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Forex spread in Forex Trading Market in Urdu

How the Broker Makes Money 

Forex spread is the source of income of the brokers by which they makes money in Forex Trading Market as we now each time you place the order broker will charge the “Spread”, When you open a trade you will automatically be down the number of pips that the broker is charging for the spread, If the Forex spread is 2 pips, when you open a trade, you will be at a loss of 2 pips and that 2 pips will be calculating according to your contract size for example  if you place 1 standard lot trade so you have to pay $20 to your broker.

Spread in Forex in urdu
Spread in Forex in urdu

Fixed Spread

Fixed Spread are those  which is mostly provided by Dealing Desk (DD) Brokers means fix in 2 or 3 even 15 pips  and No matter what time you trade, the spread will always be the same. Each currency Pair has a different Spread they can range from 1 pip to 15 pips. With fixed spreads, you always know what will be  paying.

Variable  Forex Spread

It changes from second to second. This change in spread has to do with the liquidity of providers at the time. These brokers get feeds from all of them and the best prices go to you. may be one question in mind which is better one either Fixed or Variable so it is depend on your broker choice mean which one you are choosing example DD or NDD or  even in NDD may be ECN, STP, or DMA.

Bid  / Ask  Difference

The difference between Bid price and Ask price is known as a Forex Spread. Every Forex broker has 2 set of prices. One set of prices if you want to buy into a position and another one if you want to sell into a position. Basically, the Bank( Or broker or fund Manager) has to be opposite side of your trade If you Buy, they have to Sell. If you Sell, they have to Buy.

 

About Muhammad Shahid Memon

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