WHAT IS SPREAD

What Is A Spread?

The spread is the differe

nce between the Bid and

the Ask price of a given currency pair. The Ask is the p

rice you pay to buy an

d the Bid is the price at which you sell a currency pair.

CMS Forex charges no commissions, and as a market maker may make

some of its revenue from the Bid/Ask spread.

GTL offers Forex spreads based on the type of different Accounts. All forex products ar

e commission-free and no interest is charged on overn

ight positions. This table represents the available Forex instruments: their name, the s

ymbol by which they are represented, and

the categories in which these spreads are offere

d, mainly divided into as low as for Exclusive customer base, regular spreads and our

institutional spreads.

When spreads in th

e underlying marke

t are narrow, we pass this on to you with our tightest possible spreads. If spreads in the u

nderlying market

become unusually wide (more than 1.5 times our typical spread), our spreads will match this move, but only up to a max

imum spread – our cap. In this way we protect you against the widest market spreads.

CMS Forex offers 2 Pip fixed spreads on EUR/

USD and USD/JPY , our most popular currency pairs. Competitive spreads lower you

r transaction costs per trade and may make it easie

r to open and close individual positions closer to

your target price.

On March 8, 20

09, CMS Forex began offering variable spreads on certain non-major curr

ency pairs. CMS Forex strives to provide our cus

tomers with the most competitive trading terms an

d the best trading environment we can offer. In fact,

most of the pairs affected by this change in spread start at a variable price below the l

evel at which they were fixed, enabling our clie

nts to potentially trade at an even better spread than what was offered before.

Fractional Pip Pricing

Most major currency pairs are quoted to four decimal places, so a pip would typically equal .0001 or one basis point. Forex Brokers generally round the price up or down to the nearest pip; but some now offer Fractional Pip-Pricing. It ads an additional decimal place, so spreads are usually tighter and more accurate.

Scalping the Market

Many traders favor short-term scalping strategies, which involves placing orders inside the spread. For scalping to be profitable for the client, the market maker must lose, so some Forex Brokers disallow the strategy. This strategy involves a high level of risk.

1^ST

spread is the difference between the ask price (the price you buy at) and the bid price (the price you sell at) quoted in pips. If the quote between EUR/USD at a given moment is 1.2222/4, then the spread is 2 pips. If the quote is 1.22225/40, then the spread is 1.5 pips.

2^ND

it is how brokers make money. Wider spreads result in a higher ask price and a lower bid price. As a consequence, you pay more when you buy and get less when you sell, making it more difficult to realize a profit

Brokers don't typically earn the full spread, especially when they hedge client positions. The spread compensates the market maker for taking on risk from the time it executes a client trade to when the broker's net exposure is hedged (possibly at a different price).