Here Are The Top 3 Low Spread Forex Brokers
In the online trading world, the primary focus of every retail trader is to come up with a profitable strategy. However, the outcome of a trade doesn’t just determine your profits; you also have to consider the related transactions costs. The net result is affected by several factors, such as broker’s commission, spread, the taxes to be paid and also the deposit and withdrawal fee. Since minimizing the cost is the priority for every individual and institutional trader, finding the best lowest spread broker is essential.
First, you need to understand exactly what spread is. In simple terms, the difference between the bid and ask prices is referred to as spread. When you decide to trade in the currency market, you should remember that you are not just buying or selling a currency. Instead, you are buying or selling a currency pair. The broker you decide to work with will offer you a quotation for each side of the market: the ask price corresponds to the long side (buying) and the bid price to the short price (selling). This means that if you are interested in shorting a currency pair, it can only be done from the bid price.
However, if a trader wants to book the profit, they will need to close it. The spread is the difference between the ask and bid or the entry and exit prices. Different spreads are offered by different brokers. These vary according to the market activity, type of account and also the time in the trading day. For instance, during the daily rollover, you will see that the spread has widened. This is mostly because of a scarce liquidity pool.
If you are looking for low spread brokers to keep the trading costs at a minimum and to maximize your profits, here are the top 3 options you can consider:
Broker 1: Pepperstone
Pepperstone is an Australian broker that provides veteran traders with some sophisticated trading solutions and also has plenty to offer to some of the less experienced ones. A look at the broker will show that it provides you with numerous account types that can suit different types of trading styles and this has allowed it to become one of the best forex brokers in the world. In terms of spreads as well, Pepperstone comes off as a very strong and reliable option. During times of high liquidity, something which is a common occurrence in the forex market, the broker’s spread drops down to 0 whereas the average spread that the broker offers is around 0.16 pips.
One of the best things about this broker is that you don’t have to worry about it being a scam. This is due to the fact that Pepperstone Limited is authorized and regulated by the Financial Conduct Authority (FCA) in the UK and the ASIC in Australia. The headquarters of the broker can also be found in Melbourne, Australia. Thus, you can rest assured that it is heavily regulated and has to follow strict rules and guidelines when it comes to keeping the funds of their clients.
The broker is also a good choice for traders who are just stepping into the market as it has offered them a demo account. This can be used for practice purposes before they actually invest in the money. Even when they open a real account, the minimum deposit requirement is just $200, which is quite low and reasonable. Therefore, even beginner traders will have no trouble in coming up with this much money to invest. Leverage of 1:500 is also available to the traders. As far as the trading platforms are concerned, Pepperstone has offered its customers variety in this regard.
First, it offers the industry leading MT4 platform, which can be used on desktop as well as mobile, both Android and iOS. MT5 is another option that can be explored as its desktop version is available. Lastly, Pepperstone also has the cTrader trading platform, which includes its web, desktop and mobile version. Each of these platforms is equipped with some of the most powerful and innovative trading tools that can be incredibly useful during the trading process.
Broker 2: IC Markets
This is also an Australian broker and one that offers its clientele access to more than two hundred and thirty tradeable instruments. During certain market times and conditions, IC Markets do not charge any spreads. Since they have an average speed of 0.1 pips, it doesn’t come off as a surprise to know that IC Markets is also on the list of the top 3 brokers that offer low spreads in the forex market. When it comes to broker type, it is considered as Market Maker, ECN and STP.
Similar to Pepperstone, IC Markets is definitely not a scam out for your money because this broker is also heavily regulated. The company that established this broker, International Capital Markets Pty Ltd., has its headquarters in Sydney, Australia. Therefore, it is licensed and regulated by the ASIC. Apart from the forex market, the broker also offers its clients access to some of the other instruments in the trading world, such as cryptocurrencies, indices, futures, stocks and bonds.
A demo account can be used for trying the broker’s services and experiencing the market before you use your real money for trading. This is definitely an advantage because traders can become acquainted with how the market works by using virtual money and this can minimize losses. As far as an actual account is concerned, you need to deposit at least $200 to get started. The requirement varies, depending on the account you choose to open. Leverage is also available and it is about 1:500, which is considerably high.
There are plenty of options when it comes to trading platforms on IC Markets. The broker wishes to cater to all kinds of traders due to which it has incorporated the top market options. The trading platforms it offers are all user-friendly, have sophisticated and advanced trading tools and can execute transactions quickly. Some of the options that you will find are MT4, MT5, MT WebTrader, MT Android, MT iPad/iPhone, MT Mac, cTrader Android, cTrader Web, cTrader, cTrader cAlgo and cTrader iPad/iPhone.
Hence, this means that you can find desktop, web and mobile options for trading with IC Markets and this makes the broker quite versatile. The customer support available is also quite reliable and responsive, which is another plus.
Broker 3: XM
Last, but definitely not the least, a huge brokerage business is run by XM as it offers its clients access to more than a thousand financial instruments for trading. As it offers spreads as low as zero pips when the times call for it, it has become one of the best brokers to use for your trading needs. It has an average spread of 0.1 and this has transformed it into one of the most competitive brokerages for forex market trading with low spreads. XM is founded by Trading Point of Financial Instruments Ltd., which has its headquarters located in Limassol, Cyprus.
Therefore, the company is regulated and licensed by CySEC in Cyprus. It also operates in the UK where it is regulated by the FCA and its Australia offices are regulated by the ASIC. Suffice it to say, the broker is very well-regulated. This adds a layer of safety and assurance because it means that they follow the best practices when it comes to protecting the interests of their traders. Funds are kept in segregated accounts and the company doesn’t allow any unauthorized individual to gain access to them. Even in case of financial problems, the broker cannot use your funds without your permission.
The broker is a market maker and offers the lowest spreads as well as leverage of 1:500. Nevertheless, the best part about XM is that it only has a minimum deposit requirement of $5, which is essentially none at all. This means that no matter how limited your funds may be, you can still sign up with XM and start trading some major forex currency pairs. You can use the demo account to try out the broker’s services first and then switch to a regular account.
There is also choice in trading platforms available, which include the very popular and highly demanded MT4. You can find the web version, use it on PC, Mac, Android and iPhone. MT5 is also supported and you can find all versions for this trading platform as well. No matter which one you decide to use, XM ensures that you can take advantage of some of the best trading tools in the market. Trades can be executed easily and the platform functions smoothly to provide optimal performance. You will not have to deal with any delays or lags when executing orders and transactions.
You can consider any of the top 3 brokers outlined above when you want to benefit from the low spreads available. This allows you to make high profits in the forex market and trade in a secure manner.