When trading Forex, you will have heard of spreads or cost of trading. Spreads is the commission that FX brokers earn when they execute a trade for traders. Therefore, traders would prefer to trade Forex with a broker that offers low spreads.

The most common and preferred FX brokers that provide their traders with low spreads would be OctaFX, XM, and Plus500.

 What is a Spread?

A currency pair’s buying and selling price forms the basis of a spread. The difference between the ask price and the bid price is what we mean by a spread. Traders cannot just sell or buy a currency. The trades always happen with a pair of currencies. Forex brokers offer a quotation with a bid price and ask price. The bid price is the selling side and the ask price is the buying side of the currency pair. However, to make a profit, a trader needs to close it from the asking price and the difference between the entrance and exit price is what we mean by a spread. Spreads exist in every market.

Forex spreads vary, even on an hourly basis. Knowing all about spreads is important for Forex traders as they are the main cost when trading currency. Keeping a watch of the spreads can help you to make the most of your successes.

While trading, the principal focus is to make a profit, but this means taking into consideration the transaction costs too. Commissions, withdrawal and deposit fees, taxes, as well as broker spreads, all influence the net profit of the trading. Given that all traders want to minimize their costs, finding a low spreads Forex broker with as low a spread as possible is crucial.

 What Does Low Spreads Mean?

Low spreads in Forex means that there is only a small difference in price between the ask price and the bid price. It is better to trade with low spreads as it indicates that, generally, volatility is low while liquidity is high. Low volatility means that there are fewer fluctuations in the exchange rate but its value changes steadily over time. A high liquidity means that the currency pair can be bought or sold easily without the exchange rate being affected too much.

Low spreads Forex brokers are popular because traders can open many deals in one day, with commissions reaching up to around 100 pips. Traders choose to trade with low spreads to cut the costs. With low spreads, there are fewer losses financially. This means that the trader’s basic principles of making a profit stand in good stead.

Spreads vary from broker to broker. If a trader wants to maximize their profits, he or she needs to look for a broker that suits their needs. Some brokers specialize in low spreads. We have come up with a list of low spreads Forex brokers to give you a helping hand with your Forex trading.

Advantages of Low Spreads Forex Brokers

There are two main advantages that benefit the traders when investing with low spreads FX brokers; the advantage mainly revolve around the ease of executions, and the fact that low spreads are essential for any form of scalping\hedging.

The first benefit would be the ease of execution of the trade. It is a principle that the closer the spread is to zero, and then the trading transaction tends to be much easier. The process moves smoother and the transactions are performed effectively and efficiently. This encourages traders who base their trading strategies, on fast and resourceful trading decisions that are executed.

The second advantage lies in the fact that it is essential for scalping or hedging to include low spreads. With low spreads, the cost is lowered because of the fact that the trading tools execute various open and closed positions throughout the trading session. However, traders that have long term position more likely prefer fixed spreads. Fixed spreads simplify calculations on trading costs and create a form of stability, regardless of the market conditions.

These advantages define what low spreads Forex brokers have to offer to the traders who are interested in a fast-paced trading session and those that delve into the scalping or hedging element.

Disadvantages of Low Spreads Forex Brokers

Despite the aforementioned benefits, there are various disadvantages from low spreads Forex brokers. These drawbacks include: additional cost, higher minimum deposit requirements, and the possibility of Negative Balance Protection.

The first drawback is that there are additional costs when it comes to the trading providers that offer low spreads. It is more than likely that a broker that offers low spreads would charge the trader with an additional fee, as a commission for each trade. It is recommended that the trader reads up on the broker’s trading fees and conditions, before investing with them, as to not be blindsided by the costs later on.

The second drawback is that brokers could offer low spreads, but the minimum deposit requirement could be relatively higher than other brokers. This is because the brokers with low spreads are compensating for the funds that they are not gaining for the low spreads; it is relatively common with low spreads Forex brokers. The third disadvantage is that brokers may have the option of not providing the Negative Balance Protection. Negative Balance Protection is a preventive measure that brokers take to protect their traders, a policy that guarantees traders won’t lose more funds than that they have deposits, if their trading account reaches into the negative zone.

 Low Spreads Forex Brokers List

Broker
Description
Trade Now
Octafx
OctaFX
Regulation: CySec
Min. Deposit: $/€/£ 5
Leverage: 1:500
Spreads: Low as 0.4 pips

Review


FP Markets
FP Markets

Regulation: ASIC, CySEC
Min. Deposit: $/€/£ 100
Leverage: 1:500
Spreads: Ultra Tight from 0.0 pips

Review


NSBroker
NSBroker
Regulation: MSFA, BaFin, FCA,
Min. Deposit: $250
Leverage: 1:100
Spreads: Low as 1.2 pips

Review
XM
XM
Regulation: CySEC,FCA,ASIC
Min. Deposit: $/€/£ 5
Leverage: 1:500
Spreads: Low as 0.1 pips

Review
Avatrade
Avatrade
Regulation: ASIC,JFSA,FSCA
Min. Deposit: $/€/£ 250
Leverage: 1:400
Spreads: Floating from 1 pip

Review


IC Markets
IC Markets
Regulation: ASIC
Min. Deposit: $/€/£ 200
Leverage: 1:500
Spreads: Low as 0.0 pips

Review


Etoro
Etoro
Regulation: CySEC,FCA,ASIC
Min. Deposit: $/€/£ 200
Leverage: 1:30
Spreads: Variable

Review

XTB
XTB
Regulation: FCA
Min. Deposit: $/€/£ 250
Leverage: 1:30
Spreads: Low as 0.1 pips

Review


IQOption
IQOption


Regulation: CySec
Min. Deposit: $/€/£ 10
Leverage: 1:1000
Spreads: Floating from 1 pip

Review


OlympTrade
OlympTrade
Regulation: IFC
Min. Deposit: $/€/£ 10
Leverage: 1:500
Spreads: Low as 0.0 pips

Review
Globex360
GlobeX360
Regulation: FSCA
Min. Deposit: No min Deposit
Leverage: 1:500
Spreads: Low as 1.6 pips

Review