Finding low spread forex brokers without extra fees can be challenging. There are millions of brokers out there that offer low spread. However, not all of them have the same features and benefits.
The forex exchange market has grown rapidly. It has changed over years and the market of today is different from what it was used to be in the 19th century. Foreign exchanges were exclusively for the few elites, governments and financial institutions. Today, everybody can open an account and start trading.
As forex opened up to the world, forex brokers try to diversify their products. In addition, the gate was opened for different trading styles and many flourished and thrived. Therefore, If you are adopting a scalping trend; then, looking for low spread forex brokers is a must.
However, as we said before, it can be challenging since all brokers try to compensate their low spread by charging you other hidden fees. Such a thing is sometimes hard to detect.
The logical question to ask here is how to detect the scam?
This is what we are going to discuss in the following steps.
What is spread in forex trading?
In this example, we pay 2.6 pips if we need to open a position EURUSD.
The term ‘spread’ is very common in the jargon of the forex industry. Spread is simply defined as the difference between the price at which a currency pair is bought and the price at which it is sold.
The spread is the cost paid to the broker in order to execute your orders. The lowest spread Forex brokers are generally the most popular among traders.
There are two practical explanations for the spread. Each transaction opened will result in a loss equivalent to the spread and that, each time the transaction is made, this amount is added to the losing transactions but deduced from the winning transactions.
A small spread means the transaction cost is low, whether you are dealing with a Market Maker or ECN broker. If you are looking for Forex brokers with the lowest spreads, see below.
List of Low Spread Forex Brokers
RoboForex is a brand based in Belize and operated by the RoboForex Group. This forex broker began operations in 2009 and has grown in size and capacity.
RoboForex offers several trading instruments which include Forex, Stocks, Indices, ETFs, Commodities, Energies, Metals and Cryptocurrencies. In addition, they offer cutting edge platforms.
It boosts currently over 800,000 clients from 169 countries. They are both a dealing desk and a Non-Dealing Desk broker offering ECN and STP trading accounts through their platforms. Also, they provide a range of different payment options.
With the RoboForex ECN account, you can get lower spreads with some commissions to pay.
- Low spreads starting from 0 pips.
- Micro accounts for trading with a minimum of 0.01 lot size
- Multiple promotions and bonuses.
- Diversified trading platforms including MT5, cTrader and R Trader.
- Insurance for clients’ deposits.
- Regulated and trusted broker
- Low spread broker
- Range of support tools that include skype, chat, email, and mobile.
- RoboForex’s support team certainly has a solid reputation
- Wide Range of trading instrument
- Biginner friendly
- RoboForex doesn’t accept US clients
- Doesn’t support Paypal
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2. Hot Forex
HotForex operates under HF Markets Group which includes also HF Markets. The group holds licenses from different regulators like the FCA UK, CySEC Europe, FSCA South Africa, DIFC Dubai, and the SFSA Seychelles. These regulations made HotForex a regulated and a trusted Forex broker.
Hot Forex is one of the best low spread forex brokers to try.
It offers the Meta trader platform and its tools with competitive package tools called premium tools. HotForex can use them as much as they want to enhance their trading experience.
In addition, Hotforex customers have access to over 100 securities. With six different account types offered, pricing at HotForex varies greatly by account type. At best, HotForex’s pricing is slightly better than the industry standard.
- Multiple regulations.
- Commission-free trading accounts available.
- low spreads for trading currencies
- Lots of premium MetaTrader tools and indicators such as AutoChartist.
Only 56 shares are available.
The broker doesn’t support Paypal.
HYCM enjoys trustworthiness. It has been operating for over 40 years and is regulated in multiple jurisdictions. HYCM is a safe and secure way to trade forex and CFDs. The company and its subsidiary are regulated by the Cyprus Securities Exchange (CySEC) and the Financial Conduct Authority (FCA).
HYCM provides traders with two platforms for trading: Prime Trader, which is HYCM’s state-of-the-art exclusive multi-asset platform, and the MetaTrader4 (MT4) platform.
In addition, it provides mobile apps to facilitate the trading experience of their clients. HYCM considered to be among the lowest spread forex brokers.
- All accounts have an Islamic account option
- The minimum deposit required is relatively low.
- The classic and raw accounts allow EA trading.
- It has provisions for VIP accounts.
HYCM doesn’t supprt Paypal
The broker doesn’t support Paypal.
FBS is one of the largest brokers in the world with more than 12 million traders. The broker started in Belize in 2009 and then regulated by IFSC in Belize.
FBS regulation is not one of the high points for the firm like FCA, but FBS remains among the best low spread forex brokers and operates in more than 196 countries.
FBS has managed to receive several awards and recognition for their services, like the best European broker. The broker has also been able to receive positive FBS reviews from existing customers.
- Minimum deposit of $1
- Maximum FBS leverage of 1:3000
- ECN account offered with tight spreads and a commission per lot
- Trading instruments include 32 currencies and two metals
- FBS spreads starting from 0 pip
- Five different types Of accounts
- MT4 & MT5 Trading Platform
- Full range of payment options
All the accounts available with FBS support 31 currency pairs and 2 metals and also provide free funds insurance. The most basic account can be opened with just $1.
In addition, it support more than 20 of payment tools which makes it adequate to all kind of traders.
- Extensive bonuses offered for traders
- Access to investor compensation in case of broker fraud
- Impressive catalog of educational material
- Low capital requirements for account opening
- Very effective customer support
FBS doesn’t support Paypal
limited possibilities for European traders comapared to other brokers
Plus500 is one of the best forex brokers that offer low spread. The broker focuses on trading a wide range of financila products with a low spread and without any extra commissions.
Plus500 has been in the forex industry and CFD sector since 2008. They are registered in the UK and licensed by the Financial Conduct Authority (FCA).
This forex broker provides access to several products like currencies, stocks, commodities, stock indices, cryptocurrencies, ETFs, and options.
In addition, Plus500 is the first broker to include Bitcoin in its services since 2013. The broker does not charge any extra commission on any of its services. All costs are contained in the margin for each of more than 2,000 trading instruments provided on its platform.
Plus500 Ltd (PLUS.L) has been listed on the AIM section of the London Stock Exchange since 2013 with a market capitalization of £ 1.73 billion and clients in more than 50 countries around the world.
Plus500 is a very safe broker and gained high trust score from customers. It has received many awards and recognition from industry watchers for its excellent service.
In addition, the broker has one of the highest-rated CFD apps on the App Store and Google Play. This consequently makes trading fluent and easy with this broker.
- The broker offers access to more than 2,000 trading instruments
- Among the lowest spread forex brokers with no extra commission
- FCA regulated
- Offers cryptocurrency like Bitcoin, Ethereum, and other cryptocurrencies are available
No extensive educational materials available
No paypal or US clients
Forex Broker with low spread, Perfect solution for scalpers
Spread, for different currency pairs, varies depending on the jurisdiction under which the currencies are regulated. Therefore, you will find that spread varies from one currency pair to another.
It is wise to look at the spread of the different currency pairs you intend to trade, other than EUR / USD, which is generally a traded pair for which brokers offer the lowest spread.
Therefore, deciding which forex broker to trade with can be a difficult task. Being able to find the right broker, which charges a fair price for your trading experience, secure your investment throughout the appropriate transactions and effectively respond to your concerns, is no longer as simple as dealing with someone online that you will never meet in person. Simply because they are based abroad.
The main mistake most traders make when choosing a broker is that they focus primarily on the cost factor. Many traders look for those that offer the lowest spread or “near-zero” spread on most major pairs.
The reality to remember is that brokers are aware of their cost structures and would never go into such businesses. The main objective of the broker is to always recover costs in any way possible. It means that for each low spread offered to you, the broker will certainly try to compensate for this disadvantage elsewhere in terms of recote, slippage, or poor quality execution.
Type of brokers and low spread offers
There are two main types of forex brokers; ECN brokers and market makers.
An ECN broker executes orders directly in the market where global banks and financial institutions act as liquidity providers at the applicable spread. The later fluctuates according to supply and demand but generally kept at its minimum.
Even though they offer a lower spread, ECNs recover their costs in different ways, for example through transaction-based pricing and commissions. Depending on the style and the activity level of the broker, the pricing structure of an ECN remains lower than the average of a normal broker.
Market makers, on the other hand, rely on the Bid/Ask spread to generate their income. The spread, in this case, can be multiplied if the trader chooses to use leverage in their trading account.
Market maker generally acts as an intermediate between you, his client, his bank or his liquidity providers, and prefers to “arbitrate” at a profit the margin he offers you against what he can negotiate on the market for his own account.
The market maker keeps instant accounting of “longs” and “shorts” for each currency pair. If he loses at some point, he will slightly increase the gap to compensate for the difference over time. However, the ultimate goal of the market maker is to generate a significant profit for each pair by the end of the day.
How to choose your lowest spread forex broker?
Forex brokers always compete with each other by offering low costs or quality services. A broker cannot offer the most affordable services at a low cost without compromising its quality.
This means that when a forex broker offers the lowest spreads in the market, it is absolutely necessary to reduce the quality in another department. It may happen that they charge you extra fees that are usually hidden and hard to detect. The broker also may engage in bad business practices to cover up its losses.
The trader, therefore, should be concerned with how the broker will recover his costs when low spreads are offered. The quality of the service offered and the fact that additional fees are charged are obvious if you do your due diligence and compare the broker’s offers with those of its competitors. You can do this by consulting customer testimonials and independent broker reviews.
In fact, it is not easy to identify a broker involved in bad business practices. This is because they are generally hidden and they leave you therefore at the mercy of the broker. If that happens and you detected any inconvenience, the only solution you have is to terminate your commercial agreement and withdraw all your funds without delay.
How to detect broker bad practices?
Bad business practices usually come to light in different ways. Some of them can be constantly recreated. You can see a quote and get an interest rate and act according to it. Then, you execute your order, you receive a message from the server with a different quote asking you to try again.
It certainly means that the broker may have chosen to block your request for profit reasons. However, if you took a long time to act, the broker may have acted to requote. the broker then refuses to execute your trade based upon the price you entered, but they delay your order to sell you at a high price. This happens often in fast-moving market or during news releases.
This is why we think that selecting the best forex broker with low spreads may not be as easy as you think.
Another bad practice that low spread brokers resort to is Slippage.
Slippage is also another common practice that could spoil the business experience and lead to capital losses.
Slippage occurs when a market order is executed or a stop loss closes the position at a different rate than set in the order. It is more likely to occur in the forex market when volatility is high, perhaps due to news events, or during times when the currency pair is trading outside peak market hours.
Your broker will defend themselves by stating that the market is volatile or that you have been slow to act or a major news release has caused a sudden change in the market. If these indicators are not present and there are frequent slippages, it means that it’s time for you to question the authenticity of your broker.
Another fraudulent practice that forex broker with low spreads carries out is widespread manipulation.
If your broker is a market maker, it will certainly release quotes with the most adequate price for them. Nonetheless, Market makers are all determined to establish spread requotes.
Concerning the normal brokers, some of them can offer you quotations that are not found anywhere else on the market. They can, for example, send you a quotation from other servers that imitate the real market conditions but disqualify traders in many ways.
This type of spread manipulation is common when the market is within a narrow range. Under such conditions, brokers cannot make profits, they manipulate spreads. When traders place orders for the big move, prices can dip 20 to 30 pips. This is just what it takes to eliminate stop-loss orders and prevent traders from profiting. The scam broker then takes the profit from these closed positions.
The truth behind forex brokers with low spread
When you are looking for low spread forex brokers, you should remember that the majority of them are bad. However, you can find exceptions since the market encompasses both the good and bad guys.
The truth is that not all low spread brokers are bad. However, you should know that a forex broker with low spreads will always think of compensating for their loss in one way or another. You may not need educational materials or customer support, and if you want, you are looking for a broker who really focuses on a small spread and is ready to compromise other services. Most importantly, the broker must adhere to good business practices in the execution of your orders.
Spread is very important in choosing the broker, but you must try to understand what other costs could be. If the quality of the service is likely to be low, then the best advice is to take your time to choose your broker wisely.
Best Forex brokers and best trading platforms
There are obviously several advantages for trading with a forex broker with lower spreads. The following reasons justify opening an account with a brokerage firm offering low spreads.
- The trader pays less per transaction. While it’s not always as simple as it sounds, sometimes it is.
- If you trade big, low spread brokers charge a commission which decreases as you trade.
- Negotiating with a broker offering low spreads encourages competitors to reduce their spreads, which makes the foreign exchange market more user-friendly.
Some traders insist, above all, on the lowest possible spreads before choosing to trade with a particular broker. It is important for them to get the lowest spread especially if they open multiple positions a day. This helps them minimize losses.
Therefore, Some brokers offer very attractive fixed or variable spreads with the minimum and reasonable values. The downside to these small spreads is that brokers may need high deposit accounts. Some of the best international forex brokers offer fairly low spreads with mini or even micro-Forex accounts. However, they shouldn’t be confused with zero spread accounts.
Best forex broker with Low Spread is particularly preferred by traders who use scalping. This allows them to open and close multiple transactions per day with the lowest spread possible.
In order to reduce the costs of transactions, traders generally look for the best forex broker with Low Spread. In this situation, financial losses are limited and this is what each trader impatiently expects: to be able to make profits and secure the amount of its invested capital.