Picking a Low Spread Forex trading platform is essential, especially for Forex traders who are scalping. These cut your trading cost in the long run, especially if you are an active trader. To make things easier for you, we’ve put together this list of the best brokers with low spreads.
Top 10 Low Spread Brokers
- Pepperstone – Overall Lowest Spread Forex Broker
- AvaTrade – Low Fixed Spreads Forex Broker
- FP Markets – Trusted Low Spread Forex Broker
- IC Markets – Raw Spreads FX Broker from 0.0 Pips
- Forex.com – Best Execution Low Spread Broker
- FXTM – High Leverage Tight Spreads
- eToro – No Commissions on Stocks Broker
- IG – No Commission Broker
- FxPro – 0 Spread Broker
- Fusion Markets – Low Commission Forex Broker
| # | Broker | Spread | Pips on Majors * | Established |
|---|---|---|---|---|
| 1 | Pepperstone | Variable | from 0.7 | 2010 |
| 2 | AvaTrade | Variable | from 0.9 | 2006 |
| 3 | FP Markets | Variable | from 1.4 | 2005 |
| 4 | IC Markets | Variable | from 1.0 | 2007 |
| 5 | Forex.com | Variable | from 1.0 | 2006 |
| 6 | FXTM | Variable | from 0.4 | 2011 |
Pepperstone
Pepperstone is the overall best choice for both veteran and beginner traders. It offers various account types to suit every style and an impressive average spread of 0.16 pips.
This broker is well-known for its selection of third-party platforms, including MT4 and cTrader. Traders also gain access to a range of different tools.
A downside is that Pepperstone is not listed on the stock exchange. This limits the number of financial assets available.
| Pros | Cons |
|---|---|
| Average spreads of 0.16 pips | Not listed on the stock exchange |
| Low non-trading fees | |
| Access to third-party platforms | |
| Great customer service |
AvaTrade
AvaTrade is an excellent brokerage choice for active traders. They offer competitive fixed spreads of 0.9 pips with no commissions. The minimum deposit is $100 to open a an account with AvaTrade. They offer access to their proprietary platforms as well as both MT4 and MT5. On the downside, they charge above average inactivity fees.
| Pros | Cons |
|---|---|
| Highly competitive fixed spreads of 0.9 pips | Inactivity fees |
| Wide range of currency pairs | |
| Easy account opening process | |
| Free deposits and withdrawals | |
| Great research tools |
FP Markets
First Prudential (FP) Markets is another excellent choice. They are a well-regulated and trustworthy broker. They offer tight spreads starting at 0 pips and averaging around 0.45 pips. It offers access to a range of third-party platforms for you to choose from as well as an impressive selection of educational content.
On the downside, FP Markets isn’t available to US citizens.
| Pros | Cons |
|---|---|
| Spreads starting at 0 pips | Not available in the US |
| Wide selection of platforms | |
| Educational resources | |
| Fast order execution |
IC Markets
With an average spread of 0.1 pips, IC Markets has one of the lowest spreads on this list. IC Markets great spreads and fast order execution make it a top choice for scalpers.
IC Markets has no deposit or withdraw commission fees. Plus, customers have access to powerful platforms including cTrader.
A downside is that there is a high minimum deposit required to open an account.
| Pros | Cons |
|---|---|
| Average spreads of 0.1 pips | Minimum account deposit |
| Fast order execution speed | |
| No withdrawal or deposit fees | |
| Powerful platform |
Forex.com
Forex.com is one of the top-rated brokers in the US. This is another safe and reliable choice offering competitive spreads to clients.
Forex.com gives you access to 80 currency pairs. Although spreads are low, there is a flat commission rate of $5 per standard lot. It offers three premium platform as well as the popular MT4 platform.
A downside is that passive traders will face inactivity fees. There is also a long waiting period for account verification.
| Pros | Cons |
|---|---|
| Top-rated broker | Inactivity fees |
| Low fees | Long account verification waiting period |
| Diverse research tools | |
| Great range of currency pairs | |
| Access to premium educational resources |
FXTM
ForexTime (FXTM) is another reliable choice for both experienced and beginner traders. With a great selection of account types, FXTM offers traders spreads starting at 0.1 pips.
FXTM gives clients access to over 200 markets which includes 48 currency pairs. It stands out for its excellent customer service and educational tools.
On the negative side, FXTM charges high CFD fees. There are also inactivity fees and withdrawal fees.
| Pros | Cons |
|---|---|
| Spreads from 0.1 pips | High CFD fees |
| Responsive customer service | Inactivity and withdrawal fees |
| Extensive educational tools | |
| Fast account opening process |
What is Spread in Forex?
The spread is the difference between the ask and bid price on a trade. A low spread means that there is a small difference between the bid and the ask price of a currency pair. An increase in spreads usually means that there is high volatility or liquidity in the market. Spreads usually widen during less frequent trading hours, big shock, or before news events.
The spread is how no-commission brokers make a profit. The cost is built into the ask and bid prices of each currency pair that you trade. This is done instead of paying a commission fee per trade.
>> Want to Trade Forex? Check out our guides on:
- Best Online Forex Brokers
- Best Forex Trading App
- Forex Brokers In Malaysia
- Forex Brokers in South Africa
- Forex Brokers in UK
- US Forex Brokers
- Forex Brokers in Singapore
- Forex Brokers in Canada
How does it work?
The bid price is the price at which you are willing to sell a currency and the price at which a broker is willing to pay for it.
The ask price is the price at which you buy the same currency and the price at which a broker is willing to sell it. The bid price is generally lower than the ask price.
When you buy a currency pair from a broker, you buy the base currency and sell the quote currency. When you sell the currency pair, you sell the base and receive the quote currency. Currency pairs are quoted based on their bid and ask prices.
A currency quote is the value of one currency compared to another foreign currency. These two currencies are known as the base currency and the quote currency. The base currency is always the first currency listed. The second one listed is the quote currency.
How are spreads calculated?
Spreads are a key figure when determining your cost. This price difference is calculated in pips. Pip stands for “percentage in points”. In Forex, 1 pip is usually equal to 1 point movement in market value. This is based on the fourth decimal place of your currency pair.
To calculate the spread, you need to work out the difference between the buy and the sell price in pips. All you need to do is subtract the bid price of a currency pair from the ask price.
1 pip is equal to 0.0001 for most currency pairs.
An example of a 1 pip spread for USD/EUR would be 1.1061/1.1062.
What is considered good spread?
Spreads are considered good when they are low. Low spreads usually have an average of below 1 pip. An example of a good spread would be 0.5 pips for a currency pair.
How does a good spread make a difference?
The lower the spread, the cheaper it is to place a trade order. It means that the cost of trading is less. Incorporating spreads into your strategy is a key way to make higher profits.
On the other hand, make sure you check what other commissions your broker charges. Some charge higher commissions to make a profit.
Scalping and Spreads
Finding a broker with low spreads is particularly important for scalping. Scalping is a strategy that involves profiting off of small price changes. Traders make a high number of trades. This means that traders need fast order execution and a strict exit strategy as one large loss could erase the many small gains made.