BRKV – The lowest spread brokers are very easy to find. You just go to every broker’s website and check their spreads. After comparing, you can find yourself the forex broker with the lowest spread. But is it really what you’re looking for? You may think it is but it’s not. The thing you want to find is brokers with the lowest trading cost. Spread is not the only thing that decides the trading cost. It’s just one factor among the others like commission, rebate, bonus, deposit… (go to best forex bonuses)
So how can we find the brokers with the lowest trading cost? You don’t. Luckily, I have done that for you. I have tested with many different famous forex brokers and after a lot of calculation, I’m sure these 5 brokers have the lowest trading cost:
- Exness >>> Learn more here
- Hotforex >>> Learn more here
- FBS >>> Learn more here
- XM >>> Learn more here
- FXTM >>> Learn more here
Now, let’s dive into details.
Spread and Commission
Of course we all agree that the first condition to choose a broker is their reliability. We only trade with trusted and regulated brokers. Then, the next criteria is the transaction cost.
Spread is the difference between the Bid and the Ask prices. It is the transaction fee you have to pay for brokers or banks. The higher the spread, the higher the transaction cost. That’s why most traders want to trade with low spread brokers. However, not all traders want to trade with lowest spread brokers. The information below is my own experience. You cannot find anything like this anywhere else. So let’s read all this article to understand all.
There are 2 types of forex account: regular accounts and ECN account. When traders register the regular accounts, the brokers will charge spread as their main income. That’s why their spreads are much higher than that of ECN accounts. When they get quotes from liquidity providers, they will add the transaction fee (spread) to those quotes (a process called Mash Up). For ECN accounts, they will provide the exact quotes that liquidity providers provided. Therefore, they have to charge commission as it is their main income.
So what are the differences?
– You pay for spread when trading regular accounts.
– You pay for commission when trading ECN accounts (for ECN accounts, brokers charge commission and spread also, but those spreads are nearly zero. Therefore, the main fee you have to pay is commission).
There are 2 types of forex accounts. I cannot review all broker accounts here, because it will be too long. So I will list down 5 forex brokers that have the lowest spread for regular accounts, because the question is about low spread brokers. It means you want to know about the regular accounts’ spreads. You can learn more about the best ECN brokers here.
Here are top 5 lowest spread brokers:
- Exness >>> Check details here
- XM >>> Check details here
- Hotforex >>> Check details here
- FBS >>> Check details here
- FXTM >>> Check details here
What type of traders need low spread brokers?
There are 2 types of traders: scalpers and long term investors.
Scalpers are traders who open and close many positions within short time. As usual, traders who keep their positions open less than 1 month are scalpers. Vice versa, traders who keep their positions open longer than 1 month are long term investors.
They open many positions in a short time, so their main transaction cost are spread and commission. Moreover, they also earn just some pips per order, so they prefer to choose low spread and low commission brokers. I have traded like both a scalper and an investor, so I know which brokers suit which type. These are the 3 brokers that I find most suitable for scalpers thanks to their low spread and commission:
For long term investors
Because they keep their positions longer, they earn some hundreds of pips per position. Therefore, they don’t care about spread and commission, because they only pay a maximum of 2% of their profit for spread, but their main transaction cost is swap, because they keep their positions open for months. Sometimes, they have to pay up to 90% of their profit for swap. For this type of traders, they prefer low swap brokers. These are the lowest swap brokers that I find most reliable and safe to trade with:
So what type of trader are you?
If you are a long term investor, don’t care about spread.
If you are a scalper, spread and commission are important.
Why US and UK brokers’ spreads are higher?
US and UK are the 2 biggest forex markets in the world, but their brokers are less competitive in term of transaction cost. I did a research of hundreds of the best forex brokers in the world, and I found that US and UK brokers usually offer higher spreads and commission than Australia and CySEC brokers. CySEC brokers offer the lowest spreads.
Here are the spreads for EUR/USD of top forex brokers:
|Exness||0.7 Pip (Classic account)
|XM||0.8 Pip (Ultra Low account)
|CySEC, FCA, ASIC|
|HotForex||1.1 Pip (Premium account)
|CySEC, FCA, FSCA|
|FBS||1.1 Pip (Standard account)
|FXTM||1.7 Pips (Standard account)
As you can see, the CySEC broker, Exness, has the lowest spread. UK or US brokers like Forex.com have the highest spreads. Their spreads double that of Exness. You can find more about Exness advantages in this Exness reviews.
XM has just rose to second place thanks to its all new Ultra Low account (introduced in December 2018). XM’s Ultra Low account has spread as low as 0.8 and completely commission-free. Its leverage is upto 1:888 and it has many more amazing features. You can learn all about Ultra Low account here.
Why US and UK brokers have higher spreads?
BRKV – Because of the disadvantages of their regulations. US and UK forex brokers cannot offer high leverage or bonuses, and they have to pay more for the regulation fee. That’s why they have to charge more on spread and commission.
How to choose the best low spread broker?
Again, only scalpers should choose low spread brokers. If you are long term investors, swap is more important.
But there are dozens of low spread brokers, so which one is the best for you?
Here are the conditions to choose the best low spread brokers:
- Regulated brokers. If that broker was regulated in your country, choose it. If there is no broker regulated in your country, choose the trusted and lowest spread broker.
- Brokers who have local payment system. Some low spread brokers don’t have local payment system. Traders only can deposit and withdrawal by Visa, Credit card, Neteller, and Skrill… so you shouldn’t trade with them, because as usual, you have to pay 2 – 4% of your total deposit amount as the fee for those international payment methods. This price is just too much.
- Low spread and commission.
- Good local supporters.
If you are ASIAN traders, Exness is the best brokers for Scalpers. Exness reviews
If you are Africa traders, XM and FBS are the best. FBS reviews
If you are US traders, Forex.com is the best
If you are European traders, XM and Exness are the best. XM reviews
Here are top 5 lowest spread brokers: