Spread Indicator

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Atlantic Spread

    An options trading strategy that involves purchasing both an ...
  2. Trade Signal

    A sign, usually based on technical indicators, that it is a good ...
  3. Indicator

    Statistics used to measure current conditions as well as to forecast ...
  4. Forex - FX

    The market in which currencies are traded. The forex market is ...
  5. Quote

    1. The last price at which a security or commodity traded, meaning ...
  6. Spread

    1. The difference between the bid and the ask price of a security ...
Related Articles
  1. Principal Trading and Agency Trading
    Investing Basics

    Principal Trading and Agency Trading

  2. A Primer On The Forex Market
    Options & Futures

    A Primer On The Forex Market

  3. The Basics Of The Bid-Ask Spread
    Investing Basics

    The Basics Of The Bid-Ask Spread

  4. Top 7 Questions About Currency Trading ...
    Forex Education

    Top 7 Questions About Currency Trading ...

comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center