Forex business is a highly challenging sector, so individuals interested in doing it must ensure they have the right kind of brokering done for them. The account that has grown immensely over the years is the zero spread account. In this article, we will discuss some of the things affecting spreads, some of the advantages and disadvantages associated with lowest spread Forex broker accounts as well as enumerate excellent zero-spread brokers.
Forex brokers with zero spread: the principle of work
Zero spread accounts provided by forex brokers offer trading opportunities with no additional spread costs, albeit through a per-trade commission. Five forex dealers are here examined in terms of their proposal.
Justmarkets
JustMarkets is the lowest spread Forex broker, providing a zero-spread account specifically for those traders who are not comfortable paying extra money due to widening spreads.
Key Features
- Traders can trade without any spreads on various currency pairs;
- To compensate for the lack of spreads, a fixed commission is charged per trade;
- It has access to MetaTrader 4 and MetaTrader 5 platforms;
- Here you can take advantage of high leverage – up to 1:3000 for different trading strategies;
- It is regulated by the Belize International Financial Services Commission (IFSC).
Avatrade
AvaTrade is a Forex broker with the lowest spread, offering competitive trading conditions and zero-spread accounts for certain trading conditions, which are available through special promotions or certain account types that allow clients to trade without having to pay any commissions associated with spreads on these costs. This means that instead of being charged for applying spreads during the transaction, there will be no fees indicating no spread trading, however, some other fees may still apply, such as a fee for rolling positions overnight, depending on what asset is being traded.
Forextime
ForexTime, often referred to as FXTM for short, is known for having many different account types, including those that have no spreads. For example, there are accounts where there is no spread on some instruments, especially on the major Forex currency pairs. In these cases, instead of spreads, trading is carried out through a commission system, which helps prevent possible slippage. Variable leverage is available for this account type ranging from 1:1 to 1:2000 depending on the client’s region or regulatory requirements. For example, US citizens cannot use more than 1:5 on Forex, and European citizens cannot use up to 1:3.
Amarkets
AMarkets is another Forex broker with the lowest fixed spread. The broker trades with zero spreads on numerous instruments. Depending on the account type, high leverage can reach 1:1000. It is never controlled by major global regulators, but provides reliability through affiliation with compensation funds.
Roboforex
RoboForex has gained popularity due to its flexible trading conditions. It offers no-spread accounts known as Prime Accounts, where most currency pairs have a zero spread and instead charge traders a commission per trade rather than spreads. It offers leverage for professional clients up to 1:2000, subject to restrictions. It is subject to the financial regulation of the IFSC in Belize. RoboForex, being the lowest pip spread Forex broker, includes virtual private server hosting, educational materials, and Forex market analysis.
Factors affecting spreads in the Forex market
Level of supply and demand for currency
| Market liquidity | Most liquid currency pairs, such as EUR/USD have tighter spreads than those that are exotic or less popular which usually have wider spreads. |
| Trading volumes | Widespread trading volumes lead to small adjustments in prices. However, spreads may become wider when trading volumes are low. |
| Competition between brokers | Brokers in a market where the competition level is very high may decide to offer tighter spreads to encourage more clients to subscribe to their platform. |
Time zones in which markets overlap
The heaviest overlap in markets happens in the U.S./London markets where over 70% of all trades take place because the two most popular currencies to trade with are the U.S. dollar and the euro (EUR).
Influence of actions, decisions and events
- Events in economy and politics: The publication of economic indicators such as GDP figures, inflation rates, and unemployment figures can cause substantial variations in spreads. Politics being politics like elections, crises have the potential to cause havoc and as such increase risk.
- Account and broker types: Brokers who act as market makers may decide to maintain wide margins whatever happens in trade but those with licenses from the Financial Services Commission will rather opt for commission-free trading. The lowest spread ECN Forex broker usually has floating spreads.
Advantages and disadvantages of using a Forex broker’s lowest spread
Pros
- Transparency is among the greatest advantages that are provided by zero-spread accounts: a fixed commission per trade means that the expenses are clear starting from the beginning; as a result, customers can determine their expenditure beforehand and strategize appropriately concerning it. Whereas trading costs may spiral in periods of market turbulence because spreads on classic accounts unfold too wide, thereby increasing such costs, with zero-spread accounts individuals are prevented from spending more than they might have anticipated before undertaking transactions.
- Zero spread accounts are doubly advantageous to scalpers or high-frequency traders performing several transactions over the short term carrying the hope of making a gain from small price moves because this eats into their profit margins.
- Traders who like dealing with news or economic events may find zero-spread accounts advantageous. In these times, volatility is high and so you get greater spread sizes on the market.
Cons
- Commissions on zero-spread accounts that charge may be higher than spreads on traditional accounts, so traders must weigh the commission costs up against potential savings from zero spreads. Depending on trading volume and frequency, higher commissions may be more attractive than those offered by zero spreads.
- There may be higher minimum deposit requirements for zero-spread accounts compared to normal ones. In order to make up for the lack of spreads, some lowest spread Forex brokers might have set higher threshold deposits. Smaller account traders could encounter hardships meeting such requirements to access these zero-spread accounts.
- Not all trading strategies are suitable for zero spread accounts which would be irrelevant to traders who use wider stop loss levels and rely on technical analysis. Specifically, higher trading costs may be incurred by paying a fixed commission per trade than with traditional accounts in these instances.
FAQs
Choosing the lowest spread Forex broker for gold is important. Justmarkets has some of the lowest gold spreads in the industry. The broker is best suited for beginners and experienced traders.
The most commonly traded forex pairs with the lowest spreads include EUR/USD, USD/JPY and GBP/USD. These pairs have high liquidity, resulting in tighter spreads and lower trading costs.
The main disadvantages of a zero spread are the fees, as they can be higher than spreads on traditional accounts. Zero spread accounts may have higher minimum deposit requirements and not all trading strategies are suitable for such accounts.
