Best Low Spread Forex Brokers

In forex, low spreads are imperative, considering this is the main cost of doing business for every participant. The spread is essentially the broker’s mark-up for their efforts in sourcing out currencies from liquidity providers on demand.

Like any business, any trader aims to minimize expenses before they can increase their profits. Over the years, brokers understood this premise and improved their services with this in mind. 

Nowadays, clients have a choice abundance of forex brokers with low spreads. This selection is diverse, but it might be overwhelming for many since forex traders have to regard all range of aspects. Is the broker regulated; does the broker offer fixed or variable spreads; do they have any limitations on certain trading styles? 

To answer all these questions and more, we have compiled this in-depth article looking at five of the best low spread forex brokers and a few zero spread forex brokers. Readers will also learn about the importance of trading with low spreads, the differences between a zero spread and standard account, and our selection criteria.

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Top 5 Forex Brokers With Low Spreads

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IC Markets – Best Low Spread Broker Overall

IC Markets is a prominent CFD broker coming out of Australia, a region regarded as one of the world’s foreign exchange hubs. According to the Tokenist, IC Markets is one of the largest brokers globally in trading volume, with about $19 billion executed daily.

Started in 2007, IC Markets began with the mission of providing services previously only reserved for institutional clients to a broader market. One of these facilities offers even lower spreads than through their zero or ‘raw spread’ account. 

Using this type of account allows for reduced execution costs, all for a small commission per trade. This feature is beneficial for all traders, especially those who trade quite regularly. 

Clients who’ve used IC Markets for some time can further benefit from other tradable markets like stocks, cryptocurrencies, indices, etc. All in all, IC Markets is a highly reputable company for trading with low spreads.

Read more about IC Markets in this review

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FXTM – Best Low Spread Broker with High Leverage

As its name suggests, FXTM or Forextime is a specialist in forex brokerage services but is equally competent in several other CFD instruments as well. Founded in 2011 and based primarily in Mauritius, FXTM now also offers an innovative copy trading platform for millions of non-trading investors.

Whether one is a serious trader or prefers to invest in their social trading platform, both will make the most of their tight spreads, flexible leverage, competitive tools, and low-latency execution.

With FXTM, traders know what they benefit from the broker’s technology, cost-effectiveness, and conducive trading conditions.

Read more about FXTM in this review

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Pepperstone – Best Low Spread Broker For Pro Traders

Pepperstone is another well-known, multi-asset, and multi-licensed Australian brokerage firm, established in 2010. Over time, they’ve broadened their global footprint now with offices in Cyprus, Germany, London, Dubai, and Nairobi, boasting regulations from these respective regions.

Like their Australian counterpart, IC Markets, clients have access to their ‘razor’ or zero spread account, only incurring a commission of 0.0035% of the traded base currency for opened and closed orders. 

This broker is best for all traders, particularly for more experienced or professional traders with more considerable disposable risk capital.

Read more about Pepperstone in this review

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FP Markets – Best Low Spread Broker For Scalping

FP or First Prudential Markets is one of the respected Australian forex brokers since 2005. The brokerage provides 24/5 access to forex, indices, metals, equities, and commodities through an ECN (electronics communication network) execution with cost-effective spreads and no re-quotes, perfect for scalpers and other traders in general.

Some of their top-tier liquidity providers include globally-recognized banks like Barclays, Goldman Sachs, and HSBC, among many others.  Overall, FP Markets is a simple-to-use, no-fuss forex broker catering to all experience levels of forex traders in most countries of the world.

Read more about FP Markets in this review

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Forex.com – Best Low Spread Broker For US Traders

Forex.com has been in business since 2001 and is one of the very few brokers legally permitted to offer their services to US clients along with the rest of the globe. The broker is now a subsidiary of the NASDAQ-listed financial services group StoneX Group Inc., making them more reputable and highly capitalized to serve US traders. 

Aside from forex, the brokerage provides access to indices, stocks, commodities, metals, and cryptocurrencies, totaling over 4500 markets. Forex.com is the premier choice, especially for American residents, some of whom already benefit from their reputation, economical trading costs, and access to the latest trading advancements.

Read more about Forex.com in this review

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What spreads are considered low in forex?

The EUR/USD pair is the instrument with universally the lowest spread, which, on average, is around a pip. By and large, the seven major pairs (the currencies paired against the US dollar) have the smallest spreads, followed by cross or minor pairs (combinations of major pairs without the US dollar), where it’s a little higher. The following short list is the average traders should expect for the major currencies.

• AUD/USD (1.5 pips)
• GBP/USD (1.7 pips)
• NZD/USD (1.9 pips)
• USD/CAD (1.8 pips)
• USD/CHF (1.7 pips)
• USD/JPY (1.7 pips)

For minor pairs, the lowest average spread would be on EUR/GBP at 1.5 pips, going up to 4 pips on GBP/CAD or NZD/CAD. The spreads on exotics can vary widely where the cheapest usually is found on SGD/JPY (3 pips on average), with the most expensive on a pair like USD/RUB (800 pips on average).

To lower any of these costs, traders typically opt for brokers offering fixed or zero spread accounts instead of standard, the differences of which will be covered a little later. Furthermore, investors will emphasize trading the major pairs, slightly less importance for minor pairs, and much less interest with exotics.

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Why do you need a low spread forex broker? 

The spread is any trader’s primary cost since it applies to every position regardless of how long it’s held. A small difference in the spread for more long-term traders isn’t so significant but still matters somewhat. 

However, for high-volume traders, scalpers, day traders, and those using expert advisors or other automated systems, a small spread becomes crucial. Many traders in this group aim for small profit targets, sometimes as low as five pips.

If we consider the average EUR/USD spread as around one pip, we see this can be a substantial part of their profits. Within a span of one day, the spread can account for at least 50 pips or sometimes a lot higher when we account for other more expensive pairs. 

Therefore, these traders would have to generate bigger profits to neutralize the costs. A position only goes into profit once it covers the spread, assuming price has already moved in the trader’s favor. 

For instance, if the spread were three pips, price would have to move four pips from the entry to realize some gain. During busier periods, the spreads can widen above the normal range. This further increases costs for those trading at these times, which eats into the profits. Therefore, the tighter the spread, the more profits gained.

Moreover, a tighter spread can allow for a slightly bigger position size. In general, even for traders who trade less frequently, a low spread forex broker is beneficial for similar reasons, although it doesn’t impact their losses and gains as much.

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Does low spread mean low commission? 

Brokers who offer fixed spreads will always apply a commission for opening and closing a position. As the name briefly suggests, fixed spreads remain the same in most cases regardless of market conditions. 

Conversely, a variable or floating spread fluctuates between normal and high ranges depending on how busy trading activity is. Brokers offering the former are said to pass their clients’ orders ‘straight through’ to several liquidity providers or, essentially, the interbank market. 

This model is often referred to as the ECN/STP (Electronic Communications Network / Straight Through Processing). Other terms used also include DMA or direct market access and no dealing desk. 

Brokers offering these spreads should not apply any commission as they receive their compensation primarily from the spread. These spreads are variable as they reflect real-time liquidity changes in the markets. 

However, this very attribute can make them unsuitable since they can become more expensive at certain periods. Fixed spreads are, in most cases, much lower and constant on a per-trade basis than variable ones. 

Here, brokers use a different execution model known as a dealing desk, market maker, or sometimes referred to as a B-book where they become their own liquidity provider for their clients’ orders. 

This is the only way they can essentially fix the spread and charge a commission every time a trader opens and closes his position, so-called “round turn”. The average commission charged by most brokers for each round turn is $7 per standard, $0.7 per mini lot, or $0.07 per micro lot. So, a low or reduced spread doesn’t necessarily mean lower commission.

However, since the spreads and commissions are fixed, the trading costs become far more predictable.

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Standard account vs. Zero spread account

The key difference between a standard and a zero spread account is the spread. The standard option typically shouldn’t have any other cost other than the spread, while a zero or fixed spread account does have a commission. 

Different traders will be suited towards one or the other depending on their strategy and trading frequency. Before we understand the motivations for each, let’s first understand the differences between the two.

The standard account is the baseline for nearly all brokers because of its simple, no-fuss features. Traders can execute from 0.01 lots up to 100 lots in most cases. Furthermore, clients can fund the minimum accepted by the broker.

This account will often have variable spreads, which many traders prefer due to their transparency and how they reflect actual prices directly from the source, i.e., the interbank.

While variable spreads are fairly consistent, they are prone to widen erratically due to low and high volatility periods. When market activity is reduced, it becomes more expensive to match a buyer’s order with a seller or a seller’s order with a buyer since there’s less liquidity.

Conversely, when market activity is at a peak, significantly more orders are processed than normal, meaning spreads widen. Examples of these times include during high-impact news events, at the start of busy trading sessions, when sessions overlap, and the rollover period.

Another irregularity is slippage which can be heightened with variable spreads. Even though slippage is rare considering the consistently fast execution from brokers, it can still occur from time to time. When it has negative consequences, it is an issue affecting a trader’s profitability and entries.

So, a zero spread account aims to solve some of the problems of spread widening by providing an arena of more expectable execution fees. It’s crucial to note spreads don’t technically start from zero, though EUR/USD could go as low as 0.1 or 0.2 pips. 

Also, customers trading with fixed spreads could experience some spread widening or slippage at particular times like variable spreads, but the extent is not as severe. Zero or fixed accounts generally have lower spreads than standard on a per-position basis, an attribute that’s particularly crucial for any high-frequency traders or those using robots.

Zero spreads are also beneficial for investors speculating with exotic pairs which inherently have unusually larger spreads. Even if some traders don’t trade often, there is a big variance between a 50 and a 25 pip spread. 

Aside from applicable commission, a slight drawback with the zero or fixed option is the minimum deposit can be slightly higher, the lowest being $100 and going up to $1000 in most cases.

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How we made this low spread forex brokers list

We made this low spread forex brokers list by considering the following (but not limited to):

Regulation

Regulation is the first reference point for any broker. It is an essential consideration for any financial market as it provides traders the peace of mind they are not dealing with unscrupulous brokers.  

All the brokers in this guide are regulated by top-tier recognized regulators who bound them to strict auditory standards, ensure they are well-capitalized, and foster advantageous trading conditions for their clients.

Spreads

We did thorough research by comparing the average spread across tens of brokers. While IC Markets was chosen as the broker with the lowest spread, all the other choices are fairly excellent as well. 

Another aspect we observed was whether the broker accepted scalping and trading with robots because this is where having low spreads are crucial. Fortunately, all these brokers allow traders to scalp or use expert advisors without limitations.

Other trading costs

We ensured to include brokers with minimal commissions and low or no funding/withdrawal costs.

Available markets

We looked at the available markets a broker has. For traders to benefit from low spreads, they must ensure their broker has all the major and minor pairs and a decent selection of exotic pairs. All the brokers in this list have at least 50 pairs, allowing for greater diversity.

Customer service

As a trader, one will demand to have their queries answered as swiftly as possible. Therefore, we established that all brokers here have a 24/5 dedicated and intuitive live chat function with reasonable wait times. 

A broker with a telephonic line and a few contactable email addresses is also quite helpful for establishing a more human interaction.

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Conclusion

By this time, we hope readers realize the importance of using a low spread forex broker, especially for high-frequency traders, since it impacts their bottom line the most. For traders looking for methods of cutting down these costs, this article will have hopefully provided some guidelines. 

Low spreads are imperative, and trading with safe, licensed, and reputable brokers to have the best chance of a hassle-free, transparent, and conducive trading experience.

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About zero spread forex brokers

Forex brokers with zero spreads provide trading accounts with no spread between ask and bid prices. The ability to enter and exit deals with a low forex spread cost makes it more accessible for traders with lower trading accounts.

It’s crucial to read a small print and know what to look for when selecting forex brokers with tight spreads. Choosing the best forex broker with low spread is essential because some zero-account offers may be marketing ploys to entice traders.

It is significant to note that low spread broker forex eliminates Ask/Bid difference from trading.The Zero pips RAW, however, is a floating value, which means that it fluctuates between 0 pips and any larger value and is mainly influenced by market currency spreads conditions as well as the liquidity of the currency pairs. The value will be higher or lower depending on the liquidity of the currency pairs at the moment when the order was executed. Therefore, the trader can receive better or worse terms of the Zero pips RAW, depending on the market conditions.

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What’s the difference between raw spread and a standard account?

FX Spread provides two different types of trading accounts: raw spread and regular accounts, which are different in the following ways:

Raw Spread Account:

• Provides best conditions available in the market as a whole.
• Imposes reasonable commissions or fees
• Displays interbank spread in its raw form that liquidity providers provided.
• All instruments for forex spread betting are available at real market pricing.
• Offers best conditions currently available in spread markets.

Standard Account:

• Spread better has no commission.
• Low spread forex pairs are on offer.
• Does not impose commissions on spread investor
• Provides pre-set spread forex trading.

Best forex broker with low spread is offered.

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How does a zero-spread forex broker earn money?

Forex zero spread broker generates money from commissions or markups on the underlying exchange rate. This makes trading more affordable for those with smaller trading accounts by enabling traders to trade with narrower margins and lowering overall cost of trading.

On the contrary, standard brokers make money from the spread – the difference between ask and bid prices for a particular currency pair. Fixed or variable commissions, however, might be how brokers with lowest fees benefit.In the case of variables, spread will change according to how the market or forex trader spread moves. This might alter due to a significant market event, like a shift in interest rates or political situation. It could also depend on the liquidity of the market and the number of buyers or sellers at any given time. However, several other changes can also causes these changes in the market.

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