Forex Brokers with No Commission Fee
When you trade forex online, you might need to pay your broker a commission fee for every trade that you make. However, there are commission free forex brokers that do not charge you any commission because they make money elsewhere. This is predominantly via a spread mark-up, which does mean that you will pay higher spreads on your trades. There are pros and cons to using zero commission forex brokers which we will cover in this guide.
What are forex commission fees?
Forex trading involves buying and selling currency pairs at the current market prices. You will need a broker to execute your trades through to the forex market and they will usually charge you a small fee for doing so. This can be on the entry and exit.
For instance, if the broker charged $3.5 per side or $7 commission for every standard lot that you trade, you would need to account for this in your trading strategy. Once you also add on the spread, swaps and possible slippage, your forex trading costs can quickly add up.
What is no fee forex trading?
If you don’t want to pay commission fees, then you could consider a forex broker with no commission. These brokers will execute your buy and sell trades without any additional fee because they can mark-up the spread and make money that way.
The spread is the difference between the bid and ask price of the currency pair that you are trading. The bid price represents the highest price a buyer is willing to pay for the currency pair, while the ask price represents the lowest price a seller is willing to accept.
If you are trading forex with any fees, chances are you will be paying a higher spread to compensate for this. If a broker charges a $7 commission fee and had a 1 pip spread, this trade would cost $17 when trading standard lot sizes ($10 per pip). If you were using a forex broker with zero commission fees, you could end up paying a 2-pip spread, which means the trade would cost slightly more at $20.
How much commission do forex brokers charge?
Forex brokers charge a commission based on 100,000 units traded. The rate varies based on the based currency chosen by the trader and what the forex broker chooses to charge on that currency. I have seen forex brokers that charge zero commission and other brokers charge around $7 per standard lot round turn. Some discount brokers can offer your reduced fees if you trade enough volume which can be worthwhile for high-net worth investors and traders.
Keep in mind, that the majority of forex brokers will have various account types. This can include a combination of commission free accounts and zero spread accounts with a small commission fee. This is useful because you can switch between accounts depending on your trading strategy.
Which forex brokers charge zero commission?
There are many zero commission forex brokers that you can choose from. Whilst they can all save you on forex trading fees, there are other features that you need to consider when making your choice. You will want to see which commission free forex brokers have the lowest spreads as this is another cost you need to account for when trading forex.
It is also important to check the forex broker is regulated and provides a good selection of currency pairs along with any other financial instruments that you wish to trade. Keep an eye out for the trading platforms and trading apps they have, along with any educational content. Other things to consider include deposit/withdrawal options and customer support. You can see a selection of our best commission free forex brokers in the table below.
ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA
No commission forex brokers pros & cons
- Cheaper forex trading costs
- Can benefit long-term traders
- Plenty of zero commission brokers available
- Spreads can be higher to compensate
- Not ideal for scalping strategies
- Might not know trade costs before hand
Conclusion: should I use a commission free forex broker?
If you want to save on forex trading fees and don’t mind paying a spread mark-up because it wont impact your strategies, then using a commission free forex broker might be a wise idea. If you are swing trading and holding positions for a long period of time, you might not notice a major difference in your overall trading costs.
However, if you are day trading and buying or selling currency pairs on a regular basis, then a forex broker with zero commission fees can save you money in the long run. If you are scalping forex and need access to tight spreads, you could consider a low commission forex broker instead. Granted, they will charge you a commission fee but when the spreads are not marked-up, it can work out cheaper.
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