As what I have mentioned in my previous article: Forex Pip and Spread-Synonym of Forex Broker’s Commissions, all brokers are able to benefit from spread. As they can affect the return of your Forex trading in a big way, Forex traders really need to fix a watchful eye on them. Spreads can vary based on the currencies you’re trading and what type of account you open. Most brokers will be offering different spreads for different currencies. The spreads will vary depending on the types of accounts. A mini account may have higher spreads than a full contract account.
It is important to realize that as the spread is the difference between bid prices and ask prices as determined by the free market they are not always guaranteed. So with a fluctuating market when the spreads widen, you will be charged with that wider spread. Spreads are tighter when there is good market liquidity but it will widen as liquidity dries up.
Forex spreads are only meaningful when they are supported with good execution. For example, when you find a tight spread, but your trade is filled a few pips in the wrong direction, or your transaction is rejected, you are in trouble.
It means that your broker is showing tight spreads but in effect delivering wider spreads. Be aware of such rejected trades, and delayed execution, which are strategies to deceive the traders.
In other words, the lower the spread your Forex broker provides the more opportunities you would have to benefit from your trading. Moreover, fix Forex spread can secure profitability to a large extent.
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