What determines spreads?

Discussion in 'Forex' started by Kubinec, Apr 22, 2010.

  1. Kubinec


    I'm not talking about fixed spreads by dealers, but variable spreads on ECNs.

    I've noticed that on most pairs, even though the spreads widen and narrow every 5-10 secs, most currencies usually have that "average" spread that they trade around.

    For instance, 1 pip on Euro.
    2 pips for Cable.

    Who/what determines what the average spreads are on each pair?
  2. market depth and the availability to find orders within close promiximity to pending market orders.. and limit orders as the limit orders supply liquidity that the market orders eat.