Commissions are the fees you pay to brokers whenever you buy (and sometimes when you sell) shares or other assets such as forex currency pairs. Since commissions can eat into your trading profits — particularly if you trade often — it is clearly in the interests of traders to choose a broker that charges low commissions. In recent years, some brokers have shouted about their “zero commission” accounts, but these can sometimes come with hidden costs.
In this guide, we have uncovered the best forex brokers for low commissions so that you can make a more informed choice.
Our List of the Best Forex Brokers for Low Commissions
Our list of best forex brokers for low commissions also considers other important factors such as spreads. Our list will help you choose the best low commission forex broker to suit your trading needs.
What Is a Forex Broker for Low Commissions?
Low commission or discount forex brokers charge low or no commissions on forex trades but they might make money by charging spreads (the difference between the selling and buying prices of quoted securities). Conversely, brokers that offer tight spreads usually charge higher commissions. The latter are generally straight-through-processing (STP) or electronic communications networks (ECN) brokers that pass orders directly to the liquidity providers without any dealing desk intervention, and they charge you for this service.
The point is: low (or zero) commissions are good, which is why we cover them here, but they should be considered in the context of the other ways that brokers make money.
How Does a Forex Broker for Low Commissions Work?
Forex brokers for low commissions, like most forex brokers, provide traders with real-time quotes and let you place your orders on the over-the-counter (OTC) forex market. Forex brokers facilitate trading by matching buyers and sellers by relaying quotes from the interbank market.
Forex brokers charge commissions, fees, and/or spreads for executing trades between counterparties on the forex market. You will find many forex brokers on the market with different fees and commission structures, and it is essential that you completely understand what you will be charged for trading before you choose a particular broker.
Key Features To Look For in a Forex Broker for Low Commissions
With the vast number of forex brokers on the market, choosing the most suitable broker can be a challenging task. We can help by encouraging you to consider the following characteristics, starting (in this case) with our topic of interest: the spreads and commissions.
Spreads & Commissions
Low commission forex brokers will charge lower commissions or no commissions at all. However, “no commission” brokers usually charge a certain percentage of the spread. Some forex brokers charge fixed spreads, whereas some brokers charge variable spreads. Spreads and commissions increase the costs of trading, making it more difficult for traders to generate profit. Spreads and commissions, therefore, become an important factor in selecting a forex broker.
The broker you select must be registered or licensed by the local regulatory authorities. Dealing with a licensed and regulated forex broker is usually safe, and you can have a chance of recovering your funds should your broker commit fraud or misappropriate your money. Regulated forex brokers have to comply with the regulatory requirements and operate within the guidelines of the regulators, so opening forex trading accounts with the regulated forex brokers is a safe option.
A robust, advanced trading platform can greatly improve your trading performance as it gives you great control over executing your trading strategies. Many brokers allow traders access to popular trading platforms, such as MetaTrader 4, FXTM, and ThinkTrader. Most trading platforms provide technical indicators, interactive charts, risk management tools, and algorithmic trading features that let traders analyze the price action and make informed trades.
Many new traders are fascinated by the thought of amplifying gains with the help of leverage, which essentially is borrowed money from the broker. While it is true that you can magnify your gains using leverage, you can also wipe out your account if a trade goes against you. Leverage allows traders to open large trades while having little capital in their accounts. Depending on the type of your account and the level of your experience, forex brokers will determine how much leverage you can get on your account. Some forex brokers offer leverage as high as 200:1, which means that you can open a position 200 times the capital available in your account.
Pros & Cons of Using a Forex Broker for Low Commissions
How To Choose the Best Low Commission Forex Broker for Me?
Choosing the best low commission forex broker is a time-consuming but important process. To effectively evaluate a broker, you should review several important elements a forex broker offers, including fees, commissions, spreads, regulations, currencies, trading terminals, and customer support.
Since you are looking for a low commission forex broker, you should carefully assess the fees, commissions, and spreads the broker is charging. Many brokers charge higher commissions but tight spreads and vice versa. To keep your trading costs low, you should thoroughly review the charges and try to unearth any hidden charges the broker might be charging.
The broker you select must be registered with and licensed by trusted regulatory authorities. Regulated forex brokers are stipulated by law to follow the directions and guidelines issued by the regulator in the interest of the public. Your funds are secured when you open your trading account with a regulated forex broker.
You should select such brokers that offer a wide range of currency pairs to give you greater choice. Trading opportunities can arise in any currency pair, so you should be able to trade most of the currency pairs to take advantage of the opportunities.
Your broker should provide you access to the latest state-of-the-art trading terminal so that you can trade forex using modern technical analysis and charting tools. Most brokers provide mobile versions of their trading platforms that allow traders to trade using their smartphones. You can select brokers that allow trading on popular trading platforms, such as MT4, FXCM, and ThinkTrader.
Reviewing regulations, fees, commissions, spreads, trading platforms, customer support, and many other aspects of hundreds of brokers can be cumbersome for traders. We have meticulously reviewed hundreds of forex brokers and provide a detailed comparison of forex brokers so that you can select the best broker that suits your trading needs.
How to Safely Use a Broker to Make Money Online Trading?“ You can make money trading online by adopting time-tested techniques recommended by expert forex traders. Your broker empowers you to take control of your trading and employ risk management strategies to reduce your risk on each trade. Let’s discuss how you can safely use your broker to make money with online trading. Most brokers provide leverage or borrowed money to traders for trading significantly higher amounts of currencies. You can easily get leverage of between 50:1 and 200:1, which means that you can open positions 50 times to 200 times the amount of money you have in your trading account. However, you should use leverage responsibly as a small movement against you can wipe out your account. Being emotionless during trading is key to successful trading. To perform emotionless trading, you should always put stop-loss and take-profit points while entering any trade and let the trade run unless the market takes you out of the trade. If you want to stick around for a long haul, you should never risk more than 1% of your account on a single trade. You should only take high probability trades with a risk/reward ratio of at least 2 or 3. A higher risk/reward ratio will ensure that you remain profitable even if a few trades go against you. ”- Shahid Rehman
Traders who want to keep their trading costs low should refer to our list of the best forex brokers for low commissions. Low commission brokers offer low commissions on trades but charge a moderate to high percentage of spreads. We recommend that you diligently check the commission and fee structure of the brokers before deciding which broker to trade with. Some brokers charge hidden fees and keep commissions low to entice unsuspecting, novice traders.
After analyzing forex brokers for their fees and commission structure, you should ensure that the broker you select is regulated and licensed by the local regulatory authorities. Dealing with an unregistered and unregulated broker is risky, and you might not be able to recover your money if your broker commits fraud and runs away with your money. You should also find out the capabilities and features of the trading terminal being provided by your broker for trading.
Frequently Asked Questions
No-commission forex brokers make money by charging a certain percentage on spreads, or through hidden costs such as fees to withdraw your funds.
Spread is the difference between buying and selling price of the quoted security.
Not necessarily. But some brokers claiming to be low-cost brokers charge hidden fees, such as inactivity charges and account maintenance charges.
Yes, almost all forex brokers allow traders to use leverage and open significantly larger positions, but this is inadvisable for novice traders because leverage amplifies your losses as well as your gains.
Yes, some brokers charge rollover fees and margin fees on leveraged positions. You should consult your broker for details of fees related to leverage.
Not all brokers are regulated. Some brokers are regulated by the regulatory bodies of other countries, while some are regulated by the local regulatory authorities.