5 Answers
<p>In the foreign exchange market, transactions are not performed on all positions. Therefore, to assess specific trades, the concept of spread is used, which, in fact, reflects the liquidity of a given market. The greater the difference between the buy (ask) and sell (bid) prices of a currency, the lower the market liquidity. In the sense that it will be very difficult to sell this position quickly and profitably.</p>
4 Views
<p>In spread trading you open two trades simultaneously on two correlated markets, but with different volatility (e.g. Treasury 30Yrs-T-Note 10Yrs), and in this situation you’ll need a very high and positive average trade because you’ll have to make two trades at time, and this means that you’ll pay two times commissions and two times slippage. So, you need a bigger time horizon and stay in position for more time so that the strategy has more time to develop its profits.</p>
3 Views
<p>If you open and close them on the same day, yes, they do. If you open a spread and buy back one leg in one day, that is also a day trade. Very often I can achieve a great profit on a spread opening and closing it in one day, and if so and I am not under a day trading restriction, I will happily do so. You must ask your broker whether opening and closing the spread on one day is a single day trade or two day trades.</p>
2 Views
<p>I think that the very fact that you ask such a question clearly points to the fact that you are a novice trader. I think that you have read a lot of scary stories online about spreads that widen to a mile and as a result poor traders don’t have an opportunity to enter the market. Of course, people exaggerate this problem, thus making newbies worry. In reality, the problem is not so big.</p>
1 View
<p>I think it’s hard to give a direct answer to your question. Volatility is the thing we can’t control. Market makers can make it stronger or weaker. They have power to control volatility and in turn it increases or decreases spreads on various assets. However, it’s not difficult to memorize when you can face increased volatility. As a rule, it occurs when the market is awaiting crucial news, during the news release and certainly after it. During this time spreads can widen. It occurs with many brokers and here I mean those who offer floating spreads. You know today most …</p>
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