Hello hivers, welcome to my blog, Trust y'all are having a good week.
Today,I was just home alone and decided to go through my Metatrader 4. I was careful enough to observe the difference in the spreads in each currency pair. Spread from my observation is the difference between the BID price and the ASK price. Many of you would be wondering what BID price and ASK price is.
BID price is known as the price that the buyer are willing and ready to buy while the ASK price is the price the sellers are willing to Sell.
N/B: The buyers and sellers in this forex are not necessarily humans, it's the market in this case. That is the buyers buy from the market and the Sellers sells to the market.So, as I said earlier, Spread is the difference between the bid price and ask price. It is also known as the payment we make to the broker anytime we place trades, meaning it's the profit of the brokers.
Although, the profits gained by the brokers is very small because it's calculated in Pips.However, Spread do varies because of the different trading sessions and this affects the market. When the market is very volatile and many markets are open at the same time,the spread is always small and it's of a very great advantage of trading when many markets are open.
Also when only one market is open, or the volatility is very low, the spread becomes bigger and when ever you place a trade in this kind of times when the spread is bigger, your trade will not trigger or get into profit from the supposed point where it was supposed to because of the spread. So yes Spread does affect trading.
Thanks for reading.