Spreads

Jun 2017

Spreads are the difference between the sell and the buy price. With other words, the bid and the ask price. Spreads are really important when calculating the trading fees.

Brokers can do one of the two fee settings:

  1. pass through the market spread, and tell their commissions, or with other words, markups
  2. provide straight away their own spread which includes their fees

The stock brokers, like Interactive Brokers or Saxo Bank, use market spreads at most assets. It means they use the market bid and ask price, i.e. don't incorporate their fees into spreads. However, they apply commissions. This method is considered more transparent.

The CFD brokers, like eToro or Plus500, quote a final spread and incorporate their fees into them. On the other hand, they usually don't apply commissions.

Back

Share

Comments