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Standard Futures | FAQ on Spread
2023-04-26 11:22
1. What Is Spread
In BingX Standard Futures, spread refers to the gap between the buy price and the sell price of the same contract at the same time, or the discrepancy that may exist between the execution price B of your order and the market price A that you observe during the trading.
Spread is a normal part of the financial market at large, be it institutional investors and retail investors. BingX deeply understands that the transaction cost is a major consideration to users, therefore it has been seeking and partnering with top liquidity providers to enhance its market liquidity and deliver the best bid and offer prices.
Spread is a normal part of the financial market at large, be it institutional investors and retail investors. BingX deeply understands that the transaction cost is a major consideration to users, therefore it has been seeking and partnering with top liquidity providers to enhance its market liquidity and deliver the best bid and offer prices.
2. Why Does Spread Change
The spread is greatly influenced by the market liquidity and the rate of price movement.
In the event of a volatile market, liquidity stands out as a salient factor in trading, especially for institutional investors. If the market is highly liquid, it is easy to execute orders quickly without creating an impact on the current market price when the supply and demand change. The market participants can provide the best prices and the spread can be narrowed.
However, the spread will be widened in an extremely volatile market as the market depth and the efficiency of trade execution are impaired significantly, especially for small-cap assets with weaker liquidity. When market sentiments are dominated by panic and fear while the price fluctuates quickly, the market participants tend to trade more frequently and reduce their position size. The sellers judge that the price movement will get wilder, and considering the insufficient market depth, they tend to set the order price higher than the current quotation. Conversely, buyers tend to set the price lower than the current market price. Buyers (sellers) expect their orders to be filled at a lower (higher) price, and these orders push the bid and offer prices away from fair values, thus incurring a broadened spread.
In the event of a volatile market, liquidity stands out as a salient factor in trading, especially for institutional investors. If the market is highly liquid, it is easy to execute orders quickly without creating an impact on the current market price when the supply and demand change. The market participants can provide the best prices and the spread can be narrowed.
However, the spread will be widened in an extremely volatile market as the market depth and the efficiency of trade execution are impaired significantly, especially for small-cap assets with weaker liquidity. When market sentiments are dominated by panic and fear while the price fluctuates quickly, the market participants tend to trade more frequently and reduce their position size. The sellers judge that the price movement will get wilder, and considering the insufficient market depth, they tend to set the order price higher than the current quotation. Conversely, buyers tend to set the price lower than the current market price. Buyers (sellers) expect their orders to be filled at a lower (higher) price, and these orders push the bid and offer prices away from fair values, thus incurring a broadened spread.
3. Spread for Trading Pairs
Spread varies for different trading pairs in BingX Standard Futures based on their market activity. Generally speaking, the more liquid the pair, the lower the spread. As spread is updated in real-time, users can conveniently refer to the "Est. Filled Price" displayed on the trading page.
4. How to Minimize the Effect of Spread
1) Opt for assets with good liquidity
Typically, the more liquid the asset, the lower the spread.
2) Break large orders down into small ones
Instead of making a large order, try to break it down into smaller blocks. Keep a close eye on the order book to spread out your orders, making sure not to place orders that are larger than the available volume.
Typically, the more liquid the asset, the lower the spread.
2) Break large orders down into small ones
Instead of making a large order, try to break it down into smaller blocks. Keep a close eye on the order book to spread out your orders, making sure not to place orders that are larger than the available volume.
5. Spread on Innovative Assets
Innovative Assets include Forex, Indexes, Commodities and Stocks in Standard Futures, which can be traded with USDT as margin. For these varieties, the market price is based on the index price calculated with multiple professional market data sources from markets including IG Group, Bloomberg, and MT5.
Compared to conventional forex, stock or crypto markets, BingX's cross-market innovative assets have higher requirements for liquidity and the transaction cost provided by liquidity providers. Therefore, the spread for a certain asset that falls under Innovative Assets will be different from other assets and shall be subject to the market characteristics of the asset.
Special Note:
- Considering the market conditions and liquidity, if a user's positions are large (including opened positions and pending orders), the spread fee will be adjusted slightly and will be allocated to both sides. (Users with smaller positions are less affected or not affected.)
- Operations of position opening/closing and TP/SL need to consume market depth (especially high-frequency trading and large orders which require more depth). Thus, when the market depth is insufficient, orders will be traded at the actual price corresponding to the consumed market depth. The system does not guarantee that orders will be filled with the current mark price or the preset TP/ SL price.
- The spread between the orders placed by the trader and copiers will be adjusted according to the market depth consumed by the total position size of all copied orders under the same trader.
See also:
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BingX Official Website: https://bingx.com
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