Fixed spread vs Floating spread
Look-alike pair
Full entries: Fixed spread · Floating spread.
Fixed spread and floating spread differ in whether the quoted bid-ask gap stays constant or moves with the market. A fixed spread is set by the broker and does not change under normal conditions, while a floating spread varies continuously according to liquidity and volatility. This single difference determines how you experience trading costs and execution.
Side by side
| Fixed spread | Floating spread | |
|---|---|---|
| Definition | A bid-ask spread that remains constant, typically set by the broker. | A bid-ask spread that changes in real time based on market conditions. |
| Determinant | Broker's fixed markup or policy. | Supply and demand, liquidity, and volatility in the underlying market. |
| Behavior in volatility | Stays the same during news releases or volatile periods. | Widens sharply during high volatility or illiquid times. |
| Typical context | Often offered on certain account types or instruments, but availability varies by broker and country. | Common in markets with variable liquidity, such as forex or CFDs, though specifics vary by broker and regulator. |
| Field mark | The spread shown in the platform does not change when market conditions shift. | The spread shown in the platform fluctuates tick by tick. |
| Cost predictability | Known in advance, simplifying cost calculation. | Uncertain, requiring monitoring and potentially affecting trade outcomes. |
Which word to use
Fixed spread is the right term when the spread is guaranteed to stay constant under the broker's terms; floating spread is correct when the spread is determined by the market and can change at any moment.
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