BRKV – It may be said that forex market has been increasing rapidly in recent years and has never given such dramatic profits before. There have been so many people joining in the market that they are divided into many kinds of traders and brokers. Some traders would like to work with low spread brokers, some prefer the high leverage brokers and others are suitable for the brokers which offer the best payment systems or low swap,… This article suggests every aspect of the lowest spread forex brokers which are also large and reliable for those who prefer the low spreads. It also shows how to choose the lowest spread brokers that are suitable for the traders.
What is spread? Spread is the difference between the Bid and the Ask prices. It is also the fee of transaction which is paid a broker or a bank. Accordingly, it could be said that the higher the spread is, the higher the transaction costs. As a result, most traders are likely to trade with low spread brokers but not all. Some are not concerned about the fee of transaction as they have their consideration to other aspects of trading such as leverage, swap,…
In common, there are 3 kinds of forex brokers: Market Maker, STP, and ECN. While Market Maker and STP mainly earn from spread, ECN’s income is from commission. Therefore, Market Maker and STP offer higher spreads than those of ECN. Their quotes are added the transaction fee (spread) to when they get from liquidity providers and this process is called Mash Up. Whereas, ECN’s quotes are the exact quotes that are given by liquidity providers and for this reason, their main income is from commission.
Read more best forex brokers 2018
Here are the differences:
– Market Maker and STP mainly earn from spread.
– ECN mainly earns from commission.
– ECN accounts are charged both commission and spread. However, this spread is nearly zero and the major fee paid for the broker is commission.
These are 3 major kinds of forex brokers in the market. Yet, the writer only explains more about the low spread brokers which are Market Maker and STP as the topic of the article.
Listed below is top 5 lowest spread brokers:
Exness.com
Hotforex.com
FBS.com
XM.com
FxPro.com
Regularly, traders are divided into 2 main types: scalpers and long-term investors.
Scalpers often open and close lots of positions in a short time. In contrast, long-term investors keep their positions open for a longer time. Thus, traders keeping their positions less than 1 month are scalpers, whereas, those whose positions are open for more than 1 month can be called long-term investors.
Scalpers are likely to work with low spread and commission brokers as they have lots of transactions in a short time. It would be a dramatic amount of fee if their broker’s transactions cost are high. They earn pips per order but also have to pay fees per transaction, so it is significant to carefully consider for each transactions.
On the other hand, long-term investors, who keep their positions open for a longer time, can earn hundreds of pips per positions. They hardly have their consideration to the spread or commission as they only have to pay a maximum of 2% of their profit for spread. However, they are concerned about the swap, which is also a fee of transaction. Swap is supposed to be the major transaction cost for long-term investors as their positions, which are influenced much by time, are kept for months. They even have to pay up to 90% of their profit for swap. As a result, their preference are low swap brokers.
Apparently, the lowest spread brokers are also the reliable ones! It is only regulated and trustworthy brokers that we should work with.
What kind of trader are you?
If you are a long-term investor, please be concerned about the swap.
If you are a scalper, pay your attention and consideration to the spread and commission
Despite the fact that US & UK are the 2 biggest forex market in the world, they are said to have some weakness or disadvantages, especially the fee of transactions. Many researches has suggested that the spreads and commissions at US&UK brokers are often higher than those at Australia and CySEC brokers. In contrast, CySEC brokers offers the lowest spread.
Below is an example of the spreads for EUR/USD of top forex brokers:
|
Broker Name |
EUR/USD spread |
Regulation |
|
Exness |
0.7 Pip (Classic account) |
CySEC, FCA |
|
Hotforex |
1.1 Pip (Premium account) |
Vincent |
|
FBS |
1.1 Pip (Standard account) |
Belize |
|
XM |
1.7 Pips (Zero account) |
FCA (UK) |
|
FXTM |
1.7 Pips (Standard account) |
Belize |
|
Forex.com |
1.8 Pips |
NFA (US) |
|
FxPro |
1.7 Pips |
FCA (UK) |
Accordingly, it indicates that UK and US brokers have the highest spreads and their spreads are even twice as much as those of Exness. Meanwhile, CySEC broker, Exness, has the lowest spread as I mentioned before.
Why are US&UK brokers’ spreads much higher?
It is due to the disadvantages of their regulations. According to the regulations, US&UK brokers are not allowed to offer high leverage or bonus. Their cost for regulation are also higher than any other brokers in the world and as a result, traders are charged more from spreads and commissions.
Here are some advices:
For ASIAN traders, Exness is the best brokers for Scalpers.
For Africa traders, XM and FxPro are the best.
For US traders, Forex.com is the best
For European traders, XM, FxPro and Exness are the best.
This is regularly for scalpers. If you are a long-term investor, you could also choose these brokers but it is not a recommendation.
Standards for choosing the most suitable lowest spread broker:
– Regulated brokers. It would be better if a broker has your country’s regulations. If your country doesn’t have regulations, it should be a broker who offers the lowest spread and is also in the top largest forex brokers in the world.
– Local payment system. A low spread broker who has local payment system is highly recommended. It is much more easier, better and convenient if traders could deposit or withdraw by local system, rather than by Visa, Credit card, Neteller, and Skrill,…as it takes too much cost for a payment. Often, it costs 2-4% of total deposit amount as the fee for international payment methods.
– Low spread and commission. Of course, this is an obligated conditions and again, this is normally for scalpers who have lots of transactions and pay mainly for them.
– Good local supporters. It would be safe and better to have good local supporters.
It may come from a broker which has offices in your country or many supporters that works remotely and flexibly. Moreover, local supports could reach and help you fast, quickly and instantly whenever there are any problems.
In conclusion, there are many kinds of traders as well as brokers that are suitable for them. These advices below are to partially help readers to choose their most suitable forex brokers if the concern is the low spread.
For ASIAN traders, Exness is the best brokers for Scalpers.
For Africa traders, XM and FxPro are the best.
For US traders, Forex.com is the best
For European traders, XM, FxPro and Exness are the best.
Here is top 5 lowest spread brokers:
Exness.com
Hotforex.com
FBS.com
XM.com
FxPro.com
Hey there, this is Fanara Filippo. I’m the author of this article and i’m currently collaborating with Brokerreview.net, or BRKV in short. My articles are mainly for forex traders from Thailand, Indonesia, India, Bangladesh, and South Africa.
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