Spread Definition – What is Spread? | CFI LB

spread

The spread is one of the most common and most important terms used when discussing trading terminology. The spread is the difference between the sell (bid) and the buy (offer) prices of a financial instrument like currency pairs, indices, equities, and commodities.

 

The spread for financial instruments can be impacted by a range of factors, including:

  • [liquidity] - meaning how much demand there is for an asset and how easily it can be bought or sold. As the liquidity of an asset increases, the spread for a product usually diminishes.
  • [volume] - meaning the quantity of an asset that is traded. Products that have high trading volumes tend to have tighter spreads.
  • [volatility] - is a representation of how much a market price changes in a set period. When markets are very volatile, prices can change very quickly and spreads could increase.

 

Key takeaways:

  • The spread is the difference between the sell (bid) and the buy (offer) prices.
  • When markets are very volatile, prices can change very quickly and spreads could increase.
  • As the liquidity of an asset increases, the spread for a product usually reduces.
CFI Financial Group is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
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CFI provides execution-only services and does not provide any investment advice. To make an investment decision, you cannot rely on the content of this website, or on any information, opinion, report or other materials (“Information”) you receive from CFI, or its representatives. Such Information is general and does not consider your objectives and your financial situation, thus they shall not be considered in any way as an express or implied promise nor a guarantee of any profit or limit of loss. CFI shall not bear any liability in case you used or relied on such Information. Please ensure that you make your own research and seek independent advice if necessary.

Forex and CFDs are leveraged products that incur a high level of risk. A small adverse market movement may expose the client to lose the entire invested capital. The majority of retail client accounts lose money when trading in CFDs. Please be aware of trading risks and that you could sustain a loss exceeding your deposited funds, even if a stop loss is used.

CFI Lebanon is regulated by the Banque du Liban and the Capital Markets Authority

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