Spreads are a key factor in forex trading. Spreads can be defined as the difference in the ask and bid prices for a currency pair. They can have a major impact on your overall profits and losses.

As with all things in trading, there is no free lunch. Lower spreads are often associated with higher fees and less liquidity.

There are still things you can do to reduce your risk if you want to trade with low spreads. These are our top tips.

1. Shop around to find the best deal. One broker may offer low spreads, but that doesn’t necessarily mean they are the best. Before making a final decision, compare the spreads of different brokers.

2) Use a limit order. Limit orders allow you to specify the maximum price you are willing to pay and the minimum price you will sell at. This protects you against sudden market spikes that could cause your spreads not to shrink.

Stop-loss orders should be used wisely. A stop-loss or order to sell or buy a security at a specific price. If the market moves against your position, this can limit your losses. Be careful to not set your stop-loss too close to the current market price.