HomeTrading ConditionsBest Low Spread Forex Brokers 2021

Best Low Spread Forex Brokers 2021

On any trading platform, there are two prices for each financial instrument – the bid and ask price. When buying or going long, traders use the asking price. When selling or going short, they use the bid price.

The difference between the two prices (bid and ask) represents the spread. It is a source of income for the broker (fee), thus a cost for the trader. Therefore, the lower the spread, the better for the trader.

Low Spread Forex Brokers

1
Min. Deposit
$100
Exclusive promotion
Our score
10
Leverage
30:1
New accounts
Spreads
0.7
PIPs
Regulations
NFA, CFTC, FCA
Forex Pairs
No Fee
Start Trading
Pros:
Open an account in less than 5 minitues with the global Market leader since 2001
Trade on one of the world's most popular trading platforms with access to dedicated support and integrated trading tools exclusive to FOREX.com
We’ve spent over a decade investing in technology and building a deep network of liquidity partners, so we can consistently quote tight spreads in most market conditions.
Payment Methods
Debit Card, Bank Wire, ACH, Credit Card, PayPal
Full regulations list:
NFA, CFTC, FCA, FSA, IIROC, CIMA, FFA Japan, MAS, SFC of Hong Kong
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
2
Min. Deposit
$10
Exclusive promotion
Our score
9.3
Leverage
500:1
New accounts
Spreads
0.8
PIPs
Regulations
Forex Pairs
55+
No Fee
Start Trading
Pros:
55+ currency pairs available
Trade on a trusted platform
24/7 support via live chats, email or phone call
Payment Methods
Credit Card, Debit Card, Visa, Bitcoin
Full regulations list:
LonghornFX offers high-leverage trading on a wide variety of assets. Trading with leverage carries a degree of risk which may result in losing more than your investments. Clients should practise risk management to protect themselves from losing more than they can afford when trading with leverage.
3
Min. Deposit
$200
Exclusive promotion
Our score
8.7
Leverage
500:1
New accounts
Spreads
0.5
PIPs
Regulations
FSPR, FMA New Zealand
Forex Pairs
27+
No Fee
Start Trading
Pros:
BlackBull Markets’ unique feature lies in its stated goal of delivering an “institutional” trading experience to retail clients
No-Dealing Desk Broker (NDD), with Straight Through Processing (STP) all done on a true ECN
State of the art Equinix servers, based in New York (NY4), London (LD5) and Tokyo (TY3)
Payment Methods
Mastercard, Visa, Bank Transfer, Neteller, Skrill, UnionPay, FasaPay
Full regulations list:
FSPR, FMA New Zealand
4
Min. Deposit
$10
Exclusive promotion
Our score
8.5
Leverage
500:1
New accounts
Spreads
0.7
PIPs
Regulations
Forex Pairs
55+
No Fee
Start Trading
Pros:
0% Commission Account
Low Spreads
Eco-Account Option
Payment Methods
Bitcoin, Credit Card, Debit Card
Full regulations list:
Please ensure that you fully understand the risks involved, taking into account your investments objectives and level of experience, before trading, and if necessary seek independent advice.
5
Min. Deposit
$200
Exclusive promotion
Our score
7.9
Leverage
30:1
New accounts
Spreads
1
PIPs
Regulations
CySEC, FCA
Forex Pairs
No Fee
Start Trading
Pros:
Join the Social Trading revolution. Connect with other traders, discuss trading strategies, and use our patented CopyTrader
eToro is the world’s leading social trading platform, offering a wide array of tools to invest in the capital markets
Largest number of currency pairs to trade
Payment Methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.

Variable vs Fixed Spread Trading

The table below explains the main differences between variable spreads offered by ECN brokers and fixed spreads offered by a traditional dealing desk broker.

Not all brokers who offer variable spreads provide ECN platforms: continue by learning the difference between ECN, STP and Dealing Desk brokers

Features Variable Spreads ECN platform Fixed Spread Dealer platform Commentary
Better Prices YES NO ECN platform allows traders to get better price quotes, and often be able to trade inside the pip. Such variable spreads can be as low as 0 at times.
Trading on Interbank and between traders YES NO Unlike fixed spreads from a dealing desk broker, variable spreads from ECN broker provide maximum flexibility: a trader can deal on prices streamed directly from participating banks as well as a deal on prices entered by other traders. Competitive bids/offers create a base for better quotes.
Instant trading without re-quotes YES NO Traders trading on the ECN platform doesn’t get re-quotes. The platform technology uses a strict price+time dealing protocol which ensures that trading positions are filled at the price seen on the screen.

What Is a Spread?

Let’s pick the EURUSD, the most popular currency pair among retail traders.

The difference between the bid and ask is 0.5 pips or half a pip, as the image shows. Depending on the volume traded, it has a different value for each trade.

For instance, when trading 0.1 lots on the EURUSD pair, a one pip profit roughly translates into $1. Hence, half a pip spread cost represents $0.5 on a 0.1 lot trade. Note that the spread doesn’t increase with the number of pips gained. It remains constant and is paid regardless of the trader makes a profit or not.

How Does a Broker Determine Its Spreads?

The liquidity provider determines the spreads. The more liquidity providers, the more competitive the spreads become, especially during illiquid market moments.

There are different types of brokers, and the way they are organized influences the spreads they offer. For instance, Some brokers offer fixed spreads but don’t be fooled into thinking that’s the only cost, because in this case, typically, other commissions and hidden fees exist.

In any case, the spread is one of the primary income sources for the broker and sits at the heart of its operation.

Therefore, it is essential to be aware of the brokers offering the lowest spreads possible without adding an extra fee and hidden commissions.

Low Spread Trading – How Will Low Spreads Benefit Your P/L

Coping with spreads can be a struggle for the retail trader. Retail traders, especially new traders sometimes trade via scalping. This is opening and quickly closing trades for immediate returns.

Imagine you have a trading strategy that targets ten pips for every trade. If the spread is one or two pips, that’s ten or twenty per cent of the cost. Add to it the commissions and other associated costs, and the strategy isn’t so profitable anymore.

On top of that, spreads widen during critical economic releases and during illiquid times. In high volatility environments, spreads increase, and it is easier to have the stop loss hit. Therefore, is not only important to choose a low spreads broker, but one that has tight spreads during all moments in a trading day, not only when the market is calm.

Choosing a Low Spread Broker

Most brokers offer the tightest spreads on the most popular pairs (e.g., EURUSD) but then wider ones in markets with lower liquidity. The comparison tables provided here should be of great help in finding the desired broker to trade with.

Fixed vs Variable Spreads

As the name suggests, fixed spreads do not change. However, this comes at an increased cost, as they are always wider than variable spreads.

A news trader may favour fixed spreads despite being wider. It is a guarantee offered by the broker that it’ll execute the orders no matter what. But a swing trader and especially a technical trader benefits the most from variable spreads and direct execution, despite paying more to get in or out of the market.

Why Spreads Increase?

When the market moves fast, spreads increase. It happens during economic releases or other market-related news that creates volatility.

During increased market volatility variable spreads will widen for all dealing desk brokers, which means a trader won’t get the lowest spreads advertised by a Forex broker.

However, with ECN brokers clients will have actually lower spreads when activity in the market rises and trading volume increases – during those times variable spreads can drop to 1/10 of a pip = 0.1 pip and even be quoted at zero.
(With dealing desk brokers variable spreads never drop below the advertised point, they can only rise.)

Fixed spreads, although called “fixed”, can also be subject to change.

There are brokers who offer Fixed Guaranteed spreads – such spreads don’t change no matter what.

All other brokers offer Fixed-with-Exception spreads (often marked with stars*) – these are the spreads that can change should the market become extremely volatile, for example, during important news announcements, such as Non-Farm Payroll, Unemployment Rate, Consumer Price Index, Retail Sales, Interest rates etc. During other trading hours, spreads remain fixed.

Also, traders should note the common practice of widening spreads during weekends, as well as for some Forex brokers – during night hours from Monday to Friday.

Conclusion

Traders should pick the broker offering the lowest spreads possible. However, the best broker is not always the one offering the lowest possible spreads. When choosing a broker, look for the combination of lower spreads, fair execution (this includes risk management tools like stop losses and take profit orders), little or no commissions, and no hidden costs.


FAQ’s

Which broker to choose: with fixed or variable spreads?

It depends on the trading strategy. Forex fixed spreads are wider but guaranteed, while variable spreads tighten during calm markets and widen significantly in volatile markets.

Are spreads the same on all currency pairs?

No. Typically, major pairs (i.e., the ones paired with the USD) have tighter spreads than cross pairs (i.e., with no USD).

Is there a broker with 0 spreads?

Yes. But be aware that the broker must charge from other sources, and the trader ends up paying more.

What conditions to look for when choosing a low spread broker?

Multiple liquidity providers, variable spreads broker.


For more brokers of different trading conditions, we’ve pulled together the best brokers for each: