Compare Forex brokers and accounts with fixed spreads, whatever the market conditions. Make the most of market volatility.
As a trader, you can choose between brokers with fixed and variable spreads. This article discusses the pros and cons of trading Forex on fixed spreads.
The spread is the difference between the buy and the sell price of a currency pair at a point in time. If your broker quotes EUR/USD at 1.5602/05, this translates into a 3 pip spread.
News events, data releases or the start of a new trading session can move the markets in a big way. This creates opportunities to profit from price jumps. However, it can also catch you off guard as spreads often widen substantially around those times.
A broker with fixed spreads will shield you from wild swings in spreads. This will work in your favour if you plan to trade around news events, data releases or simply day trade. If you're new to Forex trading, you'll find that fixed spreads provide a more predictable trading environment and help mitigate risks as you learn the ropes.
However, fixed spreads mean you're likely to pay wider spreads under normal market conditions. In other words, you'll pay for certainty of pricing during volatile market conditions in the form of marginally wider spreads at all other times.
For example, you could pay between anywhere between 1 and 2 pips for EUR/STP with an STP broker on variable spreads. And if you can afford to invest a large deposit upfront, you could trade EUR/USD from 0 pips with an ECN broker on a commission basis
In short, fixed spreads provide a more predicatble trading environment albeit at a premium. This could work for you if you plan to trade in volatile market conditions or value piece of mind of you learn the basics of Forex trading.
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