Ali Hashemifar

Fixed or Variable Spread Broker?: an Empirical Analysis of Spread for Two Types of Forex Brokers Ali Hashemifar

There are many FOREX brokers in the market and it makes the decision of choosing the right broker very difficult. For traders, the spread between buy and sell price is one of the most important factors to minimise the cost of exchange. There are two different main types of brokers in terms of bid-ask spread. Some offer fixed spread and others offer variable spread for exchange of currency pairs. Now, the big question is: Which one is better? There has been uncertainty among traders whether fixed spread or variable spread brokers offer the lower bid-ask spread and as a result the lower cost of transaction. This book makes an empirical analysis of spread for these two types of brokers. Additionally, liquidity features of currency pairs have a significant role in exchange of currency; That is, traders can turn the more liquid currency pairs into cash easier. Therefore, it is a good idea to know which currency pair is the most liquid.