Best forex brokers | 5 LOWEST SPREAD BROKERS FOR FOREX TRADERS

Best forex brokers | 5 LOWEST SPREAD BROKERS FOR FOREX TRADERS

Best forex brokers | It is said that there are many types of traders as well as brokers. Each trader is suitable for a broker which either has the low spread/commission/swap or high leverage.

The lowest spread brokers, which are recently chosen the most by traders, are quite convenient and useful.  This article indicates the natures of low spread brokers and also how to choose the best lowest forex brokers.

My choices for the 5 lowest spread brokers:

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

What is spread?

In the forex market, spread is the term indicate the difference between the Buy and Sell prices. Traders consider it as the trading fee which brokers or banks charge them.

They prefer the low spread brokers because if the spread is high, their trading cost will be high as well.

However, there are still some traders not suitable for these brokers as you can see in the following parts in this article.

The suitable traders to work with lowest spread brokers.

It could be said that traders are divided into 2 main kinds: scalpers and long-term investors.

Scalpers are traders who keep their positions open in a short time (normally less than 1 month).

Their main transaction cost is spread/ commission and in general, they have lots of transactions. Therefore, the best choice is to trade with low spread brokers.

Long-term investors, conversely, keep their position in a long time (often longer than 1 month).

Their main transaction, as a result, is the swap. It is up to 90% of their profit, much higher than the fee they have to pay for spread (a maximum of 2% of the profit).

They also earn much per transaction (hundreds of pips). Their preferences are low swap brokers, not the low spread ones.

  • For long-term investors, my advice is to work with the low swap brokers.
  • For scalpers, choose the low spread brokers.

Best forex brokers | Differences between Spread and Commission

Brokers normally divide their trading accounts into 2 type: regular and ECN. When traders trade regular account, the broker’s incomes are from spread.

Meanwhile, it is commission when traders choose ECN accounts.

Moreover, the spreads of the first type are much more wider than ECN account’s number as their quotes are often higher due to the addition of the transaction fee (spread) to those (it is called Mash Up).

On the other hand, ECN keeps the exact quotes given from liquidity providers and so, the broker’s main income is the commission.

Differences are:

Brokers mainly earns from spreads when traders trade regular accounts.

– ECN accounts help brokers earn from commission. 

In ECN account, traders are actually charged commission and spread. But those spreads are nearly none so the main fee is commission.

Why brokers have different spreads?

According to many researches, the U.K and U.S forex brokers have the highest transaction fees despite being ranked the 2 largest markets.

This table below shows the spreads for EUR/USD of top forex brokers:

Broker  EUR/USD spread Regulation
Exness 0.7 Pip (Classic account) CySEC
XM 0.7 Pip (Ultra Low account) CySEC
Hotforex 1.1 Pip (Premium account) Vincent
FBS 1.1 Pip (Standard account) Belize
FXTM 1.7 Pips (Standard account) Belize
Forex.com 1.8 Pips  NFA (US)
FxPro 1.7 Pips  FCA (UK)

As it can be indicated, CySEC brokers offer the lowest spreads (0.7 pip), much lower than US and UK’s fees (1.8 and 1.7 pips).

It can be explained that US and UK regulations are not good for traders.

Brokers are not allowed to provide high leverage/bonuses and so, they have to pay more for license fees.

As a result, the spread and commission are charged much higher.

Choosing the lowest spread brokers.

These standards are applied to choose the best low spread brokers for traders:

– Low spread and commission. Of course, this is the initial standard. If the fee is high, it will make no sense!

– Regulated brokers. Choose the brokers who have reliable regulation and trusted licenses.

It would be better if they have your country’s regulation when your country has the regulation.

– Local payment system. It costs much (from 2-4% of total deposit amount) for a deposit/ withdrawal by international payment system.

Therefore, it is more convenient and economical to work with brokers having local payment system.

– Good local supporters. This standard is also applied for many brokers as the supporters do help a lot. If they are in your country, they could give you the best, timely and instant support.

 In short:

  • For traders in Asia, Exness is recommended.
  • For traders in Africa, XM and FxPro are recommended.
  • For traders in America, Forex.com is recommended.
  • For traders in Europe, XM, FxPro and Exness are recommended.

Again, this is top 5 lowest spread brokers:

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