If you know spread betting, you’ll know that tighter spreads mean better value. A tighter spread means that the market does not have to move as far before you can make a profit, so we think this is better value.
Warning: Trading spot forex, CFDs, options, and spread bets is risky and not suitable for everyone. All of these products (excluding Binary CFDs and Binary Spread
Bets) are leveraged, and you can lose more than your initial deposit. Don’t trade more than you can afford to lose.
Fixed or variable FX spreads?
The difference between the buy and sell prices for any given market is effectively your cost of trading that market. We aim to keep the spreads for all our markets consistently low, to give you the best value service.
Many companies offer spreads “from” 1 point or “variable” spreads that change throughout the day.
In the case of companies who offer variable spreads, you can expect a spread that will, at times, be as low as 0.8 points but then sometimes as high as five points, depending on the instrument being traded and the level of market volatility.
Fixed or Variable? What’s best for your trading strategy?
As with all aspects of trading, it is advisable to do your homework and research the best price out there.
There are both benefits and pitfalls of trading with variable spreads. Some companies quote a headline “from a minimum of…” which at first glance may seem like a good deal. However it is worth comparing this minimum spread against their average spread; the average will in all likelihood give a truer indication of the spread you will see when you come to trade. This is because variable spreads will widen and fluctuate throughout the course of the trading day.
We also know that our clients are only interested in the spread at the time that they make their trade, an average for the day is often irrelevant. So we give you fixed spreads, all day, every day.
Depending on your trading strategy, variable spreads may suit you in quieter market times whereas fixed spreads may be much more advantageous during volatile market conditions.
Example of fixed spreads vs. variable spreads
EUR/USD is trading at 1.3162 – 1.3163
Trader A and Trader B both believe that the euro will strengthen against the US dollar and both buy £10 a point on EUR/USD at 1.3163.
Trader A buys £10 a point at 1.3163.
As these traders expected, the EUR/USD price rises to 1.3170 – 1.3171 and sells £10 at 1.3170.
Trader A makes £70 in profit.
However, Trader B places his bet with another company’s variable spreads and when EUR/USD has risen they find that the new higher price is quoted with a wider spread, for example 1.3169 – 1.3192. When Trader B sells £10 to close at 1.3169 the profit is only £60.
Don’t just take our word for it – compare our tight fixed spreads with our competitors and see for yourself.
*Throughout 2012 our spreads have been fixed 100% of the time during trading hours
Spread Betting & CFD trading carry a high level of risk to your capital and you can lose more than your initial deposit.
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