About: In the Forex world, there are two types of spreads offered by Forex Brokers towards their traders. This means that they can trade wither on a Fixed spread or Variable spread only. There are many traders that will decide to open an account with a specific Broker only because of the spread type that the Broker offers. - The Forex Brokers that offer Fixed Spreads are those that the spread for the currency pairs remains always the same no matter the market movements or the available liquidity. So despite the current liquidity of a specific currency pair, that may be affected by news releases, the spread for the said currency pair will remain fixed at all times. There are many traders who look for a fixed spread trading because it can be easier to execute a specific trading strategy. Moreover, there is a number of different Expert Advisors (EAS) that perform better in a Fixed spread environment compare to Floating. Lastly, traders tend to choose a Fixed spread Forex Broker rather than a Floating spread in order to avoid the risk of spread widening. The spread widening may cause a Stop Loss activation or even a stop out on the traders’ account. - For the Forex Brokers that offer Fixed spreads they usually widen the spread a bit comparing to Brokers that offer Floating spreads. It will also be safe to assume that Brokers with Fixed spreads are more likely working in a Market Making model given that the liquidity is provided by the Broker and not from an ECN environment. - On the other side, Brokers that offer Floating spreads tend to offer better (lower) spreads comparing to the Brokers with Fixed spreads. However, they can easily widen during news releases and thus will result on offering higher spread to those withFixed spreads. Nevertheless, floating spreads Brokers tend to be a better destination for Forex trading for the type of traders that use scalping strategies or EAs that work better with tight spreads. In general it is safe to assume that in normal trading hours without any news releases it is more likely to receive a better spread from a Broker that offers floating spreads.
