Bid-Ask Price Help

Fergi

Recruit
Messages
1
Hi Everyone

Total Noob here just trying to better understand a few things. I've did some reading to try and find and answer but all the different terms for certain happenings can be a bit overwhelming. Came across this platform so decided to screen recorded the issue at hand and ask for help.

I've noticed that my bid / ask price on AUXUSD and T100.Imax is never consistent in the spreads . Almost always tight when in profit and wide when in loss. Is this what is know as Floating Spread? Please see vids attached. ( Broker IFX).

Thank you kindly
 

bigdolly

2nd Lieutenant
Messages
1,009
Hi Everyone

Total Noob here just trying to better understand a few things. I've did some reading to try and find and answer but all the different terms for certain happenings can be a bit overwhelming. Came across this platform so decided to screen recorded the issue at hand and ask for help.

I've noticed that my bid / ask price on AUXUSD and T100.Imax is never consistent in the spreads . Almost always tight when in profit and wide when in loss. Is this what is know as Floating Spread? Please see vids attached. ( Broker IFX).

Thank you kindly
Spread is a kind of a tool for a market maker (liquidity provider). When the crowd goes excessively on one of the side (all rush to sell or all rush to buy) it is a risk for the market maker to remain on the wrong side of the market (accumulate wrong inventory - which price continues to depreciate). To deter traders from piling into this direction the market maker increases transaction costs - lowers bid when all rush to sell or hikes ask price when all rush to buy. Both decisions widens bid/ask spreads.

Bid/ask spreads depends heavily on current supply and demand, order book, etc.
 
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