Forex Brokers with Zero Spread Accounts

Richard Montana | November 7, 2022

The more you trade, the higher your trading costs can get. That is why it is important to weigh up your options when choosing a suitable forex broker and consider a forex broker with tight spreads if you are planning an being an active trader. Just be aware that whilst zero pip spread accounts can see tempting at first, there are a few important things to be aware of which we will cover in this guide for you.

What are forex spreads?

The forex spread is a price you pay to your broker for executing your trade. The spread is the difference between the bid and ask price of a currency pair when you execute your order. A wider spread means that you would pay more when placing a buy trade and receive less when selling.

Each type of forex broker can charge a slightly different spread, which can add to the costs of forex transactions. Some forex brokers will give you access to zero pip spreads directly from the market, whereas other market makers can set their own spreads and add mark-ups.

What are tight spreads in forex?

Tight spreads are when a forex broker gives you access to the best bid and ask prices at all times. They will not add a mark-up to the spread like some brokers do as they send your orders directly through to the interbank market where you can be matched against the best bid and ask prices, which includes prices with zero pip spreads.

However, I have only really over seen 0 spreads consistently on the EUR/USD currency pair, which is probably one of the reasons it is one of the major crosses that is traded by so many retail traders who are looking to save as much on costs as possible.

Why are low forex spreads important?

Tight spreads matter because the tighter the spread, the better value you get as a trader. The smaller the difference between the bid and ask spread, all other things being equal, the lower a trader’s transaction costs will be. Therefore, many forex traders will look for low spread forex brokers to help them save on trading costs in the long run.

For example: The bid price is 1.16739 and the ask price is 1.16749 for the EUR/USD currency pair. If you subtract 1.16739 from 1.16749, that equals 0.0001. As the spread is based on the last large number in the price quote, it equates to a spread of 1.0.

This means that you would pay your broker 1.0 pip in the form of the spread for placing a trade. This would be equal to $10 if trading one standard lot position. Once you take into account the commission fee and any slippage (delay) on your order, the costs can start to add up.

Scalping forex with tight spreads

Forex traders look for brokers with tight spreads, especially if they are using scalping strategies that depend on low spreads to succeed. It is not uncommon to see a scalping strategy target 3 pips per trade. If the spread is 1.0 pip, the commission is 1.0 pip and there is 1.0 pip of slippage, the trader would need to make 3.0 pips on a scalping trade just to break even.

This is one of the reasons why many traders like to scalp the EUR/USD currency pair. It tends to often have the most trading volume and liquidity, which means spreads can be as low as 0.0 pips on a zero spread forex broker. That saving can be the difference between a winning and losing trading strategy.

Advantages of zero spread forex brokers

  • Lower trading costs
  • Good for scalping strategies
  • Access to some of the best FX market prices
  • Can limit conflict of interest
  • Avoid broker spread mark-ups

Disadvantages of zero spread forex brokers

  • Spreads are not always zero pips
  • Slippage can occur on orders
  • Will need to pay a commission fee

Which forex brokers have zero spreads?

There are many forex brokers competing to offer traders the tightest forex spreads possible. The first thing to look for is a forex account with zero pips and then consider what other features the broker provides. Things to consider include the available currency pairs and other asset classes, minimum deposit, leverage, deposit/withdrawal options, platforms, apps, commission fees, execution policy and customer support.

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

ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA

$250

1974

1:200

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

ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB

$200

2010

1:400

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

ASIC, CySEC, FSA, SCB

$200

2007

1:500

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

ASIC, CySEC, DFSA, IFSC

$5

2009

1:888

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

FMA, FSPR

$200

2014

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
6.
FP Markets Review

ASIC, CySEC, SVGFSA

$100

2005

1:500

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

CySEC, FCA, FSC, FSCA

$10

2011

1:300

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

ASIC, VFSC

$50

2013

1:500

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

ASIC, CySEC, FSC, FSA

$200

2006

1:30

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

ASIC, CIMA, VFSC

$200

2009

1:500

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

Conclusion: do I need a forex broker with zero spreads?

Yes, if you want to save on trading costs and get access to some of the most favourable trading conditions. Forex brokers with tight spreads can help you to save you on fees in the long term but it wouldn’t always be a deal breaker as there are other important factors to consider when choosing a forex broker.

The tighter the spread, the sooner the price of the currency pair might move beyond the spread. This means that you are more likely to make a gain on a position sooner whilst the cost of the trade is lower. You don’t necessarily need a zero spread forex broker though, unless you are planning on using scalping strategies that are very spread sensitive. Otherwise, you can still get tight spreads from most forex brokers, especially if they are using an ECN brokerage model.

You should also consider that the forex brokers with the lowest spreads tend to compensate for this by charging you a commission fee. They can also increase the spread during times of low liquidity so you won’t always be getting zero pip spreads regardless. If you are looking for consistent forex spreads at all times, then you might want to consider a fixed spread forex broker instead.

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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