Benefits of floating spread
What kind of spread is more profitable - fixed or floating? Issue that concerns many traders, and the topic of active discussions on Forex. In this section you will find a detailed answer that dots all the i's.
By definition:
Fixed Spread is a constant price difference between Ask and Bid which is artificially maintained by the broker.
Floating spread is a real spread of the interbank Forex market with an accuracy of 5 decimal places.
In practice:
Fixed spreads are always overstated, as it is established by broker who wants to capitalize on it. There are many cases when the broker adds more than 100% to the spread of the interbank market and traders overpay such broker very considerable sums of money. Moreover, valid execution of orders with repeated requests (requotes) works on such accounts, which spoils the life of a trader and brings additional costs.
Floating spread operates on the real interbank market and many times less than fixed one. When working on the terms of the floating spread, the total costs are always lower for trader than when working on a fixed spread.
Order execution is operated by NDD technology without broker interference on accounts with floating spread. That is why such orders are processed on Market Execution at the current market price with no requotes. This work scheme with Forex broker is more convenient and beneficial for all types of traders.
ECN broker, which is
FBS, - is a broker with floating spread, which is connected to an electronic trading network Forex ECN. ECN network automatically selects the best price among many participants, and the broker gets the lowest spread. Order execution ECN NDD STP occurs instantly.