7 Best Low Spread Forex Brokers

Lowest spread Forex Brokers - the perfect solution for scalping!

The spreads for different currency pairs vary depending on the jurisdiction in which the broker is based, as the spread for one broker may be higher than for another. It is wise to look at the spreads for various currency pairs you intend to trade other than EUR/USD, which is the commonly sold pair and usually which brokers offer the lowest spread. Deciding which forex broker to deal with can be a difficult task. Being able to find the right partner that will charge a fair price to give you access to the currency trading market, secure your investment throughout with appropriate dealings, and that will efficiently respond to your concerns isn’t simply more so when dealing with someone online. You never meet them “one-on-one” because they may be abroad.

The major mistake most traders make when choosing a broker is to focus mainly on the cost factor. Many traders look for those that offer ‘the tightest’ spreads or ‘near zero’ spreads on most major pairs. In reality, brokers are aware of their cost structures and would never go into such business ventures. A broker’s main target is always to recover costs in any way possible; this means that for every subsidy of spreads they make, they are sure to recover and make up for it somewhere else in terms of other fees, possibly, slippage and poor execution, or low-quality customer service and support.

Does the broker type favor low-spread offerings?

Two main types of forex brokers are ECN brokers and market makers. An ECN broker runs the trader's orders directly to its liquidity providers to be executed at their prevailing spreads. These fluctuate over time according to supply and demand, but are usually minimal. Although they offer lower spreads, the ECNs have various ways to recover costs, such as through transaction-based pricing and commissions. Depending on the trader’s style and activity level, an ECN’s pricing structure may be lower overall than that of the typical market-maker broker.

On the other hand, market makers rely on the "Bid/Ask" spread to make their income; this is multiplied if the trader uses leverage in their trading strategy. A market maker acts as an intermediary between you and their client, bank, or liquidity providers and prefers to “arbitrage” for profit the spread they offer you against what they can trade in the market on their behalf. The market maker keeps an instantaneous daily accounting of the “overs” and “shorts” for each currency pair. If he loses at a certain point, he will slightly increase the spread to compensate for the difference over time. However, the market maker’s ultimate objective is to make a specified profit for each pair by the end of the business day.

What to be wary of when choosing a low-spread forex broker?

When selecting a low-spread forex broker like Interactive Brokers or Plus500, traders must be wary of potential downsides. Brokers compete by offering either low costs or quality services - but rarely both. 

Traders should investigate how the broker recovers costs when enabling such low spreads. Carefully compare features to competitors, read customer testimonials, and consult independent reviews. Sites like Finance Magnates provide functional broker analysis. Still, some poor practices like spread manipulation are hard to detect before making an account. If you discover shady behavior later, immediately halt trading and withdraw funds.

Re-quoting is when a broker changes the quoted price just as you place a trade, forcing you to resubmit at worse terms. Some re-quoting is regular with fast market movements, but consistent cases suggest your broker blocks trades that help you profit.

Similarly, slippage refers to executions at rates different than you specified - e.g., ten pips lower. Minor slippage happens occasionally in volatile markets. But repeated significant slippages likely mean your broker alters pricing to their benefit.

Spread manipulation is most insidious - when market makers falsely widen spreads from accurate market rates to force stop losses and limit client profits. Spreads naturally widen during low volatility periods when brokers earn less. But spreads shouldn’t inflate 20–30 pips right as significant price swings commence. This nets brokers huge profits from triggered stop losses while clients miss the move.

Consider total costs with low-spread brokers, not just spreads. Compare investment protections, platforms, customer service, transparency, regulation, and execution quality before opening an account with Tickmill or another provider. Scrutinize pricing behavior over time before depositing more funds. While most brokers are honest, be alert for any warning signs of misaligned interests. An ounce of prevention now avoids disappointment later.

The Best Forex Brokers + Trading Platforms

There are several benefits to trading with lower spreads, and the following are the reasons for opening an account with a brokerage company that offers low spreads.

1. The trader gets to pay less per trade. Although it is not always as simple as it sounds, sometimes it is.
2. If you are trading big, low-spread brokers, levy a smaller commission as you sell.
3. Trading with a broker offering low spreads encourages its competitors to reduce their spreads, making the forex market friendlier.

Some traders insist on the lowest possible spreads before trading with any broker. It is essential for traders who open and close several positions each selling session to get the tightest spread possible to minimize losses. Some brokers provide a low fixed or variable spread with desirable minimum and typical values. The downside to such low spreads is that the brokers may require high-deposit accounts. Some of the best international Forex brokers offer pretty low spreads with mini or even micro Forex accounts, but these are separate from zero-spread accounts.

Low-spread forex brokers are preferred, especially by traders who use the scalping strategy, because this trading strategy allows them to open and close several deals per day. With low spreads, the commissions may add up to even 100 pips.

To cut costs on forex operations, traders usually opt for dealing desks that can avail low spreads. Financial losses are limited for traders who use this criterion, so every trader looks forward to making profits and securing their principal invested amount.

Best Spread Forex Brokers

Forex.com

Are you new to the forex bandwagon and seeking a forex broker who will hold your hand as you start trading? This is one of the best brokerage firms for beginners, as you can understand in Forex.com's detailed Review. It offers many education resources, reliable customer support, seminars, and multiple guides. Furthermore, it provides 24/7 broker support for six days, including Saturdays, and social trading features available in 25 languages.

PLUS 500

PLUS 500 is a highly acclaimed CFD trader specializing in financial instruments such as Forex, commodities, ETFs, and stocks. The firm also has one of the most competitive market capitalizations, currently valued at over $1 Billion, and operates through multiple subsidiaries worldwide. Though the broker is registered and headquartered in London, it maintains an active office in Australia under the ASIC’s regulations.