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The ‘spread’ is the difference between the bid and offer prices quoted by brokers to traders. The width of the spread is a commercial decision for each broker, and it can differ significantly from broker to broker.

A trader can buy at the higher offer price and sell at the lower bid price. If the trader bought and sold a market instantaneously, without any movement in the underlying market price, they would have a bit less money in their trading account. In CFD trading, that money has gone to the market making broker, or if the trade is hedged, the wider market. This cost of spread will not show up as a fee or commission in the trader’s account, but it is normally the main cost to trade.

For regular traders, the total spread cost adds up, as the Spread Saver tool demonstrates. What looks like a small difference in a bid-offer price, when traded frequently over long periods of time, can add up to be a significant cost to the trader. 

All things being equal, the ‘tighter’ the spread the less it costs the trader to trade.  

The large majority of brokers provide access to the financial markets via a variable spread offering. This means the broker can widen its bid-offer spread to any level at its discretion. 

This normally happens during periods of heightened uncertainty in the underlying market, like over news releases, periods of light liquidity or if unexpected events occur. The risk to the trader is twofold, a spike in spreads might trigger orders, and the cost in spread to close a trade might be significantly higher than anticipated when entering the trade.  

When traders open a trade, they will know the spread between the bid and offer prices. If it is too wide (expensive), they can always decide not to trade. However, when traders are already in a trade and looking to close they do not have this option, this is when the methodology of how the broker quotes its spreads can matter.  

At Trade Nation with a TN Trader account, we insulate our traders from this risk by offering fixed spreads on index, FX and commodity markets, meaning the cost to enter and exit a trade is known before being placed.

The increased transparency provided by offering access to financial markets with fixed spreads allows traders to trade with added confidence in periods of uncertainty.

You can spread trade on our powerful in-house platform TN Trader or TradingView, and trade CFDs on the MetaTrader 4 (MT4) platform.

Unlike many other platforms, we don’t ask for a minimum deposit. As long as you have enough funds to cover the margin requirements of your trade, you’re good to go.

We’re regulated by the Financial Conduct Authority.