The spread of security refers to the difference between its Buy (ask) and Sell (bid) prices.
The spread may be set as 'Floating', in which case it can fluctuate throughout the day depending on market conditions such as volatility and liquidity. Alternatively, for some instruments, the spread may be set as 'Fixed', which means it will remain constant regardless of market conditions. Currently, all CFD instruments on our platform have their spread set as 'Floating'.
Larger shares, currencies, and commodities typically have a very tight spread as they are highly liquid markets. Conversely, instruments such as small-cap stocks with small free floats that don't trade much will have lower liquidity and, consequently, a wider spread.
N.B. The spread of an instrument may widen during times of thinner liquidity and high volatility, such as during market opening or during large-scale corporate news or geopolitical events. In the event of a spread widening, the result of an already open position with the instrument will worsen as it is calculated according to the opposite quote of the price responsible for the opening of the position (the Sell quote for long positions and the Buy quote for short positions). In some cases, this may lead to the position’s closure due to insufficient funds.
Note: You can check the average spread for a given instrument within a predefined period of time on our Trading Instruments page 👉 here.