Top 10 Best 5 Digit Forex Brokers for 2021
At InvestinGoal, we adhere to strict standards to ensure an unbiased review process. We conduct our reviews by examining each broker’s offering and performance across 4 key categories. A final rating is produced for each forex broker based on a total of 187 data points. Learn more about our review process and methodology.
Five digits forex brokers really have helped the whole trading industry to grow rapidly, and helped thousands of traders to get more transparent pricing while trading Forex and many other assets.
That’s why if you’re interested in forex trading and 5 digit forex brokers, you can simply check out our top 10 best forex brokers article.
In fact, to date there’s not a single Forex Broker that is not offering this kind of feature, and reading the best forex brokers article can be a very efficient shortcut.
Going back to the main topic, without further ado, let’s get into discovering the best 5 digit forex brokers.
Table of contents
What is a 5-Digit Forex Broker?
Simply put, a 5-digit broker is a broker that offers a 5-digit decimal pricing system. Unlike other brokers that only offer a 4-digit pricing system.
5-digit pricing systems are a relatively new concept that have slowly gained traction since 2007, where before then no one had heard of a 5-digit pricing system.
Although now you will see that a lot of brokers use 5-digit pricing systems as part of their approach these days since there are many benefits. Some benefits include paying less for your trades, as well as better execution speeds.
Top 10 of the Best Five Digit Forex Brokers
IC Markets
IC Markets was founded in 2007 and is based in Sydney and is the first Australian forex broker. IC Markets minimum deposit is $0, which is great for a lot of people who want to sign up and take a look around and become familiar. In terms of available trading platforms, IC Markets allows for the likes of cTrader, Mirror Trader, MT4 and MT5 as these are some of the most popular and well-known trading platforms. One of the great things about IC Markets is that it is completely possible to link your IC account to ZuluTrade, which a lot of people are using these days. Spreads on IC Markets start out at 0 pips and will gradually get larger as you trade the more exotic pairs. Algo trading is also allowed on IC Markets, so those of you have a particular Algorithm that you might have used with another broker, you can use it on IC Markets too.
Pepperstone
This broker was founded later on in 2010 and has quickly risen to be one of the largest and most popular forex trading brokers in all of Australia. Pepperstone has lightning fast execution rates in less than ~30ms, which is great for scalpers and traders who use expert advisors. The minimum deposit for the Pepperstone broker is $200, so this requires you to deposit a rather large sum upfront in order to open an account. The available trading platforms for Pepperstone are as follows; cTrader, MT4 & MT5. Like IC Markets, it is possible to link your Pepperstone account to ZuluTrade allowing for a seamless trading experience. Pepperstone is also another platform that features incredibly low spreads, starting at 0 pips but increasing when you start to trade more exotic pairs.
AvaTrade
We have previously mentioned Australian brokers, but now we will give a brief overview of an Irish broker that is amongst the top international forex brokerage firms. Avatrade is a well regulated firm by the Central Bank of Ireland giving it a huge reputation. The minimum deposit isn’t as large as Pepperstone with a $100 minimum deposit threshold. The good thing about Avatrade is that they allow for the following trading platforms; Mirror Trader, MT4, MT5 and Proprietary Web Platform. And again it is possible to link your account with ZuluTrade. Avatrade includes fixed spreads on their currency pairs at 0.9 pips, unlike other firms where spreads start at 0 pips. For those traders who trade with Algo’s they are also available on Avatrade, to help automate your trading.
XM
XM.com is another reputable broker that was founded in 2009 in Cyprus, and has since become one of the largest foreign exchange brokers in their home country. The unique quality about XM is their extremely low deposit rates, making it an attractive broker for traders who have little capital to get going. Having high deposit rates can send some traders away because they simply do not have the startup capital readily available. For those of you who fall into that bracket, XM might be the broker for you. Another great quality of XM is their range of accounts catering to all kinds of traders; Micro Account, Standard Account & XM Zero accounts. Spreads for XM.com start at 0 like a lot of other brokers. Much like other popular trading platforms, algo trading is allowed on XM.com.
Forex.com
One of the oldest forex brokers, and most popular, Forex.com was founded at the end of the 20th century in 1999 in New Jersey, and is a subsidiary of a company called Gain Capital. They have one of the highest deposit rates of $250, so this broker isn’t for the faint-hearted, but is still a reputable brokerage. The available trading platforms at Forex.com include the popular MT4 and their own proprietary platform. Forex.com has some of the lowest spreads in the industry starting at 0.2 pips. Algo trading is also available with this broker too.
FxPro
Founded in 2006, FxPro is an English broker of great acclaim as this is one of the key brokers in the No Desk Dealing category. Because FxPro is a no desk dealing platform, they can often get the best rates of currencies as they are dealing with multiple liquidity providers, unlike the alternative desk dealing brokers. Their minimum deposit rate currently stands at $100 which is pretty average for this size of broker. Traders who use FxPro are able to use popular trading platforms such as cTrader, MT4 as well as MT5 to execute their trades. FxPro’s spread is the highest in this list with 1 pip, and currently allows the use of algo trading.
Plus500
Plus500 is another popular broker, and is what’s known as a CFD broker which stands for Contract for Differences. It is an arrangement made where the differences in the settlement of an asset between the open and closing trade prices are settled in cash. The minimum deposit for this broker is $100, the same as FxPro and AvaTrade. However, when it comes to trading platforms, the only available platform for use is Plus500’s own proprietary platform, but traders seem to like it. In terms of spreads, Plus500 have set their spreads to start at 0.6 pips. Furthermore, unlike the other forex brokers on this list, Plus500 have actually excluded the use of Algo trading on their platform.
Oanda
Oanda is another one of the forex broker powerhouses. It was founded in the United States in 1995 making it one of the oldest brokers in the world, and it is amongst the biggest players when it comes to the foreign exchange market. They have set their minimum deposit rate at $0 making a great starting point for new traders, and more experienced traders looking for a change of broker. Much like Plus500, Oanda only features its own proprietary trading platform, which means that you can’t use others such as MT4 or MT5. This might be a deal breaker for some as they might only be comfortable using another platform. Another good thing about Oanda is the fact that they have spreads that start at 0 pips, which is brilliant for new traders who want to minimize risk. They also allow for the use of algo trading on their own platform.
IG Markets
IG Markets is another English broker and is one of the old English brokers as it was founded all the way back in 1974. IG Markets is a very popular broker in the foreign exchange market boasting thousands of users. Although it is one of the older brokers in the business they have a minimum deposit rate of $250, making it one of the more expensive brokers to start with. They too have their own proprietary trading platform with a sleek design and excellent news feed making it a very attractive platform. Furthermore, they allow for the use of algo trading on their platform too.
Saxo Bank
Saxo Bank was founded in Copenhagen, Denmark back in 1992. However, unlike the other brokers on this list, Saxo has one fundamental difference. It is a bank. Another not so subtle difference is its minimum deposit rate, which currently stands at $2000 so this broker definitely isn’t for everyone since not a lot of people will have $2000 ready to deposit into a trading account. Saxo Bank features its own proprietary trading platform instead of other popular platforms like MT4 or MT5. It also has some of the highest spreads when compared to other brokers, with Saxo’s starting at 0.8 pips. Saxo Bank also allows Algo trading on their proprietary trading platform.
Why are 5 digits important with forex brokers?
Before 5 digits became the norm with forex brokers, many if not all brokers were using a 4-digit price system. However, most forex brokers have started using a 5-digit price system on their platforms now.
Why is this?
One reason is that 5-digits give traders more accuracy, and there is a lot more information with the extra digit as prices can be broken down further. The addition of this extra digit allows traders who don’t have large accounts to trade half pips instead of full pips.
For scalpers, this is great news as the extra digit can give them pin-point accuracy and more room to play with. Another important reason for the importance of a 5-digit pricing system is that it has reduced the cost to trade making it cheaper for traders to execute trades.
Price movements: 5-digit vs 4-digit Broker
Here is an example of the old 4-digit spread vs the new and improved 5-digit spread. For example, say we had a 4-digit price on the EUR/USD of 1.5840 bid/1.5842ask (2 pips).
And now let’s examine what a 5-digit spread would like in comparison to the 4-digit one; EUR/USD of 1.58401 bid/1.58428 ask (2.8 pips).
You can see the difference between the two, where you get 0.8 extra pips of information with 5 digits which is more accurate when compared to the 2 pips with the 4 digits.
Here’s another example; let’s say we have a bid/ask price on GBP/USD of 1.4123 bid/1.4123 ask. You can see that there is a spread of 0 pips when using a 4-digit price system. However, when we consider a 5-digit price system we get more information leading to more accuracy. 1.41230 bid/ 1.41234 ask, which is a spread of 0.4 pips. Again we can see here that we have more information to work with, because with 4-digits you can’t detect spreads lower than 1 as it always appears to be 0 without the decimals.
With the accuracy given by the 5th digit means better transparency for traders, which forex brokers call precision pricing.
Forex Trading platforms with 5-digit pricing
More and more trading platforms are conforming to the 5-digit pricing system, such as the following:
Expert Advisors Trading with 5-digit brokers
Some expert advisors that have been built on the basis of 5-digit pricing systems are not compatible with forex brokers who offer 4-digit prices. So keep this in mind when you are looking for a forex broker, as you will need to find out if they can handle expert advisors that have been calibrated using 5-digits.
Furthermore, in the case that they are compatible they run the risk of being less efficient, which in turn will have a negative impact on your trading results. The reason for this is due to the fact that 5-digit robots are more precise and efficient, but only when they have the relevant data to work with.
Pros of a 5-Decimal Pricing System
There are some pros when dealing with a 5-decimal pricing system, which include the likes of lower spreads. It also incentivises higher trading volume by reducing overall trading costs, and this will entice traders to join a platform, so they aren’t paying as much to be able to trade.
One of the most attractive things about a 5-decimal pricing system is its level of accuracy and precision when it comes to filling orders. Accuracy is everything when it comes to trading, as it could mean the difference between being filled and missing a profitable trade.
It also promotes high frequency trading, which is a method of trading that includes the use of high-level programs to compute large amounts of orders in a fraction of a second. It also uses powerful algorithms that are capable of analyzing multiple markets at once.
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