The forex market is quite competitive and choosing between the many online brokers can be a time-consuming task.
One thing to consider is the broker’s bid-ask spread that causes you to lose a little bit of money on a trade as soon as you have placed it. Some brokers don’t impose a price spread at all, and in this article, we have identified the ones that don’t.
Our List of the Forex Brokers for 0 Pip Spreads
What is a Forex Broker for 0 Pip Spreads?
You can use a forex broker to bet on the relative strengths of currency pairs such as GBP/USD (known as “cable”) or EUR/JPY.
When the price of a currency pair goes up (so your trade makes money) or down (so you lose money, unless you have “gone short”), it does so in units called pips. A pip is the smallest measurable change in the price of a currency pair, and forex traders measure their profit or loss in pips.
For forex or any other financial instruments you can trade via a broker, you will typically see two prices: the “bid” price and the “ask” price, which are the selling and the buying prices. The buying price is usually higher than the selling price, so you’ll pay more when you buy a financial instrument than you’ll get back when you sell it back to the broker, which is one of the ways in which the broker makes money.
A 0 pip spreads broker — or “zero spread broker” — doesn’t make money from the bid-ask spread on forex trades, so it will typically make money some other way such as by charging a fixed nominal commission for each trading position.
How Does a Forex Broker for 0 Pip Spreads Work?
We already know that a forex broker is an intermediary that connects buyers and sellers of currencies through a trading platform. Most forex transactions occur between pairs of major currencies (G10 countries). These currencies include the US dollar, British pound, Euro, Canadian dollar, Swiss franc, Australian dollar, and New Zealand dollar. Brokers also allow you to trade currencies of emerging economies like the South African rand and the Mexican peso.
With the help of a forex broker, a trader opens a position by buying a currency pair and closes the position by selling it. For instance, a trader anticipates a rise in the value of the Euro relative to the US dollar, so they buy the EUR/USD pair.
If the exchange rate goes higher, the trader will close the position at a profit, while if the exchange rate goes lower, the trader will incur a loss. Remember that the buying and selling prices (“ask” and “bid”) of a currency pair are typically not the same, so the price must have moved by at least the bid-ask spread amount for you to make a profit. In this context, a 0 pips spread broker makes it easier for you to move into profit.
Key Features to Look For in a Forex Broker for 0 Pip
You should consider certain features when choosing a forex broker. Let’s look at some of those features.
Look for forex brokers that offer a 0 pip spread account. You can reduce your cost of trading and increase the potential profit if your broker does not charge you any spread. If you are a news trader or a scalper, you cannot perform well with a broker that offers floating spreads.
It is very important to know the transaction costs that a forex broker charges because it plays an important role in profitability. Brokers with the lowest spreads and commissions should be preferred.
Since traders invest their hard-earned money in forex accounts, they must ensure that the broker is regulated and therefore trustworthy.
Always look for a broker that offers an online trading platform for both PC (web) and mobile, and there should be a free news feed available to the traders.
When you place a trade, it should be executed instantly by the broker. If there is a delay in execution, this may lead to a loss as there are chances that you buy at higher prices than your intended prices and sell at prices lower than your intended prices.
Brokerage platforms are not perfect, so issues can arise. Therefore, only consider brokers that can be contacted easily.
Pros and Cons of Using a Forex Broker for 0 Pip Spreads
How to Choose the Best Forex Broker for 0 Pip Spreads for me?
Once you decide to enter the forex market as a trader, the next step is to choose the right broker for you. If you’re looking to minimise your costs and maximize your profits with a broker that offers 0 pip spreads, you might also be looking for a broker with low (or zero) commissions. However, you may find that the two aims are mutually exclusive because brokers have to make money somehow.
Regardless of the commissions or spreads, you should choose a regulated broker, ideally by one of the major regulatory authorities: the United States’ National Futures Authority (NFA), the United Kingdom’s Financial Conduct Authority (FCA), or the Australian Securities and Investments Commission (ASIC).
Other things to look out for include easy ways to deposit and withdraw your money.
How to Safely Use a Broker to Make Money Online Trading?“ There are three things that a trader must do to make money: devise a trading plan that includes a tested trading strategy, practise money management by never allocating more than 1% of your funds to a single trade, and keep control of your emotions so that your trading decisions are not driven by fear or greed. ”- Mircea Vasiu
We have described forex brokers, how they work, and what factors are important when choosing one. Our emphasis has been on brokers that offer 0 pip spreads, but — regardless of the kind of broker — you should take heed of our trading tips such as the need to practice sound money management.
Frequently Asked Questions
Opening any online brokerage account is usually easy, although you may have to provide identity documents. Opening an account with a broker that offers 0 pip spreads should be no more onerous.
The minimum deposit varies from broker to broker. It can range from $200 to $1000.
The most famous platforms are MetaTrader 4 and MetaTrader 5 but most brokers also provide their own proprietary mobile and web trading platforms.
The range of markets that can be traded varies between brokers. Some might allow trading of major currency pairs such as GBP/USD but not exotic pairs such as NZD/CNH. Some brokers let you trade other assets such as stocks (equities) and commodities.
Mostly yes, but there are some non-regulated brokers. Therefore, you should double-check the register on the website of the regulatory body.
Although a 0 pip spread makes it slightly easier for you to make money from small price moves, your ability to make a profit depends more on your skill as a trader. A 0 pip spread won’t save you if you make poor trading decisions.