Hi All,
IT IS REALLY CONCERNING!!
Is it only for me or for everyone the spread in stocks below 20 price range is almost like 0.25 to 0.30 cents.
So when you shorting over 500 stocks worth 10 euros say you pay 25 to 30 euros.
and say when they odds are against you and you wana get of the trade you still play again 25 to 30 euros before you come out.
It is almost certainly difficult for you to make a trade without paying a significant amount to trading 212.
I think Trading 212 team should look into this matter and try to reduce the spread.
P.S when u trade penny stocks you enter the trade already in a highly negative value and you need to hope that market value doubles to pay back trading212 and lock in your profits.
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Usually the case with penny stocks with low liquidity. They’ll have huge spreads and you’ll need them to perform better just to breakeven
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Some people think it shouldn’t be like it is but it do.
The spread is determined by stock price, volume, and volatility and will change. So keep an eye on it.
You’ll notice after hours or pre market when there is low volume, the spread is higher. This is because the stock is illiquid and harder to convert to cash and thus the broker wants more of a fee for this risk.
Likewise, the more volatile the stock, the higher the spread because people are willing to pay anything to profit off the wild swings. Brokers can charge a premium price here knowing people will pay.
Stocks with a low price are not as heavily traded so not as easily converted to cash. Therefore the broker will have a higher spread to manage the risk.
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Thanks for the detailed explanation.
That’s so true in my case I had shorted nio at 10.50$ I hope NIO dips lower on Monday to break even.
Also noticed this. For example FCEL has a pretty high volume. Also traded in Frankfurt a lot, however the spread is so high, it is insane to open a position. Not suitable for day trading at all.
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