help on this question about spread

[dhsdoor]

Could anyone please, provide some information as to why is a spread on a US stock sometimes much wider than that of a UK stock?
thanks,
dhsdoor

 

[Trader333]

It will be down to the volume of those wishing to buy against the volume of those wishing to sell at any given time. Stocks that do more than 1 Million a day generally have lower spreads than those who only do 100K a day. Check the volume of the stocks you were looking at.


Paul

 

[Rhody Trader]

Also, anticipated volatility will cause a spread increase. If there's an earnings announcement pending, for example, the spread could widen out as the market makers try to protect themselves.

 

[dhsdoor]

It will be down to the volume of those wishing to buy against the volume of those wishing to sell at any given time. Stocks that do more than 1 Million a day generally have lower spreads than those who only do 100K a day. Check the volume of the stocks you were looking at.


Paul

Thank you, Paul for the information. I was also thinking that it was somehow related to volume, but was not quite sure about it.

cesar

 

[dhsdoor]

Also, anticipated volatility will cause a spread increase. If there's an earnings announcement pending, for example, the spread could widen out as the market makers try to protect themselves.

Thank you, John for the information. It does make sense to view it that way. It seems that, as you said, volatility and also volume are two of the main reasons for the larger spreads.

cesar