Forex trading is the exchange of one currency for another, with the aim of making a profit from the fluctuations in the exchange rates. One of the most important factors that affect the profitability of forex trading is the spread.
The spread is the difference between the bid and the ask price of a currency pair. The bid price is the price at which you can sell a currency, and the ask price is the price at which you can buy a currency. The spread is usually measured in pips, which are the smallest units of price movement in the forex market.
For example, if the EUR/USD pair has a bid price of 1.2100 and an ask price of 1.2102, the spread is 2 pips. This means that you will pay 2 pips more than the market price to buy the EUR/USD pair, and you will receive 2 pips less than the market price to sell the EUR/USD pair.
Why are live forex spreads important?
Live forex spreads are important because they affect the cost of trading and the potential profit or loss of your trades. The lower the spread, the less you have to pay to enter and exit a trade, and the more you can keep from your profits. The higher the spread, the more you have to pay to enter and exit a trade, and the less you can keep from your profits.
Live forex spreads also reflect the liquidity and volatility of the market. Liquidity is the availability of buyers and sellers in the market, and volatility is the degree of price movement in the market. The higher the liquidity and the lower the volatility, the tighter the spreads. The lower the liquidity and the higher the volatility, the wider the spreads.
How to find live forex spreads?
There are several ways to find live forex spreads, depending on the type of forex broker you use and the platform you trade on. Some of the most common ways are:
- Broker’s website: Many forex brokers display their live spreads on their website, usually on a dedicated page or a widget. You can check the live spreads of different currency pairs and compare them with other brokers.
- Trading platform: Most forex brokers offer a trading platform, either web-based or downloadable, where you can access the live quotes and charts of various currency pairs. You can see the live bid and ask prices and the spread of each pair on the platform.
- Third-party websites: There are also some third-party websites that provide live forex spreads from different brokers, such as Myfxbook or Forex Factory. You can use these websites to compare the live spreads of different brokers and currency pairs.
How to use live forex spreads to your advantage?
Using live forex spreads to your advantage can help you improve your trading performance and reduce your trading costs. Here are some tips on how to use live forex spreads to your advantage:
- Choose a low-spread broker: One of the easiest ways to use live forex spreads to your advantage is to choose a forex broker that offers low spreads on the currency pairs you trade. This can save you a lot of money in the long run, as you will pay less for each trade and keep more of your profits.
- Trade during liquid and stable market hours: Another way to use live forex spreads to your advantage is to trade during the market hours when the liquidity and stability are high, and the spreads are tight. This can reduce the risk of slippage and wideningspikes, and increase the accuracy of your entries and exits. The most liquid and stable market hours are usually during the overlap of the major trading sessions, such as the London-New York session or the Tokyo-London session.
- Avoid trading during news events and market gaps: A final way to use live forex spreads to your advantage is to avoid trading during news events and market gaps, when the liquidity and volatility are low and high, respectively, and the spreads are wide. This can prevent you from getting caught in unfavorable price movements and paying excessive spreads. You can use an economic calendar or a news feed to stay updated on the upcoming news events and market gaps.