Spread Indicator

DEFINITION of 'Spread Indicator'

An indicator that shows the difference between the bid and ask price of a security, currency or asset. The spread indicator is typically used in a chart to graphically represent the spread at a glance, and is a popular tool among forex traders. The indicator, displayed as a curve, shows the direction of the spread as it relates to the bid and ask price. Usually, highly liquid currency pairs have lower spreads.

BREAKING DOWN 'Spread Indicator'

Spreads are calculated metrics that often requires that a trader manually determine the difference between bid and ask prices. For traders trying to capture small fluctuations in the spread, determining the spread requires handling quotes with a large number following the decimal. As a result, the spread indicator fluctuates over a very narrow range.

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RELATED FAQS
  1. What types of stocks have a large difference between bid and ask prices?

    Find out which factors influence bid-ask spread width. Learn why some stocks have large spreads between bid and ask prices, ... Read Answer >>
  2. What does the variance between the bid and ask price of a stock mean?

    Find out how stocks are traded in the market, why the bid and ask prices are different and why the bid-ask spread is smallest ... Read Answer >>
  3. What are some examples of financial spread betting?

    Learn how financial spread betting is done, and see examples of some of the ways that investors can use spread betting as ... Read Answer >>
  4. What's the difference between bid-ask spread and bid-ask bounce?

    Understand the difference between the bid-ask spread that determines the buy or sell price for a stock and a bid-ask bounce, ... Read Answer >>
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