Top 5 lowest spread brokers to bring you success in forex trading

Many forex traders participating in the forex market usually have lots of questions. One of those is “Which forex brokers have the lowest spread?” It’s not difficult to answer them but I want to have a reliable and practical solution for all of them. This article will make you have a thorough understanding of every aspect of lowest spread brokers.

 

CLICK HERE FOR THE BEST FOREX BROKERS IN 2018.

THE BEST FOREX BROKERS IN 2018.

When mentioning to forex trading, one of the popular terms is “spread”. It talks about the difference between the Bid and the Ask prices. In other words, it is the fee of transaction you have to make payment for brokers or banks. The higher the spread, the higher the transaction cost. That’s reason why most of the traders have tendency to trade with lowest spread brokers. However, not all traders want to trade with lowest spread brokers.

 

  1. What are the differences between Spread and Commission?

 

Main income of Market Maker and STP brokers are from spreads.

Main income of ECN brokers is from commission.

For ECN accounts, you were charged commission and spread also, but those spreads are even nearly zero, even nothing. The main fee you have to pay is commission.

 

I will explain the terms: Market Maker and STP and ECN as follows:

 

Basically, there are 3 types of brokers in forex trading world. They are Market Maker, STP, and ECN. For Market Maker and STP, their main income is from spread. That’s why their spreads are a lot higher than those of ECN brokers. When they get quotes from liquidity providers, they will add the transaction fee (spread) to those quotes. For ECN brokers, they will provide the exact quotes that liquidity providers provided. Therefore, they have to charge commission as it is their main income.

 

CLICK HERE FOR THE BEST ECN BROKERS.

I want you to just focus on the main points, so I will list down 5 lowest spread brokers in association with Market Maker and STP brokers’ spreads.

 

Here are top 5 lowest spread brokers:

  1. Exness.com
  2. Hotforex.com
  3. FBS.com
  4. XM.com
  5. FxPro.com

 

  1. Why US and UK brokers’ spreads are higher?

It’s universally acknowledged that US and UK are the 2 biggest forex markets in the world. This is a self-evident truth, but their brokers are less competitive in terms of transaction cost. As I know, US and UK brokers usually offer higher spreads and commission than Australia and CySEC brokers. CySEC brokers offer the lowest spreads. Those results have come from my survey and research of top forex brokers all around the world for a long time.

Why US and UK brokers’ spreads are higher?

 

 

Example:

Here are 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)

 

As you can see, the CySEC broker, Exness, has the lowest spread. UK and US brokers have the highest spreads. Their spreads double those of Exness.

 

From this table, you can easily realize that US and UK brokers have higher spreads. The reason is due to the disadvantages of their regulations. US and UK regulations don’t allow them offer high leverage or bonuses, and they have to pay more for the regulation fee. That’s why they have to charge more spread and commission.

 

If you are an ASIAN trader, Exness is the best brokers for Scalpers.

If you are an Africa trader, XM and FxPro are the best solution.

If you are a US trader, Forex.com is the best choice.

If you are a European trader, XM, FxPro and Exness are the best one.

 

  1. What type of traders need low spread brokers?

 

If you are a scalper, spread and commission are important things to focus on.

If you are a long term investor, don’t care about spread.

 

To have a better understanding of scalper and long term investor, the information below will help.

 

In forex world, there are 2 types of traders: scalpers and long term investors.

Scalpers are traders who open and close many positions within just a short time. The traders who keep their positions open less than 1 month are called scalpers.

 

For scalpers, they open many positions in a short time, so their main transaction cost is spread and commission. Moreover, they also earn just some pips per order, so they prefer to choose low spread and low commission brokers.

 

On the contrary, traders who keep their positions open longer than 1 month are long term investors.

 

For long term investors, they tend to keep their positions longer, they earn some hundreds of pips per position.

Therefore, they don’t pay attention to the spread and commission, because they only pay a maximum of 2% of their profit for spread, but their main transaction cost is swap, because they keep their positions open for months. Sometimes, they have to pay up to 90% of their profit for swap. For this type of traders, they prefer low swap brokers.

 

In conclusion, I want to repeat this important information:

If you are long term investor, don’t care about spread.

If you are scalpers, spread and commission are important.

 

 

  1. How to choose the best low spread broker?

There have been a lot of low spread brokers, so how about your decision of brokers? Don’t be in a hurry. You have to carefully choose them based on some vital conditions:

 

– Regulated brokers: If brokers were regulated in your country, don’t hesitate to choose and trade with them. This means their business is legal and lawful. If there are not any brokers being regulated in your country, choose the reliable and lowest spread broker.

–  They have local support or native languages. If you have any questions and need any immediate help, just contact brokers anytime, anywhere. If they are willing to help you early, they can be reliable and maybe the lowest spread brokers.

maybe the lowest spread brokers.

– And some conditions are for you to think of: trading forex license, available service, their credibility.

– Local payment system: Some low spread brokers don’t have local payment system. Traders only can deposit and withdrawal by Visa, Credit card… so you shouldn’t trade with them. The fee for international transaction is too high, even up to 2 – 4 % of your total deposit amount.

– Other trading conditions: margin leverage, commission/fees/deposit, bonus or rebate.

Depending on which region you are living, you can take a look at some suggestions as following:

 

If you are an ASIAN trader, Exness is the best brokers for Scalpers.

If you are an Africa trader, XM and FxPro are the best solution.

If you are a US trader, Forex.com is the best choice.

If you are a European trader, XM, FxPro and Exness are the best one.

 

If you’re from Asia, CLICK HERE FOR THE BEST FOREX BROKERS FOR ASIAN TRADERS

So, please just keep in mind that, here are top 5 lowest spread brokers to your success. If you miss them, it means you miss your success.

  1. Exness.com
  2. Hotforex.com
  3. FBS.com
  4. XM.com
  5. FxPro.com

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