Wide broker Spreads

I was wondering is anybody else hesitating to enter trades due to the extremely wide spreads this week. GBPUSD for example:

Oanda 6
Interactive Brokers 5
Advanced Markets 6.9
FXCM 4

These are just the brokers who I have accounts with.

Well I actually felt like the spreads has fallen since October. I’ve been looking for a good broker these past months and I think they have tightened. However, I found something interesting about brokers some brokers and the spreads they offer.

http://staxylouis.wordpress.com/2008...ory-marketing/

In order to provide you with tight spreads like some brokers are advertising everywhere; they must control expenses such as support services. The tighter the spread the broker offers, the better it is for you. If a broker is offering a spread as low as 1 pip, be cautious. As most of the brokers do not charge a commission, it’s the spread what they use to make their money.

For example, FXCM or ACMarkets have been offering spreads as low as 1 pip. the screen shows a tight spread, but your trade is filled a few pips to your disadvantage or is mysteriously get rejected. This shows that your broker is displaying tight spreads but is effectively delivering wider spreads. It means that your broker is showing tight spreads but in effect delivering wider spreads.

http://www.forexfactory.com/showthre...44#post2426344

It's all relative though isn't it? The markets have never been this volatile. I can't even remember what a range looks like. It is definitely something to consider, and out of principle I will not trade GBPUSD if it is more than 7 pips (which it has been on occasion with MB) but paying a couple of extra pips when these pairs are swinging wildly for hundreds, even thousands of pips should not put you off trading altogether. The market is ripe for picking so seize the opportunity whilst it is there. I very much doubt they'll be this mad in a years time.

Depending on your trading style, you must select the forex broker. If you trade only or primarily on news announcements -when markets tend to be volatile- you may choose a forex broker with low spreads, provided the execution is good. But I agree spreads are only meaningful when they are supported with good execution. It really sucks, when you find a tight spread, but your trade is filled a few pips in the wrong direction, or your transaction is rejected, you are in trouble.

How many large orders do you think are being filled a few days before Christmas?

It comes down to it being an illiquid market.

For example, FXCM or ACMarkets have been offering spreads as low as 1 pip. the screen shows a tight spread, but your trade is filled a few pips to your disadvantage or is mysteriously get rejected. This shows that your broker is displaying tight spreads but is effectively delivering wider spreads. It means that your broker is showing tight spreads but in effect delivering wider spreads.

http://www.forexfactory.com/showthre...44#post2426344[/quote]

What FXCM is does is great. They will show you a low spread but good luck getting it. With their roving spreads, it is nothing but a rip off to you. About a month ago I went long on EUR/CAD, felt lucky to get in at 8 pip spread & then watched it get stopped out as their spread widened to 50 pips. Then it moved right along to where I thought it would go. FXCM daily close on that day was 48 pips lower than FXDD where I also took the trade that turned out positive. When I emailed them about this they just claimed market volitily, that spread is what the banks were charging at the time.
Leason learned for me.

I have an account with FXCM, Oanda and FreshForex, The spreads in FXCM are Low, Oanda Spreads are low, and GBPUSD Spreads on FreshForex are lower. If you have ECN account with any of this broker, you're safe.