Looking for the lowest spread forex brokers? Forex trading is hot stuff right now. If you can find the right broker, you could be well on your way to financial success in the forex market.
Spreads affect your net result. If the spread is high, your net result isn’t as great as it could have been. You get hit even harder in the pocket if things like withdrawal fees, deposits and commissions are high, too.
As such, finding a low spread forex broker is essential if you want to maximise your gains. At the same time, you want to make sure the broker is credible and reputable. In this article, we’ve done the research and crunched the numbers for you. Let’s take a look at the top 5 most inexpensive and lowest spread forex brokers 2019.
What Is a Low Forex Spread?
The spread in forex trading is the gap between the bid and the ask prices. Traders selling a currency pair offer a quote for both sides for the market. The bid is the selling side (short side) and the ask price is the buying side (long side). When a trader wants to book the profit, they have to close it from the ask price. There’s then a gap between the bid and the ask, and this difference is the spread.
Why Do Forex Spreads Exist?
The spread exists because it’s how non-commission brokers make their $$$. They don’t charge a fee to make a trade; instead, the fee is built into the sell and buy price of the currency pair they’re trading.
So when you’re looking around for forex traders to work with, you’ll come across “non-commission brokers.” Technically, they still charge a commission – the spread. Other than that, though, there is no commission involved. Moreover, the spread is lower than the various other commissions that brokers will charge for.
Spreads vary from broker to broker. If you’ve carried out even a bit of rudimentary research into different forex brokers so far, you’ll have noticed that some offer higher spreads than others.
The reason some are lower than others is usually down to the type of account. That said, there are other factors involved that affect the spread, including the time of the day and the market activity.
The aim of the game is to find the forex brokers with the lowest spreads that are still competitive.
The Lowest Types of Forex Spreads
Brokers typically offer 2 types of spreads in forex trading:
- Floating (otherwise known as ‘variable’)
Floating spreads are offered by forex traders who use a non-dealing desk model, while fixed spreads are offered by traders using a dealing desk (or market marker) model.
Top 5 Lowest Spread Forex Brokers 2019
HotForex – Cheapest
HotForex is one of the best low spread brokers around. They offer as many as 7 different account types and trading platforms. With spreads starting from just 0.7 pips, it’s one of the best value forex brokers on the planet. You can even get zero spread accounts if you meet certain requirements.
Customer support is available 24/7, leverage is 1:1000 and minimum deposit is $5.
HotForex is ideal for investors who are looking to dip their toes into the world of forex, and because it’s also a managed forex account you can put your money in the safe hands of an experienced forex trader who’ll execute trades for you.
As well as forex, you can also trade cryptocurrency, bonds, indices and commodities with HotForex.
FXTM – Second Lowest Spread
FXTM offers some of the lowest spreads around and they start out from 0.1 pips. There are a variety of account types on offer, leverage is 1:1000 and minimum deposit is $5.
However, it’s worth mentioning that spreads vary from account type to account type. Only specific accounts offer 0.1 pips.
FXTM offers CFD trading on 59 currency pairs, 11 stock indices and 8 commodities, while five market analysts are at your beck and call to help you up your trading game with helpful videos, eBooks, webinars and more.
Transaction costs are low, too.
XM – Lowest Minimum
On XM, spreads start out from zero pips, which makes this trading platform very lucrative to forex traders. More than 1,000 financial instruments can be traded, leverage is 1:500 and minimum deposit is $5.
There are three account types available – Micro, Standard and XM Zero – with Micro and Standard offering minimum spreads of 0.1 pips. The average spread for a major pair, meanwhile, is also 0.1 pips.
XM is a super reputable trading platform that’s won numerous awards. It also supports trailing, market, limit and stop orders.
Trade 360 offers 6 trading accounts and fixed spreads. However, while relatively low, Trade 360’s spreads are currently not available to the public.
One thing that does count against Trade 360 is that the minimum deposit of $500 is far higher than any other forex broker in this article. Moreover, that’s just for the Mini account – for the Standard account, minimum deposit is $1,000. The Standard supports MT4 and gives you live customer support, but the Mini account doesn’t.
Trade 360 also uses its own trading platform and the leverage for currency pairs is 400:1.
Plus 500 is one of the best regulated forex brokers around. It’s listed on the London Stock Exchange and spreads are as tight as 0.1 pips.
Plus 500 is impressive all-round. Leverage is 1:30, minimum deposit is €100 and its 2,000+ instruments include commodities, cryptocurrencies, stocks, indices and, of course, forex. Something of a trailblazing broker, Plus 500 was the first to let brokers trade bitcoin CFD. Other cryptocurrencies you can trade include LiteCoin and Ethereum,
The only downside we found to Plus 500 is that it doesn’t offer a variety of extra services in comparison to other forex brokers. For example, helpful educational materials are sparse as are tools to help you analyse the markets.
Still, it offers low, competitive spreads which will be just the ticket for some investors in the forex market.
Before making any decision regarding which forex broker to choose, it’s important that you carry out your own research and pick an account type that’s right for you and your trading goals.