Before diving into the exciting realm of forex trading, traders must grasp a few fundamental concepts, with the spread standing out as a vital component of the financial landscape. This little number plays a significant role in determining the costs you’ll face while trading, which is why seasoned traders often hunt for the best forex brokers with lowest spreads.
If you’re just starting your forex journey and haven’t yet discovered the lowest spread forex broker, take a moment to explore our curated list of brokers that boast the lowest spreads around.
What is a Low Forex Spread?
A low forex spread signifies a minimal disparity between the bid price and the dealer’s asking price. Traders are generally encouraged to execute trades when spread costs are minimized, particularly during significant forex trading sessions. Low spreads suggest that the market is experiencing reduced volatility and that the current liquidity levels are above average.
It is important to note that what constitutes a low spread can vary across different currency pairs. For instance, the EUR/USD currency pair typically exhibits an average spread ranging from 0.1 to 0.8 pips, whereas spreads for other pairs tend to be higher.
Top 6 Forex Brokers with Lowest Spread
The following is the list of the best 6 forex brokers who provide the lowest spread:
1. CMC Markets
CMC Markets comes in first place in this list as a top broker with the lowest spread. It has a minimum deposit requirement of $0 and provides 0.0 pip spreads on six primary currency pairs (AUD/USD, EUR/USD, GBP/USD, NZD/USD, USD/CAD, USD/JPY). CMC (330 FX pairs) and the MetaTrader 4 trading platform (+175 FX pairs) are available, providing a 25% discount on spreads for more than 300 additional FX pairs.
CMC Markets offers fixed low commission rates ($2.50 for every $100,000 in notional value) and imposes no fees for deposits or withdrawals. With CMC Markets, you can enjoy lightning-fast executions (0.0030 seconds).
2. Capital.com
Capital.com mandates a minimum deposit of $20 and does not impose any fees for deposits or withdrawals. It features a user-friendly and straightforward platform equipped with sophisticated analytical tools, featuring MT4 risk management capabilities.
This top forex broker offering lowest spread also provide complimentary trading manuals, live quotes, interactive charts, and indicators, and is regulated by FCA, ASIC, CySEC, FSA, and SCB.
3. ICMarkets
ICMarkets demands a minimum deposit of $200, imposes no fees for fund transfers, and provides an average spread of 1 pip on EUR/USD. The typical execution times are below 66ms, and support is available for MetaTrader 4, MetaTrader 5, and CTrader platforms. ICMarkets is ideal for automated traders and offers a complimentary low-latency collocated VPS.
4. FPMarkets
FPMarkets requires a minimum deposit of $50 and provides competitive spreads starting from 0 pips on over 60 forex currency pairs through the MT4 platform. This makes it one of the lowest forex spread brokers. Moreover, their customer support team is multilingual and responsive, ensuring assistance is readily available.
FPMarkets also provides top-notch Virtual Private Server (VPS) solutions tailored for Expert Advisors (EAs). The platform functions without dealing desks or requotes, and it is compatible with leading trading platforms such as MetaTrader 4, MetaTrader 5, IRESS, and WebTrader.
5. IG
IG has no minimum deposit requirement and offers spreads starting from 0.6 points on key forex pairs. IG boasts an impressive average execution speed of just 0.014 seconds and is compatible with platforms like MetaTrader4, ProRealTime, and L2 Dealer.
The broker with lowest spread has also received accolades at the ADVFN International Financial Awards, being honoured as the Best Multi-Platform Provider and Best Finance App.
IG also provides valuable educational resources, including IG Live: Expert Trading Tips and IG Academy, which feature free online courses, webinars, and seminars. For those with limited trading experience, selecting a low-spread broker is a wise choice, as many of these brokers offer excellent trading tutorials and demo accounts to help enhance your trading skills.
6. Pepperstone
Pepperstone operates in over 160 countries, making it one of the most accessible brokers on our list and a trusted broker with lowest spread. With licenses from reputable regulatory bodies such as ASIC, CySEC, and the FCA (UK), traders can feel confident in the security and quality of services provided by Pepperstone.
The broker advertises spreads of 1.00 pip for Standard account holders, while Razor account holders can benefit from spreads starting at 0.0 pips, along with a €2.60 commission per lot per side. For novice traders, Pepperstone offers a wealth of educational resources, including comprehensive guides and webinars available on their website.
What does Forex Spread Depend on?
Several factors influence the amount of a forex spread. Forex quotes are required to include both ask and bid prices. The bid price indicates the rate at which the market maker or broker intends to purchase the base currency.
The bid-ask spread represents the difference between the price at which a broker buys and sells a particular currency. Therefore, when a trader executes a sell trade with a broker, the quoted price will be the bid price. If a trader intends to carry out a buy transaction, the price they will see is the asking price.
What Type of Account Has the Tightest Spreads?
Brokers that utilize EU technology and trade automation typically provide the most favourable trading conditions, including relatively low spreads. These low spreads are particularly beneficial for trading bots and expert advisors.
Additionally, micro and mini accounts are gaining popularity among forex traders due to their low minimum deposit requirements, allowing for trading in micro and nano lots.
Furthermore, ECN brokers are increasingly sought after, as they leverage electronic communications networks to offer clients access to a diverse range of participants in various currency markets.
How to Get the Lowest Spread in Forex?
- Trade during high-volume periods: The market experiences tighter spreads when it is most active, particularly during the overlap of the London and New York trading sessions. Steer clear of trading when significant markets are closed.
- Concentrate on major currency pairs: Pairs such as EUR/USD and USD/JPY offer the highest liquidity and the lowest spreads. Trading exotic pairs typically results in higher spreads.
- Use Limit Orders: By opting for limit orders instead of market orders, traders can better manage spread costs. Limit orders enable traders to set the exact price at which they wish to buy or sell.
- Refrain from News Trading: Spreads often widen during important news announcements. It may be wise to avoid trading during these times unless you are specifically focused on trading the news.
- Employ Spread Indicators: Various spread indicators can assist traders in monitoring and analyzing spread levels in real-time.
- Request a discount: Some brokers may provide reduced spreads or cash rebates to highly active traders with substantial monthly volumes. It’s always worth inquiring.
Is Low Spread Good in Forex?
Yes. In Forex, a low spread typically indicates that the difference between the buying and selling prices of a currency pair is minimal. This indicates that the transaction expenses are comparatively reduced and the likelihood of gains is increased.
Conclusion
This guide provides an overview of the best six forex brokers with lowest spreads, highlighting their currency pairs, key features, and both trading and non-trading fees. While selecting the ideal broker for your trading requirements may initially seem daunting, this guide aims to simplify the process. By reviewing the information presented, both novice and experienced traders will be well-equipped to identify a platform that aligns with their specific needs.