It is difficult for a novice to succeed in any business, and Forex trading is no exception. To navigate and not get lost at the start, a trader needs to understand all the details about exchange services, tools, and indicators. For example, what is a spread, which brokers give a profitable spread, and why is it worth choosing the right one for successful trading?
DotBig Exchange is focused on investors with different levels of initial capital and investment skills.
DotBig cooperates with leading providers of trading signals and trading software. The company is a universal intermediary for working on the traditional currency, crypto, commodity, and stock markets. It is confirmed by flexible trading conditions that are suitable for various investment strategies – from scalping to algorithmic trading.
Why Does a Trader Need a Broker?
Trading will not work without the help of a broker. The fact is that the broker acts as a link, an intermediary between the seller and the buyer of the asset. Thus, it is impossible to make a deal without the participation of a broker.
Intermediaries are used in trading on stock, currency, and commodity markets. That is, if a novice trader wants to access one of the above markets, he will have to use broker services.
And now, it is crucial to get things of spread as it is a crucial element of Forex trading.
Trading Spread: Intro
Stock trading presupposes the presence of many offers that become the basis for making the quotations of a particular asset. The range between them can be completely different. Its calculation becomes the basis of the concept of “spread”.
Thus, the spread is the basis of trading, its first indicator.
By this term, in trading, it is customary to understand the difference between the best price for buying an asset and selling it.
Most often, the concept of spread is used to characterize prices or profitability. However, it also may have the following differences between:
- The purchase and sale price of an asset.
- The price of an asset now and after a certain period.
- The price of very similar (in terms of their characteristics) assets. For example, the cost of Brent oil is about WTI.
- The yields of securities of different issuers.
The most common type of spread is the difference between categories such as supply and demand, that is, the price of supply and demand.
Types of Exchange Spread
Spreads show not only the difference between prices. Traders can earn profits on spreads or consider them in trading strategies.
Fixed and floating spread
There is a fixed spread in the Forex market. For example, the DotBig Forex broker can independently determine the size of the spread. As a rule, trading platforms specify the size of the spread in the contract specifications. The fixed spread does not change over time. In the Forex market, it is determined in points.
Floating spreads exist on both exchanges and Forex. They are provided by market makers. If there is no market maker, then the spread depends on the actions of other exchange participants. The floating spread varies depending on the activity of sellers and buyers.
Inter-market and intra-market spread.
The inter-market spread is the difference between the prices of the same asset in different markets or exchanges.
The intra-market spread is the difference between the prices of correlated or interrelated assets in the same market or exchange. In the stock and futures markets, intra-market spreads show the difference between related assets, such as common and preferred shares of the same issuer.
Buying and selling
The difference between buying occurs when an investor buys securities using a market order since the transaction is made at the best available seller’s price.
The difference between the sale occurs when an investor sells securities on a market order since the transaction is made at the best price available to the buyer.
What Is the Best Spread for a Trader?
The smaller the exchange spread, the higher the liquidity of fast and the more attractive it is for online trading.
A widespread means that it causes low liquidity and low trading volume. Thus, wide spreads are not particularly popular in the market. Therefore, a large spread should alert the trader.
But at the same time, there are many trading strategies designed specifically for the large difference between the purchase and sale prices. And the bigger the difference, the higher the profit you can get.
The final decision on whether to make transactions with assets with a wide spread remains with the trader. It all depends on a particular trading strategy and trading goals.
Why Does DotBit Provide the Best Trading Conditions?
When choosing an intermediary in the financial markets, it is crucial to determine your trading goals and trading style. Comparing large brokers, it is worth considering the size of leverage, the speed of order execution, and the size of the spread. Some brokers are focused on active trading, while others provide more advantages for passive investing.
DotBig site is an international company providing investors with online trading access. The platform offers clients a convenient toolkit for trading with valuable assets. Here you can trade Forex, work with stocks, and cryptocurrencies, and carry out portfolio and venture investments.
DotBig has a user-friendly and intuitive interface, available in various languages. For those who have just started learning online trading, educational materials and a reference section are available on DotBig. Experienced traders can trade Forex here, and buy and sell stocks, cryptocurrencies, and other assets.
If you are aiming for more than just passive investing, pay attention to a versatile broker such as the DotBig trading platform. In addition to the copy trading service, this company also offers professional MetaTrader trading terminals, branded web terminals, and mobile versions of platforms.
In addition, DotBig provides optimal conditions for scalping. Traders who trade using this strategy can open hundreds of short positions per day. For such high-frequency trading to be successful, the DotBig broker meets the requirements:
- instant execution of orders;
- floating spread;
- no restrictions on the time during which the transaction remains open.
To start trading with a broker, pass registration and top up your balance. The exchange supports numerous financial gateways. At the moment, a deposit and withdrawal is available here:
Transfer via Bank, Visa/MasterCard/Maestro, Transferwise, PayPal, Qiwi, Webmoney, YooMoney, and cryptocurrencies. And yes, DotBig provides spreads starting from 0 points.
Also, among the advantages of DotBig broker for beginners is the opportunity to trade under the guidance of an experienced analyst.