It is known that the largest Forex brokers earn over 100,000 US dollars only through spreads that they charge on trading assets. Forex trading is unimaginable without spreads. The spreads are the main revenue sources for the Forex brokers worldwide while at the same time they represent significant trading costs for the traders. Therefore, most Forex traders will seek the lowest spread Forex brokers to cut on their trading costs. In most cases, those brokers who have the tightest spreads come with commission fees payable to compensate for their main revenue source. It is very rare to come across a commissionless trading opportunity with low spreads on Forex currency pairs.
Since there are over 3500 officially registered and regulated Forex brokerage companies worldwide, the competition among these firms is extremely high. They compete with each other in many ways – some choose to lower minimum deposit requirements, some will offer massive assets portfolios and others will provide tight spreads. If you seek low-budget trading then the last option is what you should look for. Our review will reveal the best Forex trading brokers who offer the lowest spreads on the market but do not compromise the quality of the service at the same time.
Tight spreads only are not enough to save you money on brokerage services since you might be subject to other fees such as commissions, administrative or hidden fees. Therefore, one should not be deceived by the 0 pip spread banners lighting up the internet. You should carefully examine the fee structure of the broker to understand why and how is it offering such tight spreads. Below is the list of the cheapest Forex brokers with the lowest spreads.
CySEC, FCA, ASIC
MT4, MT5, WebTrader
CySEC, CBI, FSA, FFAJ, BVI FSC, FSCA, FSRA
MT4, MT5, WebTrader, AvaTradeGO
Swedish FSA, Finansinspektionen
cTrader, MetaTrader 4, MetaTrader 5
SVGFSA, FCA, DFSA, FSCA, FSA
From 30% to 100%
Risk Warning: YOUR CAPITAL MIGHT BE AT RISK
FCA, CySEC, FSA
MT4, MT5, WebTerminal
ASIC, CySEC, FSA, BVI
WebTrader, MT4, TradingView
FCA, CySEC, DIFC, CIMA
WebTrader, MT4, MT5, IRESS
ASIC, SCB, CMA, CySEC, FCA, BaFin and DFSA
MT4, MT5, cTrader, TradingView
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Simply put, the spread in Forex is the difference between the buying and selling price of any given currency. The spreads are not exclusive with Forex brokers only, the banks and retail currency exchanges use them actively, as well. However, the main difference is that your bank or retail currency exchange will usually charge much higher spreads than a decent Forex broker.
Let’s explain the example of spreads on the most popular Forex currency pair – EUR/USD. If a certain exchanger purchases one Euro for 1.10 US dollars and sells for 1.15 US dollars, it means that the spread on an applicable currency is 0.05. If you were to buy 1 lot of the currency with this exchange (1 lot is equal to 100,000 USD) you would immediately lose 5,000 US dollars. However, this usually happens with major exchanges such as banks.
The best Forex brokers with lowest spread have access to major liquidity providers, which allows them to lower the difference significantly compared to banks and retail currency exchanges. For instance, on EUR/USD currency pairs, the best brokers will have a spread of 0.00005 USD which is at least 2000 times less than what you’ll observe with major retailers.
Pip is a percentage in points, some refer to it as a price interest point. It is a standard measuring unit of price movement of Forex currencies. If you were to express the price difference in four decimal places then the last or the fourth decimal point would be a pip. Hence, a pip is mainly equivalent to one-hundredth of a 1 percent or one basis point. However, it has to be noted that not all currency pairs are quoted in dour decimal points. For example, while a low spread Forex broker in India would use 4 decimal places as a general rule on all currency pairs, the Japanese yen (JPY) is the only exception that is quoted with 2 decimal points.
If you are new to Forex trading it might be difficult to understand what is a convenient or tight spread. You may observe that most Forex brokers offer EUR/USD currency pairs for 1 pip or more and it may sound quite cheap for you. However, the absolute best brokers would go even lower and offer spreads of 0.9 or 0.6 pips. So how do you know what is the best spread for a specific currency pair? One of the guaranteed methods of identifying the best offer would be to dig into the lowest spread Forex broker comparison reviews. As you go through the available spread offers of the individual brokers you will eventually come up with the lowest offer available on the market. Another way is to seek special low spread accounts which are often referred to as Zero Spread account types.
Zero Spread accounts are exclusive account types of Forex brokers where the spreads applicable on Forex currency pairs start from 0 pips. It might sound counterintuitive as it seems that the broker is losing its revenue source. However, it has to be noted that these account types come with commission fees almost in every single case. Two best examples of 0 spread Forex broker would be HotForex and FXTM. HotForex offers a Zero Spread account with 0 pips and a commission rate of $0.03 per 1K lot, whereas FXTM offers a 0-spread Advantage account type with an average commission of $0.40 – $2 per lot based on volume.
While some Forex traders might prefer commissionable Zero spread accounts, others will look for tight spreads and no-commission trading opportunities. For the traders who seek the last option, we recommend the XM Ultra-Low account type which operates commission-free and offers spreads starting as low as 0.6 pips compared to the standard 1 pip market average. To understand the differences between these brokers better, you can read the XM vs HotForex or XM vs FXTM comparison reviews. However, XM is the best low spread no commission Forex broker currently operating in the industry.
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