Which is your preference, fixed or variable spread?

Bid-ask spreads have two types. The first one is the fixed spread, and the other one is the variable spread, also known as the floating spread. Dealing desk brokers (DD brokers), who are also called the market makers, are the ones who usually offer fixed spreads. In contrast, the No dealing desk forex brokers (NDD brokers) are the ones who typically offer the variable spreads. NDD brokers are further subdivided into two classifications which are STP (straight-through processing) and the ECN + STP (electronic communications network + straight-through processing) brokers.

Which is a better spread between the two? It is actually not a question of which is better among the two because trading with a fixed spread is not better than trading with a variable spread and vice versa. We might as well need to change our question to: What type of trader are you, and what is your trading style or technique?. The better spread will always depend on the needs of the trader. If a trader has a tight budget and only trades seldom, then a fixed spread may be suggested. If a trader prefers large positions and trades frequently, especially at peak hours, we may suggest trading with variable spreads.

For those looking for further insight about variable spread, check out related article on The Difference of Bid and Ask Price Always Changes in Variable Spreads.