GBP spreads?
does anyone have an explanation or a theory why on average spot cables spread is twice that of usd/yen. from what ive read they both have about the same volume and it seems to me little difference in volatility
The liquidity on the cable pairs is not terribly different than any other of the majors. In fact, it's one of the most liquid. What you have to realize is that you are most likely trading on a deal desk platform. You have to understand that these brokers have to make money. Brokerages are businesses. The real true spread in the markets is much tighter, but deal desks widen the bids and asks and make their profit hiding your "commission" into the spread. This is fine, as long as you are aware of it.
If you are looking for tighter spreads on these pairs, try looking into some of the ECNs. Hotspot, EFX Group, etc. I wish there were more names I could give you. I work for an ECN brokerage, so if I can help answer any questions, feel free to email me.
I have heard that Oanda has the tightest spreads out of the deal desks.
On the flip side, be aware that if you chose an ECN, they make money too, in the form of a commission. For example, my group charges a commission of $5/100 K USD traded. For a GBP-based pair, since it takes twice as many USD to purchase/sell 100K worth of GBP, it will cost you $10 USD per standard contract (thus making is $20/round turn, or roughly 2 pips in and out combined) If you do the math, most times you will come out ahead, since most platforms charge minimum 2 pips on these pairs.
It's all about how comfortable you are.
Good luck trading!
Andy Geller
