“Who are lowest spread brokers?” is the question which most beginners ask me. That list down 5 lowest spread brokers is no problem, but what is the issue here? I don’t make sure what is the purpose they ask? In order to meet the different demands today I write this article to help you understand every aspects of low spread brokers. I believe that you use the following information efficiently.
Here are top 5 lowest spread brokers:
-
Exness.com
-
Hotforex.com
-
FBS.com
-
XM.com
-
FxPro.com
1. The things you need to know low spread and low commission:
- What is a spread?
The difference between the buy and the sell price is called spread. It is the transaction fee you have to pay for brokers or banks.
- How it impacts your trades?
It could have a significantly impact on the profitability of your trades. The higher the spread, the higher the transaction cost. Therefore, most traders tend to trade with low spread brokers. It is worth nothing that no all traders are keen on trading with lowest spread brokers. According to their purposes, traders co-operate with different brokers.
- What is commission?
This is an amount of money which traders or investors have pay for brokers to carry out trading.
- How does it affect the trading?
You only don’t charge commission for regular accounts. You will earn a money if commission fee low. The best forex broker in this category is Exness, who only charge 2.5 USD for each lot traded. You can check this here.
There are 3 types of brokers: Market Maker, STP and ECN brokers. They have differently main income. For Market and STP brokers, their main profit is spreads. On the contrary, main income of ECN brokers is commission.
Because today’s article relate to low spread brokers I cannot review all broker types here. I will list down 5 lowest spread non-ECN brokers, and provide some information about Market Maker and STP brokers’ spreads. If you want to know more about ECN brokers, click ECN brokers.
2. Type of traders need low spread brokers.
Only scalpers should choose low spread brokers. If you are long term investors, swap is more important. Why I said so?
For scalpers, they open many positions in a short time (less than 1 month), so their main transaction cost are spread and commission. Low spread brokers is their top brokers. If traders want to earn much money, you have to select them.
For long term investors, because they keep their positions longer (over 1 month), they earn some hundreds of pips per position. Moreover, they only pay a maximum of 2% of their profit for spread. Vice versa, they have to pay up to 90% of their profit for swap. That is the reason why their main transaction cost is swap.
3. Why US and UK brokers’ spreads are higher?
Here are the 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) |
Although US and UK are the 2 biggest forex markets in the world, the CySEC broker, and Exness take possession of the lowest spread. UK and US brokers have the highest spreads. This figure is 2 times higher that of Exness. As I mentioned the article before, be the side of advantages, regulations create some disadvantages. US and UK regulations don’t allow them to offer high leverage or bonuses, and they have to pay more for the regulation fee. That’s why they have to charge more spread and commission.
To prove that I also did a research of hundreds of top forex brokers all over the world and I discovered that US and UK brokers usually offer higher spreads and commission than Australia and CySEC brokers. Clearly, CySEC brokers offer the lowest spreads.
4. How to choose the best low spread broker?
In this part, I will orient some conditions to traders in choosing the best low spread brokers:
-
Regulated brokers: you can always trust a broker with a license in your country, If there is no broker regulated in your country, choose the trusted and lowest spread broker.
-
Brokers who have local payment system. It is not convenient for traders if some low spread brokers don’t have local payment system. You have to pay 2 – 4% of your total deposit amount as the fee for those international payment methods by Visa, Credit card, Neteller, and Skrill. I think you spend money on them is not essential. Local payment system will help you get and withdraw immediately through automated machine.
-
Low spread and commission: depending on your strategies you select a broker with low spread and commission.
-
Good local supporters: as you know, most everyone find the forex market very difficult and complicated, so it is very vital for a broker to have a good customer service to give advices and instructions. A good broker should be available for the customers 24/7 and can help them in different languages. I choose Exness is my best friend. How about you? open account by clicking Exness’s account.
Sum up:
If you are ASIAN traders, Exness is the best brokers for Scalpers.
If you are Africa traders, XM and FxPro are the best.
If you are US traders, Forex.com is the best
If you are European traders, XM, FxPro and Exness are the best.
