailer” that the deal pulls behind it. But with the commission there is no such problem.

Dangerous and safe transactions - how spread can “eat” your deposit

In early 2016, Chris Davison conducted a formal study on the profitability of Forex trading. According to its results, only 30% of traders regularly earn money. And what an interesting coincidence! Only 30% of respondents check the spread size before opening a trade. Maybe there is a connection between these numbers?

TOP 10 assets with low spread

There are about 10 assets with a low spread size (up to 5 points). This:

• AUD/USD – Australian dollar (“aud”) against the US dollar;
• GBP/USD – British pound to dollar;
• EUR/CHF – euro/Swiss franc (“chief”);
• EUR/GBP – Euro/English pound sterling;
• EUR/JPY – euro/Japanese yen;
• EUR/USD – euro/US dollar;
• NZD/USD – New Zealand dollar (“kiwi”)/US dollar;
• USD/CAD – US dollar/Canadian dollar;
• USD/CHF – dollar/Swiss franc;
• USD/JPY – dollar/yen;
• XAG/USD – silver/dollar.

Usually, these tools are enough to guide profitable trading. But there are times when there is a reason to trade other assets!

Where can you get a $200 spread?

High performance spread is usually installed on exotic currency pairs. As well as gold, corporate shares and cross pairs (without US dollar).

Let's take gold as an example. Considering its growth by 8,500 points from August to September 2017, you can invest money in a purchase. But only if your deposit can withstand large drawdowns. After all, having opened a deal, you will immediately find yourself in the red from 18 to 80 points! This is exactly how much the spread is for different brokers. The slightest rollback, and Stop Loss or Stop Out (lack of funds in the account) takes away your savings. (Fig.5)

Enlarge image

Other assets with high spreads (10 points or more):

1. AUD/NZD – “audi”/“kiwi” (Australian dollar/New Zealand dollar);
2. GBP/AUD – British pound/Australian dollar;
3. GBP/CAD – pound/Canadian dollar;
4. GBP/CHF – pound/chief;
5. GBP/NZD – pound/New Zealand dollar (“kiwi”);
6. EUR/AUD – euro/Australian dollar (“audi”);
7. EUR/NZD – euro/kiwi;
8. EUR/PLN – euro/Polish zloty;
9. NZD/CAD – “kiwi”/Canadian dollar;
10. NZD/CHF – “kiwi”/Swiss franc (“chief”);
11. USD/MXN – US dollar/Mexican peso;
12. USD/PLN – US dollar/Polish zloty;
13. USD/RUB – US dollar/Russian ruble;
14. USD/ZAR – US dollar/South African rand.

Stop Loss and Take Profit - how to set the levels correctly

Spread affects the execution of Take Profit and Stop Loss. But before we figure out how, let's understand these concepts. (Figure 6)

Enlarge image

Take Profit – an order to close a transaction upon receipt of a certain profit. Why is it needed? The price movement on the chart resembles steps. She cannot go in one direction all the time and jumps up and down, forming a corridor. The boundaries of this corridor are called support and resistance lines. The quote for them goes out very rarely and immediately comes back.

Therefore, the trader always places Take Profit in front of these lines. This is necessary to take profits before the price pulls back. How does the spread affect order execution?

It prevents the order from being closed at the specified price, automatically delaying execution by several points. As a result, the chart jumps onto the resistance/support line and reverses. And the trader is left with nothing!

A similar situation is with Stop Loss is an order to close a trade with minimal losses. Only here execution occurs before the price reaches the line you set. Again, by several points equal to the spread size.

How to deal with this? Set the spread value when calculating Take Profit and Stop Loss. That is, set Stop Loss a little further, and Take Profit closer.

How spread affects trading strategy

Spread does not affect the trading strategy if it is tied to long-term transactions (weeks and months). Indeed, in this case the price goes up to 10,000 points. Against their background, the same 250 points of the spread are lost without causing damage to the deposit.

Conversely, this type of deduction can reduce the profitability of short-term trading to zero. It knocks down closely spaced Stop Loss, which is typical for scalping. It prevents you from making money on news and eats up your profits from night trading.

Therefore, scalpers, as well as traders who trade on the night shift, need to search for a long time for a broker with suitable conditions for the assets of interest. And carefully check the current spread values.

Rebate services - how to return up to 90% of the spread

The spread on Forex is one of those pitfalls that have caused more than one thousand deposits to crash. But it turns out you can also make money on it! How? By registering in Rebate services.

These are Internet companies that are ready to return to the trader part of the funds he spent on spread. Brokers themselves offer a similar service, but the percentage there is much lower (about 15%).

Why charge the spread first and then give it away? This is a multi-move game, like in chess. The broker takes a commission from the trader. Then he enters into a partnership agreement with a rebate service to attract new clients for money. Next, the Rebate service advertises its services, attracting people to the broker’s company, and receives its reward. He pays part of it as interest on the spread. Everyone is happy!

conclusions

Let's summarize:

• Spread is the difference between the purchase price and the sale price, or in other words, the difference on the chart between the Ask and Bid lines.
• If the Ask price is not reflected on the chart, then correct it in the terminal settings
• The spread is measured in points.
• To determine the spread, 2 calculation systems are used.
• The size of the spread depends on the amount you are trading. The higher it is, the more deductions to the broker.
• The spread can be fixed or floating.
• The minimum spread usually occurs for highly liquid assets, such as the euro/dollar pair.
• High spread indicators are usually set for exotic currency pairs.
• The size of the spread is also affected by the time of day, holidays and news releases.
• To protect yourself from spread spikes, always close trades before important news releases and regularly check the spread is up to date.
• The spread can be zero, but this does not always mean a benefit for the trader, because in this case the broker's commission comes into play.
• According to the study, only 30% of traders check the spread size before opening a trade.
• You can return part of the spread if you use rebate services.
• Spread influences the investor's trading strategy if it is based on scalping, cross pairs, gold or exotics.
• It reduces the likelihood of pending orders and Take Profit being triggered. And on the contrary, it increases the likelihood of hitting Stop Loss. Therefore, when setting these levels, include the spread size in them.

We hope our tips will help you avoid losses in the Forex market and make your trading strategy even more profitable. Like and don't forget to subscribe to new articles.

Video for dessert: Chic log lamp

Everyone paid attention to the fact that after opening a transaction, it immediately turns out to be in a slight minus. This is not fraud on the part of the broker or a malfunction of the terminal - it’s all due to the presence of a spread on the currency pair. Today we will understand what a spread is and how much it affects trading efficiency.

Press the button" , increase profits from your transactions.

All assets traded on stock markets, there are two cost options. These are two the best prices for which it is possible to purchase or sell an asset at the current moment. The first of them is put up by the seller, and the second, respectively, by the buyer. The liquidity of an asset, or in other words the trading volume, is influenced by the difference between the sale and purchase prices and is called the exchange or trading spread.

First of all, if interpreted literally, spread is the difference. In this case, the difference between the prices set for purchase and sale. Depending on the asset, they can differ by tens or hundreds of times. As a conditional example, we can consider the fact of how Gazprom shares are quoted, when the best selling price is set at 135.57 rubles, and the purchase price is 135.55 rubles. It is the difference of 2 kopecks that can be considered a spread. If we talk about another trading instrument with less liquidity, then the spread can be much higher and reach several rubles.

When making a transaction, the trader automatically receives a loss in the amount of the Forex spread. This happens because all assets are purchased at the cost offered by the selling party and, therefore, for a more prompt sale of the asset, it is necessary to take into account the prices of those who would like to purchase them, but these indicators will always be lower by the size of the spread.

Explore »

So, for example, in some cases you will have to wait for the moment when quotes increase by 0.5% with only one profit in the form of going to zero. To make a correct comparison of Forex spreads across different assets, it is preferable to use percentages rather than absolute numbers.

Spread in the terminal

To quickly and clearly understand what a spread is, it is best to contact directly trading terminal. This will help you clearly understand how it can be taken into account when conducting trading operations.

An example is a chart with the euro/dollar currency pair. The graph displays the current price. When you click the “Open new order” option, it becomes visible two prices and, accordingly, two possibilities: the price at which sale is possible (called “bid”), as well as the price at which purchase is possible (called “Ask”).

Click the button to go through a step-by-step guide to "Currency spread" and master this tool in a few simple steps Explore »

But why are there actually two prices, while only one is shown on the chart? The answer to this question can be illustrated very easily, drawing a parallel with a currency exchange office, where for each currency two prices are indicated: for purchase by the bank and for sale. Moreover, the price at which the bank purchases currency from the client is always slightly lower than the average cost, presented in the form of the official rate established by the Central Bank.

At the same time, the price at which the bank itself sells currency to clients is higher than the average rate. You probably already guessed that the bank receives its income from the difference established in this way. A similar situation exists in the Forex currency market. Thus, the margin between the two prices at which a currency is bought and sold is a spread. The spread of currency pairs is exactly what goes to the broker’s account as a commission.

Types of Forex stock spreads

Trading spreads can be one of two types: they can be floating or fixed. Fixed ones, for the most part, can be found in the Forex market, where the difference between the purchase and sale prices is set by brokers independently.

Click the button to go through a step-by-step guide to “Currency Spread” and master this tool in a few simple steps Explore »

In most other cases, a floating currency spread is almost always used, the size of which is determined based on the current situation on the market, as well as a particular asset. Moreover, even if at first glance its size is determined somewhat spontaneously by the participants, in fact, the exchange exercises very strict control. In particular, this is done by market makers, whose responsibilities include ensuring high liquidity of traded securities, as well as eliminating excessively large spreads. In some rare cases, when quotes move too quickly in one direction, a serious widening of the spread occurs, while the exchange has the right to stop trading in this instrument for a certain period of time.

The spread, considered in the context of the options market, represents two options positions - long and short. Both of them are based on the same securities. But there is also a situation in which there is a combination of a long position in one of the assets with a short position in another. Spreads of this type can be based on futures or stocks, as well as options. Thus, there are such categories of spreads as intermarket and intramarket.

Intermarket and intramarket spreads

Intramarket trading is characterized by the use of identical trading instruments or goods.

Click the button to go through a step-by-step guide to “Currency Spread” and master this tool in a few simple steps Explore »

For inter-market, the ability to work with two different markets is established. One of the most significant examples is T-bond and municipal bond market. Create a market this kind It is also possible using shares, provided there is a tendency for their simultaneous synchronous movement.

In some cases, the situation may develop in such a way that the differences in related markets are quite critical. This makes it possible to make good profits from trading markets against each other. The presence of inter-market relationships makes it possible to make a profit on the inter-index spread. In this case, there will be no need to predict the direction in which the stock market will move. The most important thing is the traceable relationship between the indices and their changes.

The size of the spread depends on the selected currency pair. Some pairs, due to their higher popularity, have a smaller spread, others, which are much less common and have less liquidity, have a larger spread. Each time a transaction is opened or closed, the broker writes profit to his account in the form of a spread, which can range from a fraction of a point to several points. When a client buys, the broker makes a profit when the trade is opened, and when he sells, the broker makes a profit when it closes.

Click the button to go through a step-by-step guide to “Currency Spread” and master this tool in a few simple steps Explore »

Buy and sell spread

When closing a transaction, part of the funds is always either lost or acquired by the client. At the same time, the broker earns his money already when the deal is opened. It is important to remember that selling occurs at the price displayed on the chart (equal to the bid price), and closing the position is carried out at the ask price.

How to take into account the spread when concluding transactions?

Take Profit and Stop Loss when buying

If you have the opportunity to set large stop losses and large take profits, the spread does not play a particularly important role and you can not pay too much attention to it. Because its share in this case is too small. When trading on daily charts and the presence of large takes and large stops, you may not notice the spread, since it is not capable of having any significant impact. But in intraday trading, when take profits reach not 100-200 points, as in the first case, but only 10-20, it turns out that the spread plays an important role.

If we talk about purchase transactions, then in general, the situation with them is much simpler. First of all, it is necessary to remember that the purchase is made at a price slightly higher than that shown on the chart. If there is a signal on the chart, the target is counted not from it, but from the moment (point) at which the purchase was made. In such a situation, when setting a take profit on purchases, you need to add the take profit and spread to the moment the signal appears. In the case of the EUR/USD pair, the spread will be extremely small and can often be ignored. For those pairs whose spread exceeds two or three points, they should be added to the take profit. The stop loss is also calculated from the moment the signal appears.

Click the button to go through a step-by-step guide to “Currency Spread” and master this tool in a few simple steps Explore »

Separately, it should be noted that when placing a pending order “Buy Stop”, the activation of the pending order will take place slightly earlier than the moment when the price reaches this point on the chart.

Take Profit and Stop Loss when selling

When selling, the trader benefits from a decrease in price, and in order to limit possible losses, he has to set a stop loss level. When concluding sell transactions, stop losses are activated slightly earlier than the moment when the price reaches this level. For what reason does this happen? The same principle applies here as with purchase orders. A purchase, and when a sale is closed, we are actually talking about a purchase; the ask price is taken to be a value slightly higher than the market value. This means that the stop loss is activated at the moment when there is a very small gap between it and the price. And the trader should take this into account if he does not want to include a sell stop loss due to the spread. To avoid this, when carrying out sales operations it is necessary to set a stop loss at a higher level.

The stop loss is added to the spread value and set slightly higher from 0.5 to 2-3 points, depending on the spread of the currency pair.

Click the button to go through a step-by-step guide to “Currency Spread” and master this tool in a few simple steps Explore »

How does the situation develop in the case of take profit? When selling, the take profit is set at a lower level than the market price level. Take profit activation in case of selling occurs below the line visible on the chart, since the closing price of the order is the ask and it is higher than the current price on the chart.

For an existing sale, the current price will be the price itself and the spread added to it. And at the moment the price reaches the specified line on the chart to begin activating the “sell” take profit, it will need to overcome another half a point. When placing a pending order to sell Stop Sell at a level lower than the currently available price, activation will occur when the price touches the level taking into account the spread.

Spread widening

IN certain conditions, namely, if you have an ECN account, it is possible to observe an expansion of the spread. For the most part, spreads are low, which undoubtedly has a positive effect on such accounts, but when news of an economic nature is published, the spread widens and a stop loss, take profit, or pending order is likely to be triggered, even though the price seems to be was quite far from him.