Spread vs commission?

calleen · #1 (**permalink**) 03-27-2006, 02:47 PM

Is a spread another name for a brokers commission?

Sorry if my questions are dumb but I'm looking into this.

Calleen

Florida Jake · #2 (**permalink**) 03-27-2006, 03:03 PM

A spread is the difference between income and cost so yeah you can read it that way.

feline · #3 (**permalink**) 07-05-2006, 10:47 AM

What about another trading term - pip - what is this?

brian · #4 (**permalink**) 07-11-2006, 12:20 PM

Here you go:

Quote:

The smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point - for most pairs this is the equivalent of 1/100 of one percent, or one basis point.

Investopedia Says: For example, the smallest move the USD/CAD currency pair can make is $0.0001, or one basis point. The smallest move in a currency does not always need to be equal to one basis point, but this is generally the case with most currency pairs.

daytrader · #5 (**permalink**) 03-07-2007, 11:58 PM

Both above definitions are correct. Pips are the basis on which forex operates, while the spread is similar to the spread in any equities market.

financeguy · #6 (**permalink**) 03-08-2007, 01:45 AM

Right. The bid/ask spread on Forex is the same thing as the bid/ask spread in equities trading. So really, there are no true commissions.

FX_scholar · #7 (**permalink**) 08-06-2007, 05:09 PM

The spread between the bid and ask varies among FCM's and brokers. Depending on your trading volume you can get better (tighter) spreads if you request based on your trade size and frequency. The actual spread is the cost of doing business and providing you the service to trade online. So you can call this the equivalent of the brokers commission.