What are the spreads?
Whilst there is no definitive answer to this question, there are certain things to be aware of when it comes to spreads on your trading platform.
The spread is the name generally given to the difference between the buying price and the selling price of an instrument or asset.
For example: if the GBPJPY pair has a selling price of 1.08440 and the buying price is 1.08445 then the spread on this instrument is 0.5 (or half a pip).
During quiet periods in the market, known as illiquidity, brokers may increase the spread to counteract the reduced amount of orders they receive. This tends to happen around the rollover periods, when a market is due to close soon, or just before large economic news releases.
Spreads will tighten again once orders begin to increase in frequency.
Please Note that whilst FTUK has chosen three trading platforms with low spreads in mind, we are not able to change the spreads ourselves in realtime. This is entirely dependent on the market conditions.
Slippage occurs when the price at which your order is executed does not match the price at which you sent it. In some cases this can be quite a difference, and can see profits lost in just a split second.
Use pending orders. Stop and limit orders can be a great way to avoid slippage. They act as a preset agreement between you and your platform - trades will only execute when the requested price is met, instead of the closest available price.
Avoid gambling on the news. When a big news release is announced (think Non-Farm Payroll or Interest Rate Decisions), there is often so much market volatility in the moment, that sometimes entire accounts can be wiped out due to slippage alone.
Stick to instruments you are familiar with. Normally trade FOREX or Gold? Stick with these. Jumping over to something like Crypto or an unfamiliar exotic pair means you will be unaccustomed to the way the market reacts. It could catch you out if there is an unexpected volatitlity spike.
Avoid illiquid markets. Unless you are experienced in them, markets such as exotic currencies or precious metals can have long periods of inactivity followed by surges of weakness or strength. Enter the market at the wrong time and the slippage combined with increased spreads could hurt you.
What are spreads?
The spread is the name generally given to the difference between the buying price and the selling price of an instrument or asset.
For example: if the GBPJPY pair has a selling price of 1.08440 and the buying price is 1.08445 then the spread on this instrument is 0.5 (or half a pip).
Why do spreads move?
During quiet periods in the market, known as illiquidity, brokers may increase the spread to counteract the reduced amount of orders they receive. This tends to happen around the rollover periods, when a market is due to close soon, or just before large economic news releases.
Spreads will tighten again once orders begin to increase in frequency.
Please Note that whilst FTUK has chosen three trading platforms with low spreads in mind, we are not able to change the spreads ourselves in realtime. This is entirely dependent on the market conditions.
What is slippage and how can I avoid this?
Slippage occurs when the price at which your order is executed does not match the price at which you sent it. In some cases this can be quite a difference, and can see profits lost in just a split second.
Although slippage is an inevitable part of trading, there are several ways to protect your account from the likelihood of this occuring:
Use pending orders. Stop and limit orders can be a great way to avoid slippage. They act as a preset agreement between you and your platform - trades will only execute when the requested price is met, instead of the closest available price.
Avoid gambling on the news. When a big news release is announced (think Non-Farm Payroll or Interest Rate Decisions), there is often so much market volatility in the moment, that sometimes entire accounts can be wiped out due to slippage alone.
Stick to instruments you are familiar with. Normally trade FOREX or Gold? Stick with these. Jumping over to something like Crypto or an unfamiliar exotic pair means you will be unaccustomed to the way the market reacts. It could catch you out if there is an unexpected volatitlity spike.
Avoid illiquid markets. Unless you are experienced in them, markets such as exotic currencies or precious metals can have long periods of inactivity followed by surges of weakness or strength. Enter the market at the wrong time and the slippage combined with increased spreads could hurt you.
Updated on: 16/08/2024