The spread is used as an indicator to test the liquidity of the market. Generally alower spread means greater liquidity.
As for the forex market, the spread measures the difference between the bid andask price which is practically the agreement on the broker's commission.
And 'well to specify that the broker does not alter the spread in the short term,although the contract could change the magnitude of the spread. In almost all casesthe value of the spread in forex online platforms, remains the one indicated.
Before you start trading it is important to know the spread of the broker as it represents the cost of each operation. In the forex spread is the only cost on the transaction, the broker is in fact the gain calculated on the difference between the value of the bid and the dell'ask.
It 's important to consider not only the spread as a transaction cost, but must also take into account the difference between bid and ask in closing the transaction.
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The Beginner's Guide to Online Stock Trading
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