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FIND MORE ABOUT TOP 5 LOWEST SPREAD FOREX BROKERS

Recently, I have received email from many subscribers asking about the top 5 lowest spread brokers. I can easily list down 5 lowest spread brokers, and I really want my subscribers take full advantages of my list. Therefore, I am writing this article to explain to you every aspects of low spread brokers in detail.


FIND MORE ABOUT TOP 5 LOWEST SPREAD FOREX BROKERS

Spread is the difference between the Bid and the Ask prices. It is the transaction fee you have to pay for brokers or banks. The higher the spread, the higher the transaction cost. That’s why most traders want to trade with low spread brokers. However, not all traders want to trade with lowest spread brokers. The information in this article is based on my own experience. You cannot find anything like this anywhere else. So let’s read this article to know more about the lowest spread forex brokers.

What are the differences between Spread and Commission?

There are 3 types of forex brokers: Market Maker, STP, and ECN. For first 2 types, their main income is spread, so their spreads are much higher than that of ECN brokers. When Market Maker and STP get quotes from liquidity providers, they will add the transaction fee (spread) to those quotes (a process called Mash Up). Meanwhile ECN will provide the exact quotes offered by liquidity providers. Therefore, they have to charge commission as it is their main income.

The differences are:

- Main income of Market Maker and STP brokers is spreads.

- Main income of ECN brokers is commission.

- When opening an ECN accounts, you will be charged both commission and spread, but those spreads are nearly zero. You mainly pay for the commission.

Although there are 3 types of brokers, I don’t have enough time to review all broker types. Besides, you will be charged the spreads only when you trade with Market Maker and STP brokers, so I will list down 5 lowest spread non-ECN brokers in this article.

Here are top 5 lowest spread brokers:

  1. Exness

  2. Hotforex

  3. FBS

  4. XM

  5. FxPro

Who needs low spread brokers?

There are 2 types of traders: scalpers and long- term investors.

Scalpers are traders who open and close many positions within short time. As usual, traders who keep their positions open less than 1 month are scalpers. Vice versa, traders who keep their positions open longer than 1 month are long- term investors.

For scalpers, they open many positions in a short time, so their main transaction cost are spread and commission. Moreover, they also earn just some pips per order, so they prefer to choose low spread and low commission brokers.

For long- term investors, they earn some hundreds of pips per position, because they keep their positions longer. Long- term investors only pay a maximum of 2% of their profit for spread, so they don’t care about spread and commission. However, because of the fact that their positions will be kept for months, their main transaction cost is swap. Sometimes, they have to pay up to 90% of their profit for swap. As a result, low swap brokers are favorable to long-term traders.

Obviously, it is agreed that the first condition to choose a broker is their credit. We only trade with trusted and regulated brokers. Then, the next criteria is the transaction cost.

So what types of trader are you?

If you are long-term investors, don’t care about spread.

If you are scalpers, spread and commission are important.

Why are US and UK brokers’ spreads high?

US and UK are the 2 biggest forex markets in the world, but their brokers are not competitive in term of transaction cost. I did a research of hundreds of best forex brokers in the world, and I found that US and UK brokers usually offer higher spreads and commission than Australia and CySEC brokers. CySEC brokers offer the lowest spreads.

Example:

Here are the spreads for EUR/USD of top forex brokers:

- Exness : 0.7 Pip (Classic account), CySEC, FCA

- Hotforex : 1.1 Pip (Premium account), Vincent

- FBS : 1.1 Pip (Standard account), Belize

- XM : 1.7 Pips (Zero account), FCA (UK)

- FXTM : 1.7 Pips (Standard account), Belize

- Forex : 1.8 Pips, NFA (US)

- FxPro : 1.7 Pips, FCA (UK)

As you can see, Exness- a CySEC broker , has the lowest spread. UK and US brokers have the highest spreads. Their spreads are twice as high as those of Exness.

Why do US and UK brokers have higher spreads?

US and UK regulations don’t allow the brokers to offer high leverage or bonuses, and they have to pay more for the regulation fee. That’s reason why US and UK brokers have to charge more spread and commission.

If you are ASIAN traders, Exness is the best brokers for Scalpers.

If you are Africa traders, XM and FxPro are the best.

If you are US traders, Forex is perfect choice.

If you are European traders, you should choose XM, FxPro and Exness.

How to choose the best low spread broker?

Again, only scalpers should choose low spread brokers. If you are long term investors, you should pay more attention to swap.

But there are a dozen of low spread brokers, so which one is the best for you?

Here are the conditions the best low spread brokers must have:

  • Regulation: If that broker was regulated in your country, choose it. If there is no broker regulated in your country, choose the trusted and lowest spread broker.

  • Local payment system: Some low spread brokers don’t have local payment system. When trading with these brokers, traders only can deposit and withdrawal by Visa, Credit card, Neteller, and Skrill.... Additionally, you have to pay 2 - 4% of your total deposit amount as the fee for those international payment methods which is quite high. In conclusion, you should not trade with the brokers who don’t have local payment system.

  • Low spread and commission. As mentioned above, the spread and commission of Exness is quite low, so you should consider opening account at this broker.

  • Good local supporters.

Sum up:

If you are ASIAN traders, Exness is the best brokers for Scalpers.

If you are Africa traders, XM and FxPro are the best.

If you are US traders, Forex is smart choice.

If you are European traders, you should trade with XM, FxPro and Exness.

Here are top 5 lowest spread brokers:

  1. Exness

  2. Hotforex

  3. FBS

  4. XM

  5. FxPro

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