Forex Brokers with Fixed Spread Accounts

Richard Montana | November 7, 2022

There are many benefits to trading forex with fixed spreads, specifically if you are using a forex scalping strategy that is very spread dependant. The spread can make a difference between a profitable forex strategy and a losing one. If you have a trading strategy that requires tight spreads at all time, then you may want to consider using a fixed spread forex broker.

What are forex spreads?

The spread is a fee that you pay your broker for buying and selling currency pairs. It is the difference between the bid and ask price at the time you execute your position. Spreads can start from as low as 0.0 pips on ECN forex brokers as they will also charge a commission fee on top to cover costs.

Otherwise, you can trade with zero commission fees using a market maker broker and pay a spread mark-up instead. Some market maker forex brokers provide fixed spread accounts as they can set the bid/ask prices themselves. This has both pros and cons which we will discuss later.

How to calculate forex spreads?

The spread is usually measured in pips, which is the smallest unit of the price movement of a currency pair. For most currency pairs, one pip is equal to 0.0001. To calculate the spread in forex, you have to work out the difference between the buy and the sell price in pips. You do this by subtracting the bid price from the ask price. For example, if you’re trading EUR/USD at 1.2089/1.2091, the spread is calculated as 1.2091 – 1.2089, which is 0.0002 (2 pips).

What are fixed spreads?

Most forex brokers provide floating spreads, which means that they get the bid/ask price from a pool of liuqidity providers. Therefore, the spreads are variable depending on the available liquidity when you want to buy or sell a currency pair. When there is plenty of liquidity, spreads can be very low, especially on major currency pairs such as the EUR/USD.

However, if there is high volatility or not much liquidity, spreads can increase significantly. This can cause unexpected losses, especially on spread sensitive forex strategies. That is where a fixed spread account can come in handy. If you want to know what spread you will pay before placing a trade, you might want fixed forex spreads.

What is a fixed spread forex broker?

A fixed spread forex broker will offer trading accounts where you can get access to fixed spreads rather than floating spreads. On this type of forex account, you will pay a fixed spread at all times, regardless of the liquidity.

This means that you can plan your strategy accordingly as you know the spread beforehand. Some brokers even offer both variable and fixed spread accounts to cater for the needs of different traders.

Advantages of fixed spread forex brokers

  • You know the spread you will pay in advance
  • Can plan your trading strategy accordingly
  • Can be good for scalping strategies
  • Can work out cheaper depending on the liquidity
  • Might not need to pay a commission fee due to spread mark-up

Disadvantages of fixed spread forex brokers

  • Broker terms usually state that they do not have to offer fixed spreads during certain market conditions
  • Fixed spreads are generally higher than floating spreads
  • Not many forex brokers provide fixed spread accounts due to the risks they have where they may end up losing out by paying a higher spread themselves

What are the best fixed spread forex brokers?

There isn’t really a great selection when it comes to fixed spread forex brokers and there are other aspects that you need to consider other than the spreads. Things to look out for include the currency pairs available, funding methods, minimum deposit, leverage, any commission fees, regulation, customer support and more. You can see a selection of our best fixed spread forex brokers below based on the hundreds of brokers that we have reviewed over the years.

Broker
Rating
Regulated
Min. Deposit
Founded
Max. Leverage
1.
AvaTrade Review

ADGM FRSA, ASIC, BVIFSC, CBI, FFAJ, FSCA, IIROC, JFSA

$100

2006

1:400

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
2.
TradeDirect365 Review

ASIC, SCB

$1

2014

1:200

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
3.
IronFX Review

ASIC, CySEC, FCA

$50

2010

1:1000

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
4.
FXGiants Review

ASIC, FCA

$100

2015

1:1000

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
5.
FBS Review

CySEC, IFSC

$1

2009

1:3000

76.2% of retail investor accounts lose money when trading CFDs with this provider.
6.
InstaForex Review

BVIFSC, CySEC, SVGFSA

$1

2007

1:1000

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
7.
HYCM Review

CIMA, CySEC, DFSA, FCA

$100

1998

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
8.
Rakuten Securities Review

ASIC

$50

1999

1:400

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
9.
easyMarkets Review

ASIC, BVIFSC, CySEC, FSA

$100

2001

1:400

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
10.
Traders Way Review

N/A

$10

2011

1:1000

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.

Conclusion: should I use a forex broker with fixed spreads?

It depends on your forex strategy. If you are scalping or day trading, then you might benefit from knowing what spreads you will pay in advance. However, if you plan on holding positions for the long-term, then the spreads that you pay may not matter so much to you.

It is also worth considering that you can get cheaper floating spreads if you are trading around hours when there is plenty of liquidity in the forex market. This is usually when the major markets are open, including the New York and London trading sessions.

If you want to trade after the NY close and prior to the Asian session, spreads can be higher due to the lack of trading volume. This might be an instance where fixed spreads come in handy but it is rare for a broker to have fixed spread then.

It can be a risky business model for a broker as they do not always know what bid/ask price they will be getting from their liquidity providers, if they use any. If they provide inhouse liquidity, they can still lose out if you are trading successfully which might lead to a conflict of interest.

I have also seen forex brokers offer fixed spreads but state in their terms and conditions that they have the right to increase spreads during certain market conditions. This defeats the purpose of having fixed spread accounts in the first place.

Hopefully this has given you some food for thought when looking for a fixed spread broker. They do exist, but it is not realistic for most brokers to provide fixed spreads 24/7 as they could end up losing out themselves. This might even cause them to ask about your trading strategy and put restrictions on your account if you are doing really well.

About the Author

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Richard Montana
Richard has many years of experience in broker research, testing, analysis and reviews. He knows what to look for through years of trading himself with different brokers and listening to the feedback of others.

Review Methodology

For all of our broker reviews, we research, validate, analyse and compare what we deem to be the most important factors to consider when choosing a broker. This includes pros, cons and an overall rating based on our findings. We aim to help you find the best broker according to your own needs. You can read more about our review process.


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