Spreads are often mentioned by traders, but most do not know the actual monetary value of the spreads that they pay.
Using the gold example, if the bid and ask price of gold are 1920.10 and 1920.30 respectively, the spread is 20 cents.
1 standard lot traded on gold = 20 cents x 100 ounces (contract size)
= 20 USD in spreads
Table 1: Gold’s (XAUUSD) average spreads on Alchemy Market’s VIP account as of January 2022
Table 2: A snapshot of Alchemy Markets’ gold live spread during Asian session on 14 June 2022.
Alchemy Markets’s gold spreads averaged at 10.37 cents during the New York session, which is some of the tightest gold spreads in the industry. In fact, I am looking at 4 cents spreads on Gold right now during the Asia session, and that is super impressive considering that the markets have been relatively volatile recently and the Asia session typically has lower liquidity for gold pairs.
Good to know:
Spreads are variable depending on market conditions and they increase when markets are volatile and when there is thinner liquidity.
Alchemy Markets works with more than 20 Banks and Non-bank LPs. This helps ensure that there is more than enough liquidity and tight raw spreads available for our clients at all times.
Another thing before we finish part 2, if you see a broker offering fixed spreads, chances are they are a market maker because there is no such thing as fixed spreads in the real interbank market.
Let’s move on to the final part- Part 3 – Slippage
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