What causes Spreads to change?

[e_abrams]

Market volatility. If you notice, during major fundamental events spreads become yawning.

 

[Petrichor]

Just wondering, I understand why the spread is changing all the time, which to my feeling it's normal to see it always changing. But why would broker choose fixed spread? Are the brokers who are offering fixed spread less legit or it doesn't make any difference?

 

[cashisking]

Just wondering, I understand why the spread is changing all the time, which to my feeling it's normal to see it always changing. But why would broker choose fixed spread? Are the brokers who are offering fixed spread less legit or it doesn't make any difference?

It does make a difference. Fixed spreads are mostly offered by brokers who operate as a market maker and have a dealing desk. These brokers first buy large positions from their liquidity providers and then sell smaller parts to retail traders which helps them to keep spread rates constant irrespective of the market conditions. Market makers have a reputation of acting as a counterparty to their clients’ and you should try to avoid them.

 

[rickfx]

Just wondering, I understand why the spread is changing all the time, which to my feeling it's normal to see it always changing. But why would broker choose fixed spread? Are the brokers who are offering fixed spread less legit or it doesn't make any difference?

I've never seen or heard of it... it's either fixed or variable spreads.
Wonder which broker switches from fixed to variable ones and then back.

 

[no_frame]

Spreads change as rates from the LPs change and eventually bid - ask price changes to match exact buyer and seller or vice-versa by the service provider.

 

[sharabela]

I

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

It mainly depends on market's liquidity. If there is a massive news event, we see spread gets changed. It is because big news events make traders close their running trades and entering new trades. It causes the price movement with good momentum. Thus, price quotes gets changed as well.

 

[sunar14]

Market volatility. If you notice, during major fundamental events spreads become yawning.

Yes high speads should be avoided and the rule of thumb is to avoid times of increase market volatility, mainly during news releases.

 

[e_abrams]

Yes, that was my point too. There are plenty of places that provide economic calendars for the current trading week, make a habit of checking one every week, several times a week.

 

[Glossy]

Brokers usually write most of the information on their website, before trading, all information must be read.