UNDERSTANDING A HIGH SPREAD AND A LOW SPREAD

It's important to note that the FX spread can vary over the course of the day, ranging between a 'high spread' and a 'low spread'.

This is because the spread can be influenced by multiple factors like volatility or liquidity. You will notice that some currency pairs, like emerging market currency pairs, have a greater spread than major currency pairs. Your major currency pairs trade in higher volumes compared to emerging market currencies, and higher trade volumes tend to lead to lower spreads under normal conditions.

Additionally, it's well known that liquidity can dry up and spreads can widen in the lead up to major news events and in between trading sessions.

The Lowest Spread Forex Brokers:

FOREX.com
Pepperstone
IG Markets
FXTM

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Why do spreads widen?

When you place a trade, you are effectively taking on the broker as they assume the risk and are the ones who will pay you out if your trade is profitable. When markets are specifically volatile and it's completely unclear as to which way the market will go and by how much, brokers are obtaining more risk by accepting trades. This is because a market is more likely to make a greater move, which could lose the broker a lot of money. So, to counter this risk, a broker might widen the spread.

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