Managing and Minimizing your Spreads:

  • Trade only during the highest volume trading hours. For example, when more buyers and sellers are in the market that is when it is the most favorable time to trade. Competition for this business increases as the number of buyers and sellers for a given currency pair increases and Market- Makers are often able to narrow their spreads to capture it.
  • Avoid buying or selling thinly traded currencies. When you trade popular currencies, such as the GBP/USD pair, Market-Makers compete for your business. If you trade a thinly traded currency pair, there may be only a few market makers to accept the trade,and reflecting the lessened competition, they will maintain a wider spread.

How "Spreads Cost" is calculated using this formula:

(Spread) x (Pip Cost) x (Number of Lots Traded) = Spread Cost