What is a spread?
Similar to any other type of online brokerage, AvaTrade gains a certain amount from the trades that are conducted with taking advantage of the spreads. A spread is a difference between the purchasing and the selling price of a commodity. They are the characteristic of every AvaTrade account variations and one should be knowledgeable about spreads when starting the trading activity.
Due to the tendency of traders to complain that AvaTrade spreads can be complex to deal with below are guidelines on how to properly conduct trading and get familiar with how spreads should be implemented to fulfill your profit needs.
First, we will look at the different types of spreads
Type of Spreads with Avatrade
Avatrade gives you spreads that differ based on the commodity you are utilizing in the trade and the type of account under implementation. There are different accounts that a broker can open depending on the capital and the preference or rather the type of trading you want to trade with.
Variable and Fixed Spread
Most of the brokers will give their traders the variable and the fixed spreads but this is solely dependent on the commodity you are trading with and the type of account underuse. AvaTrade is slightly different when it comes to offering these spreads. It gives fixed spreads to traders only but the confusing part is that they do not give the variable spreads because the fixed spread is not always fixed entirely.
When dealing with the forex exchange market the AvaTrade spread can be said to be fixed but on other fields. The spread is calculated using a fixed rate. If the value of the commodity increases then the spread increases too and when the asset’s value decreases then the spread is affected.
The instance explained above can happen in some situations but there are some when a mark-up is utilized. The difference is that in this situation the current cost of the commodity is not considered.
Spread on instruments
The AvaTrade spread changes naturally based on the commodities that you are practicing the trade with. The good part about using Avatrade is that they give the trader a chance to trade using different types of commodities from Indices, bonds, equities, Forex, cryptocurrencies, and ETFs.
It comprises a wide selection of markets giving the Avatrade market its own spread to use based on preference. The most commonly used spread is the fixed spread that applies to all markets from CFD, bond to indices market. But in cryptocurrency and CFD trading a fixed percentage is utilized. Similarly to the mark-up which can be used in most markets.
The spread can be affected by time for instance in oils and metal spreads which get wide from 10 pm to 2 am,10 pm-5 am.
Spread on accounts
Similarly to the instrument spreads, the spread here also changes based on the type of account. Avatrade is a regulated body in five continents due to this the boy has been divided into two major regions which include:
- The EU
- The international
The spreads utilized in the EU are also found in the international account.