BRKV - Many people who just entered the industry will get confused about so many brokers. And because they think spread is the only cost you pay when trading, they tend to search for a low spread broker. I can easily recommend you a top 5 lowest spread brokers, but, before we reached to the list, I would like you to make sure that the lowest spread brokers do the best for you. Why? Because what you paid wasn’t just spread, and the lowest spread might not as good for you as you expected.
If you’re changing your positions in frequently, you might be a scalper, who open and close trading account in a short time. And by doing so, you save the maintenance fee and pay brokers by spread and commission.
If you are investing with a brokers in a long run and have no intention to close it soon. What you pay is neither spread nor commission but 2% of your income for the maintenance of your account. Unlike to the scalpers, long term investors can earn hundreds of pips, so 2% is just small pennies.
In short, if you are scalpers, you should find a low spread brokers. If you intend to invest in long time, you should find a trustworthy broker to trade with (you can get consulted from the list here just in case)
Firstly, you should now that no every best forex broker lives on spread. Only Market Makers and STP brokers mash up the difference between ASK and BID to give you the final spread. Because their profit comes from that figure. So the higher the spread is, the more they earn.
ECN brokers do not charge traders by spread. The spread you take from them is the original number and no add-up. However, they charge you commission.
In short, if you want to spare your cost from spread (by the way, they always provide the lowest spread as they can, sometimes, spread is zero) find an ECN broker. If you find non-ECN brokers to trade with, keep reading.
In simple, spread is different between a BID (purchasing cost) and ASK (buying cost) of a currency pair. Spread can be known as the brokerage cost or transaction fee if you just buy and sell a currency. Besides, there are some types of spread in forex market then I think you should keep reading more for an illustration.
In the case of ECN brokers, the transaction fee is commission. Because they do not charge traders in spread. You must be clear between two definitions.
Hence, if you have made clear of who you are, which types of brokers you want to trade with and more importantly, you got the idea why you need low spread, I suggest you the 5 lowest spread brokers as below and they are all non-ECN:
Exness.com
Hotforex.com
FBS.com
XM.com
FxPro.com
Don’t think that every broker who provide low spread is automatically good for your trading. To choose the most suitable broker for you, you have to depends on many aspects
Firstly, you might want to look at the table of spreads for EUR/USD of top forex brokers:
Broker Name | EUR/USD spread | Regulation |
Exness | 0.7 Pip (Classic account) | CySEC, FCA |
Hotforex | 1.1 Pip (Premium account) | Vincent |
FBS | 1.1 Pip (Standard account) | Belize |
XM | 1.7 Pips (Zero account) | FCA (UK) |
FXTM | 1.7 Pips (Standard account) | Belize |
Forex.com | 1.8 Pips | NFA (US) |
FxPro | 1.7 Pips | FCA (UK) |
In general, brokers regulated by US and UK offer much higher spread. It due to expensive regulation cost and forbiddance of high leverage. While brokers regulated by CySEC and Asia as Exness, spreads are much lower. You can find more information of spread for XM (a UK regulated one) and Exness (an Asia regulated one) in the link below:
Spread and commission of XM.
Spread and commission of Exness.
Thus, I hope you see that local brokers will be the best for you, because it’s regulated by your own country. If you do not have any brokers available at your area, you can consider other brokers, but with following criteria besides low spread/ commission or you can find the list of the best brokers here:
Regulations: a fine regulated broker will ensure your security in trading. It’s like you’re protected from the loss or liar. You can start looking at their licenses.
Payment system: you must not want to have a low spread and low withdrawal, must you? So find brokers who allow you to withdraw as much as you have got and smooth and fast procedure.
Customer service: brokers who can serve you in your langue are the best. You should see if they have offices around you and live assistance at least. There must be their people with you if you are in trouble.
In conclusion, you can easily find brokers who offer you low spread. However, there are many things you must to understand and make clear before studying spreads.
Hey there, this is Fanara Filippo. I'm the author of this article and i'm currently collaborating with Brokerreview.net, or BRKV in short. My articles are mainly for forex traders from Thailand, Indonesia, India, Bangladesh, and South Africa.