Finding the best low spread forex broker is crucial for any trader, especially those involved in Forex trading and scalping. The spread plays a vital role in this decision since lower spreads can greatly reduce trading costs, which is particularly enticing for active traders who trade large volumes.
However, it's important to exercise caution as numerous options are available, and not all brokers are equally trustworthy. Some brokers may claim to offer zero-spread accounts as a marketing strategy to attract unsuspecting newcomers.
In this blog post, we will reveal our findings and shed light on the best low spread Forex brokers that you can rely on for your trading endeavors.
6 Best Low Spread Forex Brokers
- IG – Best Low Spread Broker Overall
- CMC Markets – Best web trading platform
- Interactive Brokers – Best for professionals
- eToro – Best for Beginners
- XTB – Best for 0% Commissions
- Capital.com - Best for Diversification
IG – Best Low Spread Broker Overall
IG provides a complete trading package that includes top-notch trading and research tools, exceptional education resources, and a wide variety of markets to trade.
IG is a reputable broker that offers multiple asset options and operates under global regulations. It’s considered one of the leading brokers with low spreads for clients based in the United States.
The company is registered with both the CFTC and NFA, offering support for over 80 currency pairs. Additionally, IG stands out for its rapid execution speeds and advanced trading dashboards. These dashboards provide numerous technical indicators, chart drawing tools, and various order types to meet customer needs.
The trading suite provided by IG also can deliver up-to-the-minute news directly from Reuters. When it comes to fees, traders can engage in EUR/USD trades with spreads starting from 0.8 pips.
There’s no need to pay any commissions when participating in forex trading. Additionally, US clients have the option of trading Forex with leverage. For EUR/USD trades, there’s a minimum margin requirement of only 2%. However, for GBP/USD and USD/CHF trades, a slightly higher margin of 5% is necessary.
IG offers a streamlined account opening process that is quick and efficient. In most instances, US clients will be instantly verified upon registration. The only downside for US clients is that they’re unable to trade assets other than those available on IG's platform.
However, individuals in other countries will have access to an extensive range of options, including thousands of stocks, funds, commodities, indices, and other popular markets.
- Excellent platforms and tools
- Wide selection of 19,000+ tradable assets
- Competitive Pricing
- Top-rated US Forex broker
- Support for multiple trading platforms, including MT4
- Commission-free Forex trading with spreads starting at 0.8 pips
- Outstanding customer support
- Debit/credit card fees may reach up to 1%
CMC Markets – Best web trading platform
CMC Markets stands as a frontrunner in offering affordable trading options with consistently competitive spreads across all customer segments and account types.
The availability of discounts and rebate programs may vary depending on your country of residence. CMC Markets ensures an exceptional user experience by providing advanced tools, comprehensive market research, and an outstanding mobile app.
In the year 2022, CMC Markets introduced a new pricing structure known as FX Active. This structure charges a commission per trade in addition to its already highly competitive spreads. Initially launched in the Southeast Asia region, FX Active is now available in Australia, New Zealand, Canada, and the U.K., accessible through both MT4 and Next Generation platforms.
With FX Active's commission-based pricing model at $2.50 per side coupled with minimum spreads of zero pips, traders can benefit from an all-in cost of 0.5 pip when trading currency pairs like EUR/USD and five others.
As an example illustrating the advantages of this pricing strategy: while CMC Markets' standard account offering boasts a spread of 1.5 pips for NZD/USD trades, utilizing FX Active brings down the overall cost to just 0.5 pips (after accounting for commissions).
- Affordable trading costs
- Superb web and mobile platforms
- Comprehensive research resources
- Room for enhancement in educational offerings
Interactive Brokers – Best for Professionals
Interactive Brokers is a reputable broker that specializes in multiple asset classes and offers a wide range of global markets for trading. The broker prides itself on providing competitive pricing and top-notch research and educational resources. Their trading platform suite is modern and designed to meet the needs of institutional traders.
Experienced traders will appreciate the advanced trading tools offered by Interactive Brokers and the ability to customize order types according to their preferences. However, beginners may find these features overwhelming, especially since MetaTrader isn’t available as an alternative platform option.
In terms of Forex trading commissions, Interactive Brokers charges 0.00002 (equivalent to 0.2 basis points) per side based on the trade value in U.S dollars with a minimum fee of $2 per order ($4 for round-turn trades). However, exceptionally active traders have the opportunity for even lower commission rates at 0.08 basis points.
Overall, Interactive Brokers delivers a comprehensive trading experience with its extensive market offerings and reliable services tailored toward professional traders seeking sophisticated solutions.
- Powerful platform for professionals
- Extensive global market coverage
- Comprehensive research resources
- Trader Workstation may be too complex for beginners
eToro – Best for Beginners
With a minimum deposit requirement of only $10 (or $50 for clients outside the US and UK), this widely-used online broker offers flexibility in funding options. Traders can choose to fund their eToro accounts using debit/credit cards, e-wallets, or bank transfers. Deposits and withdrawals made in US dollars do not incur any fees, although there’s a 0.5% transaction fee for other currencies.
Once the account is successfully funded, eToro traders gain access to a wide range of more than 50 Forex pairs. This selection includes major currency pairs as well as minor and exotic ones. When it comes to trading fees, eToro follows a spread-only model for Forex trades.
For example, the spreads on EUR/USD start from just 1 pip. Moreover, leverage is available for all supported currency pairs but with a maximum cap at a 1:30 ratio. eToro takes pride in being beginner-friendly by offering negative balance protection to its users.
This means that account balances are safeguarded from going below zero even during volatile market conditions. Novices can take advantage of various trading tools provided by eToro, such as technical indicators, pricing charts, and drawing tools.
One notable feature offered by eToro is its copy trading tool which allows users to engage in passive trading activities without active involvement or expertise required on their part.
By selecting an experienced Forex trader to copy from within the platform's network, any trades performed by these experts will be automatically replicated into the user's own portfolio on eToro.
- Ideal low-spread broker for novice traders
- Forex trading with spread-only pricing (from 1 pip)
- 50+ supported Forex pairs
- Low minimum deposits starting at $10
- Regulated by multiple authorities
- Diverse support for stocks, ETFs, commodities, indices, and cryptocurrencies
- Offers passive Forex trading through copy trading
- 0.5% deposit fee for non-USD payments
XTB – Best for 0% Commissions
XTB stands out as one of the top brokers for day traders due to its low spreads and absence of commissions. This applies across all supported markets, with the EUR/USD pair starting at a mere 1.3 pips. Furthermore, XTB is beginner-friendly as it does not require a minimum deposit.
It's worth noting that XTB's spreads are variable and can change throughout the day based on broader trading conditions. For instance, GBP/USD currently has a spread of 1.6 pips due to market closures, but during standard market hours, it decreases to 1.3 pips. In addition to offering low spreads, XTB is also renowned for providing high-leverage limits.
Qualified traders can leverage their positions up to 1:500 when buying or selling Forex pairs through XTB. This equates to a margin requirement of just 0.2%. Apart from Forex trading options, XTB supports an extensive range of financial instruments spanning stocks, indices, cryptocurrencies, and commodities.
To facilitate seamless trading experiences for its clients, XTB offers its proprietary trading platform, xStation 5. This advanced platform hosts an array of tools, including technical indicators that assist traders in making informed decisions.
- Zero commission on all available markets
- EUR/USD spreads from just 1.3 pips
- Offers high leverage, up to 1:500
- No mandatory minimum deposit
- Regulated across multiple jurisdictions
- Wider variable spreads outside standard market hours
Capital.com - Best for Low Spread Forex Broker Diversification
Capital.com stands out as an exceptional choice for traders seeking FX low-spread brokers to diversify their investments. With support for a staggering 125 Forex pairs, Capital.com surpasses most competitors in the industry.
This extensive range includes numerous exotic pairs that appeal to those who thrive on high-risk trading opportunities.
What sets Capital.com apart even further is its commitment to offering all markets with zero commission fees. In addition, they boast impressively low spreads starting from a mere 0.6 pips on EUR/USD. It's worth noting that these spreads are subject to change based on market conditions.
To enhance the trading experience, Capital.com provides its users with both a web trading platform and a native app available for iOS and Android devices alike.
Their comprehensive trading suite encompasses over 70 technical indicators, real-time economic news updates, multi-chart toggling functionality, and personalized watchlists tailored to individual preferences.
When it comes to leverage options, Capital.com offers maximum leverage of up to 1:30 when trading major currency pairs, a generous margin indeed! However, this leverage ratio is slightly reduced at 1:20 when dealing with minors and exotics.
As such, traders may find it advantageous to begin their journey by utilizing the demo account offered by Capital.com before diving into live trades.
Capital.com offers a convenient trading platform that includes $1,000 in virtual funds upon registration. The platform allows users to monitor real-time market conditions. A minimum deposit of only $20 is required to start trading with real money.
Multiple payment methods are accepted, including debit/credit cards and e-wallets. However, bank wire deposits must be at least $500. One noteworthy feature of Capital.com is its support for leveraged markets beyond stocks.
Users can access over 2,800 stocks from various international exchanges and trade cryptocurrencies, commodities, and indices without deposit or withdrawal fees.
- Ultra-low EUR/USD spreads starting at 0.6 pips
- No commissions on any supported markets
- Extensive support for 125 Forex pairs, including numerous exotics
- The native trading platform offers abundant analysis tools
- No fees for deposits or withdrawals
- Bank wires necessitate a minimum deposit of $500
Our Ranking Methodology for the Best Low Spread Forex Brokers
Our approach to ranking online brokers and their offerings is based on a thorough analysis that takes into account both quantitative data and qualitative insights. Our team of researchers provides expert opinions, contributing to the comprehensive reports we produce annually.
These reports cover various aspects of the online Forex brokerage industry, amounting to tens of thousands of words. As part of our evaluation process, we carefully examine the operations of multiple international regulatory agencies.
In addition, we conduct meticulous research on industry fees and commissions to ensure that our information regarding the costs associated with the online brokers we review is accurate and up-to-date.
During our evaluation process, we consider several key factors that are crucial in determining rankings:
- Bid/Ask Spreads: Our analysis involves a detailed examination of each broker's bid/ask spreads, and we furnish average spread statistics for the most commonly traded Forex currency pairs.
- Rebates and Discounts: We evaluate the accessibility and criteria for Active Trader or VIP rebates and discounts.
- Fees: This category encompasses inactivity or custody fees, ensuring a comprehensive comprehension of the fee structure.
- Minimum Deposit Requirements: We offer information regarding the minimum deposit amount required to initiate an account with each broker.
- Execution Methods: Our assessment encompasses execution methods and other data-driven factors that influence the quality of trading experiences.
In order to ensure consistency, we carry out our testing using specific tools and platforms. When assessing websites and web-based platforms, we make use of the most up-to-date version of the Google Chrome browser. Our systems operate on Windows 11 for desktop testing purposes, while MacBook Pro laptops equipped with macOS 12.5 are utilized for evaluating trading capabilities on the go.
When it comes to mobile device testing, we employ the iPhone XS running iOS 15 for Apple devices, as well as the Samsung Galaxy S9+ and Samsung Galaxy S20 Ultra running Android OS 12 for Android devices.
Through this comprehensive approach, we guarantee that our rankings are based on a thorough and unbiased evaluation of online brokers in the Forex industry.
Best Low Spread Forex Brokers – Buyer’s Guide
What Is a Spread in Trading?
In basic terms, the spread refers to the difference between a Forex pair's bid and ask prices. Some brokers may label these as the buy and sell prices. Regardless, this indirect fee is imposed when opening or closing a position.
Significantly, this serves as one of the most prevalent methods through which Forex brokers generate profits. Regardless of market direction, each buy and sell order allows the broker to earn a small profit.
Within Forex trading, spreads are priced in PIPs (percentage in point). This choice stems from the fact that currency prices, particularly major ones, move in minute increments.
- Consider EUR/USD with a bid price of 1.0922
- At the same time, the asking price for EUR/USD is 1.0923
- The gap between these two prices is 0.0001
- This difference indicates a 1-pip spread
Traders are required to pay 1 pip as they initiate a position, with an additional 1 pip if the spread remains unchanged during cash out.
It’s worth noting that Forex brokers often emphasize the "minimum" spread available to traders. However, spreads tend to be variable and fluctuate every second. The minimum spread typically applies for the specific currency pair during peak market hours.
What is Considered a Low Forex Spread?
The competitiveness of the Forex spread varies depending on the currency pair being traded. When assessing this, it’s helpful to start with EUR/USD as it is the most widely traded currency pair worldwide.
Additionally, Forex brokers typically offer their most competitive spreads for EUR/USD due to its high liquidity and low volatility levels.
A less than 1 pip spread for EUR/USD would be considered competitive. However, traders should also consider any additional trading fees, such as commissions.
For instance, there are some Forex brokers that offer spreads as low as 0.0 pips for EUR/USD. Nevertheless, to access these ultra-low spreads, traders will need to pay a commission fee.
The usual rate ranges around $3.50 per lot traded ($100,000). Certain Forex brokers provide commission-free trading options; however, their spreads may not be as competitive compared to those charging commissions.
Best Times to Trade Forex for Low Spreads
In the previous mention, it was noted that Forex brokers typically provide the lowest possible spread they can offer. However, it’s important to understand that spreads aren’t fixed and can vary. Consequently, traders should anticipate less competitive spreads outside of regular market hours.
The most competitive spreads are generally available during peak market hours; however, this is contingent upon the specific currency pair being traded.
For instance, prime trading hours for GBP/USD occur between 8 a.m. and 12 p.m. (EST). This time frame coincides with both the UK and US markets being open.
What Does Forex Spread Depend on?
Determining the Forex spread involves considering various factors. Forex quotes display both ask and bid prices. The bid price indicates the amount at which a market maker or broker wishes to purchase the base currency, such as USD, in exchange for a counter-currency like GBP.
On the other hand, the asking price represents the value at which the broker will sell that base currency for another currency.
The bid-ask spread refers to the difference between a broker's buying and selling prices for a specific currency. For instance, when initiating a sell trade with a broker, their quoted price would be considered as their bid price.
Conversely, if one intends to initiate a buy trade, they would refer to the asking price as their quoted value.
Let's take an example. Suppose an investor wants to purchase AUD, and the bid-ask pricing on the broker's platform indicates it as $1.1300/1.1230. To enter a buy trade, the trader would need to pay the asked price of $1.1230.
If the trader immediately sells back the AUD to the broker, effectively closing their position, they would then receive the bid price of $1.1300 per AUD, assuming no exchange rate changes occurred during this period.
In this particular trade scenario, due to the specific bid-ask spread set by the broker for this currency pair, it costs a total of $0.0070 to execute both buying and selling transactions involving AUD.
This example demonstrates how exchange rate fluctuations can impact trading costs and emphasizes why understanding bid-ask spreads is vital for investors in making informed decisions about entering or exiting trades involving different currencies.
What Is the Difference Between Fixed and Variable Spreads?
Forex brokers utilize fixed and variable spreads as pricing models to indicate the disparity between bid and ask prices for currency pairs. Each model has its own unique characteristics and associated risks.
A fixed spread maintains a constant difference between bid and ask prices, regardless of market circumstances. This offers a level of predictability that can be appealing to beginners, as their costs are not dependent on market conditions.
However, trading with fixed spreads may result in potentially higher overall costs since fixed spreads tend to be slightly wider than variable spreads during periods of low volatility. Additionally, fixed spreads may not accurately reflect actual market conditions.
Fluctuating bid and ask prices, known as variable spreads, are influenced by market conditions. When there’s sufficient liquidity in the market, these spreads tend to become narrower.
However, they may widen during times of low liquidity or significant developments. Compared to fixed spreads, variable spreads can be narrower when there’s a high market liquidity level.
Nevertheless, traders who opt for variable spreads should be aware that they might not know the exact cost of the spread when initiating a trade. Additionally, during volatile market events, variable spreads have the potential to widen significantly.
What Are Pips?
Spread costs are predominantly measured in percentage points or pips. In the Forex market, a pip represents the smallest price movement possible for an exchange rate.
Most currency pairs are priced to four decimal places, with the pip change occurring at the fourth decimal point. Specifically, a pip is equivalent to 1/100 of one basis point or 1%.
How to Pick a Low-Spread Forex Broker?
Before embarking on your trading journey, it’s crucial to thoroughly investigate the spread offered by commission-free brokers that you have carefully selected. Although certain Forex brokers may claim to provide attractive low-dealing spreads, they might not necessarily align with your trading strategy.
When choosing a broker, pay close attention to the following criteria:
- Fixed Spreads – Exercise caution when encountering fixed spreads, as this could indicate a broader spread compared to the average. In such cases, the broker may also engage in countertrading as a market maker.
- Spreads across different Forex pairs – Scrutinize the spreads associated with various major Forex pairs and account categories. Although some brokers with low spreads promote cost-effective trading, it's crucial to recognize that spread costs can fluctuate based on currency pairs and account types.
- Regulation – Ensure that a regulatory body of high standing oversees the broker's operations. This additional layer of oversight instills confidence in the broker's adherence to ethical business practices and serves as a prudent safeguard against potential Forex scams.
- Minimum Deposit – Confirm that the minimum deposit requirement is reasonable and doesn't pose an undue financial burden.
How Does Spread Work in Forex?
The current market price at which you’re willing to sell a currency is referred to as the bid price, while the price a broker is willing to pay is also known as the bid price.
On the other hand, the asking price denotes the amount at which you can purchase the same currency and is also what brokers offer when selling it. It's worth noting that, generally, bid prices tend to be lower than asking prices.
Buying entails acquiring the base currency and selling off the Quote Currency when engaging in a transaction with a broker involving Currency Pairs.
Conversely, when selling off a currency pair, one disposes of their base currency and receives payment in quote currency. The quotation of currency pairs is based on their respective bid and ask prices.
In the realm of foreign exchange, a currency quote represents the relative worth of one currency in relation to another.
The two currencies involved are referred to as the base currency and the quote currency. The base currency is consistently listed first, while the second one listed is designated as the quote currency.
Best Low Spread Forex Brokers – Frequently Asked Questions
What Is a Good Spread for a Broker?
The competitiveness of a spread varies depending on the currency pair. For instance, a spread below 1 pip is deemed competitive when trading EUR/USD.
What Account Types to Choose?
Brokers that endorse EU technology and trade automation typically provide the most favorable trading conditions with relatively narrow spreads. Trading bots and expert advisors greatly benefit from these low spreads.
Forex traders are increasingly favoring micro or mini accounts due to their low minimum deposit requirements, allowing them to trade micro and nano lots.
Additionally, ECN brokers are gaining popularity because they offer financial expertise through electronic communications networks (ECN), granting clients access to various participants across different currency markets.
Is a Low Spread Good in Forex?
In Forex trading, a narrow spread is typically viewed as favorable since it indicates a small gap between a currency pair's buying and selling prices. This can result in reduced transaction expenses and the potential for increased profits among traders.
What Is a Zero-Spread Account?
The Zero Spread Trading Account is a type of Forex trading account that boasts an incredibly narrow spread, resulting in virtually no difference between the bid and ask price.
However, it's important to note that these spreads can widen under certain circumstances, such as specific trading conditions or the type of account being used. Additionally, some brokers may charge commissions which can also impact the spread.
Final Thoughts – Best Low Spread Forex Brokers
Out of all the brokers we’ve mentioned, any of them can meet your trading needs effectively. However, the broker that stands out as our top recommendation is IG.
Not only is it the most affordable Forex broker, but it’s also the ultimate choice for experienced and beginner Forex traders. With IG, you can rely on a broker that excels in every aspect of Forex trading, making it the number one option for traders at any skill level.
Disclaimer: The above is a sponsored post, the views expressed are those of the sponsor/author and do not represent the stand and views of Outlook Editorial.