What causes Spreads to change?

[Zalea]

Spreads usually vary due to the liquidity and the upcoming economic events which causes volatility in the market. As at the time of major data releases like interest rate decisions, inflation rates, etc. volatility in the market increase, hence spreads widen.

 

[Jotori]

Next time when you see change in spreads, try to check if there were some release of important fundamentals. Usually during time of high volatility, brokers are changing spreads in order to price the risk

 

[vicjon1995]

The global financial news and the changing volatility causes the spread to change.

 

[Oswald]

In general, higher volatility imply higher spreads, because risk is increased during these times. Now, why volatility is changed, well, there could be many reasons, depending on a currency and general developments over it

 

[Petrick Liman]

Spreads depend on liquidity and this is it)))

 

[Resolve]

Spreads depend on liquidity and this is it)))

When we are trading then if the amount of market orders become to high then the spreads will also change so as to accommodate the sudden influx of orders.

 

[danielbro]

One word: Volatility

 

[Resolve]

One word: Volatility

Many times it will happen that we are seeing a spike or big movements in the markets and this is because of a big news release that has a High Impact in the markets.

 

[Akwin]

Good day, after months of reading and learning , I can tell you that the spreads changes due to volatility, for example when you have a high spread this means you have high volatility or low liquidity. Don't hesitate to ask for more details. All respect to you.

 

[hk_09]

Market volatility is the major cause, and that can happen because of any major/minor events. We traders just have tobe ready to face all of those at any time.

 

[e_abrams]

You took the words right out of my mouth. The main reason for spread increasing is volatility.

 

[Resolve]

You took the words right out of my mouth. The main reason for spread increasing is volatility.

To contain the spreads we must make use of the Fixed spreads trading accounts in doing our trades.

 

[e_abrams]

I have never paid much attention to that part - are fixed spreads a popular offer among brokers?

 

[e_abrams]

They would, important economic news cause a lot of market volatility, which affects spreads.

 

[forexking]

Higher the volatility, higher will be the spread. Occurrence of major events across the strong economies of the world also lead to higher spread.

 

[reecerispoli1]

Dear Friends,I m kind of confused to what would cause spreads to change second by second,My broker offers both the fixed and variable spreads but would trigger the variable spreads to change with time? I would appreciate any help

spreads change due to quotes from the other traders

 

[kathleenaustin]

Spread fluctuations are a result of market volatility.

 

[JoshEvansFX]

I recommend that you use an ECN broker instead, one such as ICMarkets etc.

 

[Fried_Rice]

Yep, market Volatility

 

[no_frame]

Market volatility influences the forex spread which then causes fluctuation. Major economic indicators also cause a currency pair to strengthen or weaken, which directly affects the spread. If the market is volatile, the currency pair becomes less liquid, and hence the spread widens.