What to choose – fixed or floating spread?
The eternal question of all traders: how to choose a spread - fixed or floating, is always relevant. Each type of spread has its own advantages and disadvantages. Before you choose the type of spread, it is necessary to set a trading style and strategy used.
Popularity floating spread has increased significantly in recent years. Agree, spreads from 0.2 points are very attractive. This type of spread is for those traders who are important minimum possible spread. Especially floating spread important for scalpers and fans of intra-day trading, when the time of the transaction is limited to the price momentum, and we need to work as quickly as possible spread and get a plus before price reverses. The main disadvantage of the floating spread lies in the fact that during the news, sharp price impulses and at night can significantly expand the spread, which makes the trade at that time unprofitable. As explained brokers spread expansion is due to the lack of liquidity.
If you are trading on the news, you can not do without a fixed spread. Of course, it is more floating spread, but its main advantage is that it does not extend more than the declared value of the broker. In addition, in some settings, counselors need to prescribe the exact size of the spread, so if there is a floating spread, they either do not work or the algorithm of their trade will be disturbed, which eventually affect profitability. The disadvantage of a fixed spread is that it can not be used during the scalping.
How to choose a spread - fixed or floating?
We have led the main arguments in favor of both types of spread, and what to choose a fixed or floating spread - you decide. One thing is certain, if you are trading on the daily charts, you can choose any type of spread, since it has little impact on trade. We can also recommend a broker with low spreads.