Spreads define the cost of trading, which makes them crucial for anyone entering the financial market. We have compared Forex brokers with low spread offers to find the best ones in 2021. They charge a modest commission for their services, so it will not eat into your profits.
The more trades you place — the higher the cost. This is particularly important for short-term strategies like scalping. Discover the best-fixed spread offers and companies that charge very little. Without further ado, here are 10 top contenders.
Top 10 List
We have looked at a combination of factors to come up with a reliable rating. The brokers were compared based on their average and lowest spreads, the size of minimum deposit, and general pros and cons. These are regulated companies worth trusting in 2021. They comply with stringent regulations that protect their clients’ rights.
This Australian company is praised for its technological solutions for experts and beginners. Getting started with Forex and CFDs is a breeze, and the active trading program allows you to reduce costs. On the downside, the news flow for fundamental traders is only basic.
An account may be opened with $200, which is a relatively high price for entry. However, the average spread of 0.09 pips is extremely competitive. When the market is highly liquid, you can see your spread drop to 0!
2. IC Markets
The runner-up is also headquartered in Australia. It offers simple account registration, no fees for deposits and withdrawals, and over 230 instruments across markets (Forex, CFD, crypto). Note that clients outside the EU do not get investor protection.
The minimum deposit is $200. The spreads fall to 0 at certain market times, but the average gap is 0.1 pips. Many scalpers prefer this broker, as the costs are so low.
XM is a great choice for beginners as it offers a plethora of educational resources and responsive support. Members gain access to 1,000+ assets, including Forex, CGFs, and real stocks. This company based in Limassol has over 5 million clients in 196 countries. Clients outside the EU do not have investor protection.
The minimum deposit is also very low — $5! Like IC Markets, this broker has an average spread of 0.1 pips. The trading conditions are highly competitive. Read the full XM review here.
This UK-based broker is known to have executed over 250 million orders to date. FxPro is headquartered in the Bahamas, and it is one of the most respected brands in the industry with great customer service. Its clients enjoy low-cost trading in Forex (stock CFDs have relatively high fees).
Beginners can deposit just $100 to enter the market. On some pairs, the spreads are non-existent. On others, they amount to 0.45 pips on average. Floating spreads start at 1.2 pips.
This broker has over 9 million clients worldwide. The brand belongs to a company registered in Cyprus. FBS offers bonuses to new members, high leverage and a wide range of accounts. Note that this is an ECN/STP broker focused on CFD trading.
The minimum deposit is just $1 on a cent account. The average spread is 0.5 pips and 1 pip in the EU, but there is also a Fixed Zero Spread account. It requires $500 to open.
This giant brokerage house with offices around the globe gives access to 200+ markets, from Forex to CFDs to cryptocurrencies. Over 48 pairs are offered. The company’s app allows you to trade on the go, and the range of educational resources is spectacular. On the downside, fees for withdrawal and inactivity apply.
The lowest deposit for an ECN account is $200, but you can open a cent account with just $10. Spreads can be as low as 0.1 pips.
7. FP Markets
This highly respected Australia-based broker offers lightning-fast execution in the ECN and STP modes. It has been operating since 2005 and is particularly attractive for newbies. The speed of deposits and withdrawals is impressive. Currency trading has low costs, but the charges for stock CFDs are substantial.
Deposit at least $100 to get started. The average spread is 0.45, but it can be as low as zero. This is why this broker is among scalpers’ favourites.
8. Vantage FX
Another trusted broker from Australia, Vantage FX offers quick registration and seamless deposits and withdrawals. It offers a range of social trading platforms and a proprietary mobile app. The portfolio is fairly limited (300+ assets, only Forex and CFDs), but the trading conditions are attractive.
Deposit at least $200 to get started. The company offers just two ECN accounts with spreads starting from 0. Islamic trading is also supported.
This ECN/STP broker offers fixed and variable spreads. It is an award-winning company headquartered in St. Vincent and the Grenadines. OctaFX has a good reputation, and users of its own copy trading app are not charged commissions for the service. Only Forex and CFDs are offered. The broker is especially popular with traders from Asia.
The minimum deposit requirement is $100. The best spreads start at 0.4 pips and the average is 0.45. Fixed spreads can be as low as 2 pips.
Another broker incorporated in St. Vincent and the Grenadines, HotForex offers a wide range of trading platforms, around-the-clock support and a wide range of Forex and CFD instruments. It is chosen by over 2.5 million traders globally. The trading fees are low, but be aware of the inactivity fee.
The lowest acceptable deposit is only $5. Spreads start at 0.7 pips. There are also zero-spread accounts (these require at least $200).
What Is a Low Spread in Forex?
The spread is easy to understand — it is the difference between the Ask and Bid prices for any traded pair. As you may know, currency buyers and sellers use different prices. For Forex brokers classified as market makers, the spread is a source of profit. The best low spread allows you to trade with lower costs.
Low spreads are smaller than the average for the trading market. In many cases, 1 pip is the starting point. In some markets, spreads are tighter or wider. For example, trading in the commodities market is expensive in comparison with Forex currency.
In essence, a spread is a commission from your broker, so the lower it is — the better. If you plan to trade frequently (for example, as part of a scalping strategy) those charges will accumulate fast. At the same time, you should be aware of any other charges that may apply — find out more below.
How Are Forex Spreads Calculated?
The spread Forex brokers charge determines their revenue and the cost of trading with them. This is why a very low spread is perceived as a competitive advantage. It means the Bid prices are very close to the Ask prices. Another vital term to know is pip or percentage in points.
Spreads for any asset are calculated in pips. The latter is the last decimal value. In most cases, a movement of 1 pip means the price has risen or fallen by 0.0001. For example, this works for the USD. Here is an example for the EUR/USD pair prices:
- bid/ask of 1.07235/1.07240 (spread of 0.5 pips)
- bid/ask of 1.07235/1.07245 (spread of 1 pip)
- bid/ask of 1.07235/1.07285 (spread of 5 pips)
There are very few exceptions. Most notably, currency pairs with the Japanese yen have only two decimal places, so 1 pip is calculated as calculated 0.01. Thus, a one-pip spread for USD/JPY would be bigger than for EUR/USD.
Forex Spreads and Commissions per Lot: What Should You Expect?
Do not jump at the first zero-pip offer you see. Some Forex brokers actually offer a range of spreads that starts from zero, and their advertisement can be confusing. So, how to make sure you will be getting the best low spread?
Note that even a range of spreads that starts from zero can be decent. Note that the spread will also vary depending on your trade volume and volatility of the market. Inevitably, its value will be higher than you expect sometimes.
Additionally, pay attention to any other charges. The spreads are the main source of revenue for the intermediaries, but there could also be commissions for trading with low or no spread. If it applies, the company will calculate their revenue as a number of pips per one lot of your chosen currency. As a rule, it is less than $5.
How to Estimate Forex Trading Fees When Opening a Trade
Quite a few Forex brokers advertise tight spreads, but you need to calculate the true value of their offers. The best low spread may come with a substantial commission. Here is an example.
Suppose the broker offers you a spread of 0.1 pips. This equals 0.00001 of the price for your chosen pair. The gap between Bid and Ask may look like 1.08335/1.08336. To see how big or small the spread is, you need to calculate the percentage by deleting 0.00001 by the price. In this case, you get 0.00092% of the ask price, which equals $0.92 per lot.
Forex commission per lot
Learn about any commission charged per lot. It is just as essential as low spreads and minimum deposit. Typically, it constitutes roughly $7 per lot traded. Therefore, a position worth 0.5 lots would cost you $3.50 to open.
This is an example of a ‘per-side, per lot’ commission, but you may encounter another type — ‘round turn’. As the term suggests, the fee is charged twice — upon opening and closing (if you traded in our example, you would pay $ 3.50 twice). It is crucial to check such details before starting any trading action.
A low spread is advantageous for any Forex trader, as it defines their costs. We have selected the best-regulated Forex brokers in 2021. Their spreads can reach rock bottom. ECN accounts are often available, so you can secure zero spreads if you are ready to deposit a little more.
At the same time, you should pay attention to any other applicable charges, such as commission per lot. Reliable providers make their trading conditions crystal clear. The range of markets also matters — make sure the company gives access to the assets you need. All brokers on our list support both currencies and CFDs. Take advantage of their advanced trading solutions and make money in the largest financial markets — with low costs, and even on the go!