PepperstoneVisit Pepperstone74-89% of retail investor accounts lose money when trading CFDs
IC MarketsVisit IC Markets74-89% of retail CFD accounts lose money
XMVisit XM77,37% of retail investor accounts lose money
Fusion MarketsVisit Fusion Markets(Your capital is at risk)
FxProVisit FxPro72.87% of retail investor accounts lose money
FBSVisit FBS74-89% of retail CFD accounts lose money
FXTMVisit FXTM81% of retail investor accounts lose money
FP MarketsVisit FP Markets74-89% of retail CFD accounts lose money
VantageVisit Vantage74-89% of retail CFD accounts lose money
AxioryVisit Axiory(Your capital is at risk)
In the context of forex (foreign exchange) trading, “spread” refers to the difference between the bid and the ask price.
Forex brokers typically make their money through this spread.
Here’s a brief explanation of each term:
- Bid Price: This is the highest price that a forex trader is willing to pay to buy a certain currency pair.
- Ask Price: Conversely, this is the lowest price at which a trader is willing to sell a certain currency pair.
The “spread” is measured in pips, which is the smallest price move that a given exchange rate can make based on market convention.
So, if a broker is quoting a bid price of 1.3000 and an ask price of 1.3002 for EUR/USD, the spread would be 2 pips. In this situation, if a trader were to buy at the ask price and then immediately sell at the bid price, they would incur a loss of 2 pips.
Forex brokers offer different spreads based on various factors such as the currency pair being traded, market volatility, and the broker’s policy. Some brokers offer fixed spreads, while others offer variable spreads.
The spread is one of the cost factors a trader should consider when choosing a broker.
A “low spread forex broker” refers to a forex brokerage firm that offers its traders relatively small differences between the bid and ask prices for currency pairs. Low spread is also called “tight spread”. In other words, the broker provides a trading environment where the cost of entering and exiting trades is lower than that offered by other brokers.
The spread is essentially the broker’s fee for executing the trader’s order.
A smaller or tighter spread can save a trader a significant amount of money over time, especially if they are a high-volume trader or a scalper who makes multiple trades in a single day.
For instance, a broker offering a spread of less than 1 pip on the EUR/USD currency pair is considered to provide a low spread. Conversely, a broker offering a 3-pips spread on the same currency pair is providing a higher spread.
It’s also worth noting that some brokers offer different types of accounts with varying spread structures, including accounts with lower spreads but commissions per trade, and accounts with commission-free trading but wider spreads. So the total cost of trading can depend on various factors, not just the nominal spread.
The ‘spread’ is usually the focus of forex brokerage advertising campaigns. One of the most popular tactics has become lowering offered spreads. Nowadays, practically every platform brands itself as a ‘low spread Forex broker.’
That said, the real issue is not finding the lowest-spread Forex brokers but rather finding low-spread brokers that are also reputable. There are tons of scammers out there, and nothing attracts traders, especially inexperienced ones, more than low trading costs.
To ensure you only trade at tried and trusted trading platforms, we have grouped some of the best brokers that offer low spreads.
We have taken the following factors into consideration to compile the ranking:
- Spreads without mark-ups
- Low fees per lot
- The broker’s minimum deposit
- The overall quality of the broker
- The trading platforms offered
So, without further ado, let’s see which Forex brokers offer the tightest spreads.
|Low spread FX brokers||Avg. EUR/USD spreads||Fee per lot (round-turn)|
|Pepperstone||0.09 pips||7 USD|
|IC Markets||0.10 pips||6 USD|
|XM||0.10 pips||7 USD|
|Fusion Markets||0.09 pips||9 USD|
|FxPro||0.45 pips||9 USD|
|FBS||0.50 pips||6 USD|
|FXTM||0.10 pips||4 USD|
|FP Markets||0.45 pips||6 USD|
|Vantage||0.50 pips||6 USD|
|Axiory||0.30 pips||6 USD|
What are the best lowest spread forex brokers?
What is considered Low Spread in Forex?
A low Forex spread is usually considered to be any value below 1 pip, considering that the Forex market’s average spread is between 1 and 3 pips on major Forex pairs.
Nowadays, the best low-spread Forex brokers offer extremely tight spreads, with the lowest spread available on Forex starting from 0 pips.
Not all of these zero-spread brokers are reliable, though, so it’s essential to always do your research when looking for the supposedly cheapest Forex brokers, especially if they market themselves as such.
Are low spreads worth it?
Since the spread is effectively a commission from the broker, lower spreads are always to be preferred. Low spreads are also necessary if you want to employ trading strategies such as scalping.
With that said, while a lower spread is always better, it’s important to ensure you examine the broker offering closely to avoid any other types of commission put in place of a spread.
How Are Forex Spreads Calculated?
The spread is the difference between the bid/sell prices of an asset.
This price difference is calculated in “pips” (Percentage In Points), where 1 pip is a 1-point movement in market value based typically on the fourth decimal place of a currency pair.
For example, in the case of EUR/USD:
- bid/ask of 1.08335/1.08340 (0.5 pips spread)
- bid/ask of 1.08335/1.08345 (1 pip spread)
- bid/ask of 1.08335/1.08485 (5 pips spread)
JPY Forex pairs: the exception to the rule
The Japanese Yen (JPY) doesn’t follow the same rules. Spreads on JPY Forex pairs are measured on the second decimal place instead of on the fourth.
Here’s how to calculate the spread on USD/JPY:
- bid/ask of 110.099/110.109 (1 pip spread)
- bid/ask of 110.102/110.114 (1.2 pips spread)
- bid/ask of 110.094/110.108 (1.4 pips spread)
Forex Spreads and Commissions Per Lot: What You Should Expect?
In many cases, where you see a regulated Forex broker offering 0 pips spread, what they are actually offering, is a spread that starts from 0 pips.
This is still desirable, although you should be prepared for it to vary depending on the volume and volatility of the Forex market at any given time. These variations can mean that your spreads can be significantly higher so it is something to look out for.
Since the spread is the main revenue for a broker, you should also take care to note any commission that may apply to low-spread or zero-spread trading. If such commissions do apply, this will typically be calculated on a per lot ($100,000) of currency traded basis and is usually below $5, depending on the market.
How to Estimate Forex Trading Fees When Opening a Trade?
Choosing a Forex broker with the best spreads to offer can be valuable. However, any reasonable Forex trader should also be able to estimate how much the spread will cost overall. Additionally, despite a broker having the lowest Forex spreads, you should also be mindful of any commission in place.
Here’s how you can calculate currency trading commissions easily:
So, let’s take an example. The lowest spread Forex broker you can find is offering a spread of 0.1 pips. This number translated onto a currency pair price would take effect as 0.00001.
This means that you could be looking at a situation, for example, where the bid/ask would look something like 1.08335/1.08336.
Here you can see the 0.1 pip spread has moved the ask price up to 1.08336. With a higher spread, of course, this price will climb further in the same way.
Translating this number into an actual percentage and real cash value shows us just how small it really is. In this example case, a 0.1 pip spread is equal to just 0.00092% (0.00001 / ask price), or $0.92 per standard lot traded.
Forex commission per lot
Another point you need to consider when looking at Forex brokers with low spreads and low deposit minimums is to double-check any commission per lot charges they have in place.
This typical commission charge, even for brokers with the lowest Forex spreads, is usually around $7 per lot. Using this as our benchmark, it means that if you open a position for 0.5 standard lots, you will have a commission of $3.50 on opening. This is one way to charge the fee, which is sometimes referred to as the “per-side, per lot” commission.
In other cases, with some brokers, you may see commission written as “round turn.” In such instances, a round-turn commission of $7 means $3.50 on the opening of the trade and $3.50 on closing. These are important details since you need to check beyond just the lowest Forex spreads with all brokers.
Best Low-Spread Brokers for Scalpers
Finding low-spread Forex brokers can be great for many traders, however, for day trading Forex traders like scalpers, a Forex broker with low spreads and commissions is not quite enough.
Scalpers will also need fast order execution and the ability to harness leverage to make money due to their trading strategy relying on a high number of trades.
You should also remember that within the EU and UK, as well as under ASIC regulation, the highest leverage available to retail traders from any regulated Forex broker is 30:1. Among these brokers, one regulated Forex broker offering high leverage is IC Markets.
IC Markets, along with some others mentioned in our high-leverage Forex brokers’ top ten, can offer 500:1 leverage to some traders outside the EU, UK, and Australia. If you are a professional trader in these countries, there are also many brokers offering high leverage and the lowest Forex spreads.
Which Broker Offers the Lowest Forex Commissions Per Lot?
In addition to seeking Forex brokers with low spreads, traders should also look out for those offering low commissions.
One broker offering this is FXTM through their ECN account. This account charges traders just a $4 round turn commission, which means you pay a $2 commission on opening and when closing a trade.
FXTM is a popular choice for its low Forex spreads, which start from a highly competitive 0.1 pips. Again, the trusted MT4 and MT5 platforms are available for you to trade with, and the minimum deposit on this account type is $500.
What Is the Best Zero-Pip Spread Broker?
If you are looking for the best broker with a zero fixed spread, the FBS Fixed Zero Spread account type remains fixed at 0 pips and does not increase.
Despite this, FBS is only available under IFSC regulation in Belize and is not accessible to Europeans regulated within Europe. The only downside of this account type is the huge $20 commission per lot traded.
What Is the Forex Broker With the Lowest Fixed Spread?
With fixed spreads, you won’t have to worry about the market volatility of liquidity in order to find the best spreads to send a buy/sell order to the broker. Spreads, in fact, tend to widen depending on a number of factors when using floating spreads brokers.
The broker offering the lowest fixed spread in the market currently is AvaTrade. They offer CFD trading on Forex from a fixed spread of 0.9 pips with no commissions per lot to worry about.
You can open a Forex trading account with AvaTrade with a minimum deposit of only $100.
AvaTrade also offers a wide range of the top Forex trading platforms, including both MT4 and MT5. For more in-depth information on this broker and a round-up of the lowest Forex spreads, benefit from our top 10 brokers with the lowest fixed spread.
Comparison of Forex Brokers with the Lowest Spreads
There are a lot of Forex brokers in the industry, with many of these offering low spreads. Here you can find a list of brokers offering tight spreads, but if you’re interested in ECN brokers, visit our round-up of the best ECN brokers.
|Broker||Minimum deposit||EUR/USD avg. spread||Fee per lot|
|IC Markets||$0||0.10 pips||$6|
|FP Markets||$100||0.09 pips||$6|
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