Spreads

When trading financial assets, brokers will give you two different prices for a currency pair. These prices are referred to as the bid and ask prices. The bid is the price you can sell the base currency, while the ask is the price you can buy the same currency. The difference between these two prices is known as the spread. Another term for the Forex spread is the ‘bid/ask spread.’

Brokers make money when they offer trading services to traders and investors. Usually, when a broker doesn’t charge any commissions on your trades, it implies that they are making money from the spreads. The broker buys an asset from you at a lower price and sells it back to you or other traders at a higher price. Traders should ensure that their trades move above the spread amount if they intend to make money from trading financial assets. Trades within or below the spread range mean that you are not making any money (or even losing money). A market’s spread is expressed by using the last large digit of the price quote. For instance, if the buy price for the EUR/USD currency pair is 1.2190 and the selling price is 1.2186, the spread is 0.4.

Most brokerage platforms don’t charge commissions instead, they make money via spreads. At PanaceaCapitals, we do not charge any commissions on your trades, and we offer narrow or tight spreads to ensure that you can make more profits on your trades.