SPENDING 5 MINUTES ON TOP 5 LOWEST SPREAD FOREX BROKERS
BRKV - Forex trading is one of complicated job. It requires traders to have essential skills in choosing a suitable broker. One factor to pick out a good broker which I want to mention today is lowest spread forex brokers. I know that many traders are wondering if they should brokers which support their business. Recently, there are many of my subscribers sending me emails asking: “Who are lowest spread brokers?”
In this article, I also answer the question. I hope that this article provide you with useful information and this is a solid basis in a fair way of business.
Here are top 5 lowest spread brokers:
1. Some problems relate to spread
The difference between the Bid and the Ask prices is called spread. It represents brokerage service cost and replaces transactions fee. The higher the spread, the higher the transaction cost. Therefore, most traders want to trade with low spread brokers.
It should be noted that no all traders tend to like work together with low spread brokers because it depends on their campaigns.
a. What are the differences between Spread and Commission of 3 types of brokers
As you can see, Market Maker, STP, and ECN are 3 types of traders favored all over the world. However, today I only correspondents with you about Market Maker and STP because main income of these 2 types is spread. On the contrary ECN brokers with main income is commission. If we discuss all traders, it is very long. You can check ECN brokers here to learn more. When they get quotes from liquidity providers, they will add the transaction fee (spread) to those quotes (a process called Mash Up).
b. What type of traders need low spread brokers?
If you are long term investor, don’t care about spread.
If you are scalpers, spread and commission are important.
Do you know why I said so?
- For scalpers, they open many positions in a short time ( less than 1 month) , 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, because they keep their positions longer (over 1 month) , they earn some hundreds of pips per position. Their main transaction cost is swap so they make nothing of spread and commission. In fact, they only lose a maximum of 2% of their profit for spread. Sometimes, they have to pay up to 90% of their profit for swap. This is the reason why they prefer low swap brokers.
Remember! You have to work with trusted and regulated brokers.
c. Why US and UK brokers’ spreads are higher?
As I mentioned in some article before, regulations limit brokers some problems related to offering bonuses, program and spreads. They have to pay more for the regulation fee. That’s why they have to charge more spread and commission
US and UK are the 2 biggest forex markets in the world, but their brokers are less competitive in term of transaction cost.
You observe the following table to see clearly about the spreads for EUR/USD of best forex brokers:
From that the CySEC broker and Exness have the lowest spread. UK and US brokers have the highest spreads. Their spreads double that of Exness. Click to check spreads of Exness.
In addition, I did a research of hundreds of top 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.
2. How to choose the best low spread broker?
Here are 4 conditions to choose the best low spread brokers:
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.com is the best
If you are European traders, XM, FxPro and Exness are the best.
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