✔️ Information reviewed and updated in May 2024 by Eduardo López
Price is one of the factors that we should all pay attention to when trading cryptocurrencies, Forex or any other asset. And is that the investment mechanism is very similar to trade, buy low to sell more expensive.
To take full advantage of the price variation, it is necessary to take into account the different types of variation that exist. Here we will talk about the minimum price variation, one of which we must take into account both because of its relationship with our capital gain and the influence it has when operating.
➡✨ What is the minimum price variation?
As its name implies, it is the minimum variation that the price of an asset can have. That is, it is the least that the price of an asset can vary so that this variation, for example, is different from zero.
Each type of asset has its own variation in price so they also have their own minimum variation in price. According to experts, the required minimum is 1, although this is generally higher depending on the type of asset and the market.
➡✨ Who is in charge of setting the minimum price variation?
There are two in charge of fixing it. The first applies to the stock markets and regulated markets because here, the one in charge of setting this minimum is the regulatory bodies. For example, the stock exchanges or the stock market associations of each country.
For over-the-counter markets such as cryptocurrencies, there is no centralized setting of the minimum price variation here., the brokers are in charge of fixing it. That's right, each platform or intermediary is in charge of setting its own minimum price variation.
➡✨ Commissions for intermediaries
Something you should know, especially for the over-the-counter markets, is the fact that intermediaries find their gold mine in this. This is because on this they usually charge a commission or operating expense on these price variations through the Spread.
Many experts talk about how some intermediaries tend to inflate the minimum price variation in order to obtain much more attractive returns. There is no type of regulation, so we must be attentive to the amount of commissions set for this variation.
➡✨ How does it affect my operations?
We must take into account how large the minimum price variation is to determine how feasible and attractive our operations are. This is because, the higher it is, the less profits for the traders and the more commissions for the broker.
Experts recommend paying close attention, and if it is modified by the intermediary. In this way, we can assess whether it is worth carrying out an operation or not, according to the profit that we could generate.
