People always talk about its wider spread of forex brokers, but there are also brokers that offers quite narrow spreads.
Commission fee is low as well.
It also depends on the account type, and even the same broker may be narrow or wide depending on the currency pair.
In other words, it’s simply hard to compare.
In this article, I will explain start with what is spreads, how spreads are determined, when they go narrow, etc. with learning the market principles as easily as possible, and thoroughly compare the spreads of each major currency pair.
Finally, I recommend forex brokers with low fees in a ranking format.
Let’s get started.
- What is Spreads?
- Difference Between STP and ECN Account Type
- Why Spreads Fluctuate
- Why spreads differ depending on the type of currency pair or CFD?
- The Idea of a Real Spread
- Spread of Each Forex trader
- Recommended Forex Broker Ranking with Low Fees (STP Account)
- Recommended Forex Broker Ranking with Low Fees (ECN Account)
- Summary
What is Spreads?
What is a spread in the first place?
In Forex currency exchange trading, there are two price settings, selling price (Bid) and buying price (Ask), and the difference is called the spread.
The image below is the quote seen on the MT4 mobile app.
The difference between the ask price and the bid price is displayed as a spread.
Spreads are the commission of the forex broker.
For traders, of course, the narrower the spread, the better.
Regarding the calculation of fees, the formula is as follows.
Spread * Number of currencies to trade ＝ Commission Fees
For example, when the spread is 1.0 pips, the commission for trading 10,000 currencies in USD/JPY is
1.0 pips x 10,000 currencies = 1 USD
In this example, the fee will vary by $0.1 as the spread varies by 0.1 pips.
Difference Between STP and ECN Account Type
There are two main types of forex account types.
STP account and ECN account.
The settlement method of the transaction is different, but there are the following differences in terms of fees.
| STP | ECN | |
|---|---|---|
| Spread | Wider | Narrow |
| Variability/Fixed | Variable | Variable or Fixed |
| Commission Fees | No | Yes |
| Min Deposit | Low | Higher |
ECN accounts have extremely narrow spreads (or even zero), but a separate commission fee will be charged.
Fees are regulated by each broker. In addition, ECN accounts often have a certain amount of deposit conditions.
The spreads for each broker and each currency pair will be explained in detail later.
Why Spreads Fluctuate
Spreads fluctuate depending on market volume and time of day.
Spreads tend to widen when:
- Low liquidity
– Currency pair with few trades
– Few market participants - Difficult to close a transaction
– Orders are concentrated on either sell or buy
– The market price moved sharply
Spreads tend to widen in the early morning due to low market participation and low liquidity.
On Saturdays and Sundays, markets around the world are basically closed. Even so you can trade, but you can see the spreads widening considerably.
Also, before and after the announcement of important economic indicators, such as the US unemployment rate on the first Friday of every month, or when there is big news worldwide (such as large-scale terrorism or war), the rate changes sharply and the spread widens.
In such cases, you should avoid trading.
Conversely, spreads tend to be narrower during normal times when there are many market participants.
Every forex broker offers variability spreads.
Most of the official websites of each brokers disclose average spreads for each product such as currency pairs.
Why spreads differ depending on the type of currency pair or CFD?
Now we understand that spreads are quite different between STP and ECN accounts. This is due to the difference in processing method.
We also understand that the spread itself is very narrow because the ECN account collects a fixed fee separately.
We also knew when the spread would move.
On the other hand, why do spreads vary depending on currency pairs and CFD products, even for the same account type and the same time zone?
Isn’t the cost of any currency pair the same if it’s just the commission of the forex broker?
There are two main reasons.
One is the difference in transaction volume.
The other is the difference in the key currencies.
High trading volumes mean stable market participants and currency circulation, and financial institutions such as forex brokers try to attract traders to their companies by offering lower fees.
Also, the market principle is simply a balance between supply and demand, and currency pairs with high trading volumes will inevitably have lower fees.
Currencies with high trading volumes include US dollar, Euro, Pound, Australian dollar and Japanese yen.
On the other hand, what are called minor currencies or exotic currencies are difficult to settle because the transaction volume is small in the first place, so the fees charged by forex brokers tend to be high, that is, spreads tend to be wide.
Another important reason is the key currency.
The key currency of the market is the US dollar.
All currency pairs are traded via US dollars.
Currencies that can trade directly with the US dollar tend to have relatively narrow spreads. For example, EUR/USD or USD/JPY.
On the other hand, when trading, for example, EUR/JPY and AUD/JPY, the Euro is exchanged for US dollar and then the US dollar is exchanged for Japanese yen. This is called a cross-yen transaction, but since it is exchanged twice, the commission will increase accordingly.
Simply remember that spreads tend to be wider for currency pairs that do not directly trade with US dollar.
The Idea of a Real Spread
If you compare the spreads by broker, you can see that even the same currency pair is quite different depending on the forex broker.
Some brokers have very narrow spreads on certain currency pairs.
The reason why spreads open depending on the broker is that it is the result of cost reduction efforts as a company, and high liquidity compared to other brokers depends on whether it can be provided.
From a different perspective, some brokers offer bonuses and cashback programs, which are also funded by commission income.
In other words, if you deduct from the commission what you got by bonuses or cashbacks, you can think that the actual spread is narrower than the showing spread.
For example, with regard to XM, you can exchange XM points given for each transaction for cash, but as your membership rank goes up, you will actually get cash back of about $ 5 per lot.
The average spread of USD/JPY is 1.6 pips, but if you deduct the cashback amount, it will be 1.1 pips.
If you calculate the real spread in this way, you can see that XM is actually a very narrow spread compared to other brokers.
On the other hand, for ECN accounts, all brokers charge a fee separately from the spread.
Tradeview has the lowest ECN transaction fees, $ 5 round trip.
The average USD/JPY spread of Tradeview’s ECN account is 0.1 pips, but if you add transaction fee on spread, it’s actually 0.6 pips.
In this way, instead of simply evaluating by spreads and fees,
compare each currency pair and product that you mainly trade, and also consider real spreads, and select the best forex broker for you.
Spread of Each Forex trader
For each of the STP and ECN account types, I have compiled a list of the average spreads of each forex broker for the major currency pairs with the highest market volume and the most popular GOLD/USD CFD.
The spread unit is pips, and the ECN account transaction fee is in USD / round trip.
For each account type, the ones with the lower spreads and fees in the same currency pair are in the red.
STP Account Spread List
*Unit: pips
| Account Name | Fees (Round) | EURUSD | USDJPY | GBPUSD | AUDUSD | USDCAD | XAUUSD | |
|---|---|---|---|---|---|---|---|---|
| XM | Standard | No | 1.7 | 1.6 | 2.4 | 1.9 | 2.2 | 3.5 |
| FXGT | Standard | No | 1.6 | 1.6 | 2.2 | 1.8 | 2.3 | 3.0 |
| FBS | Standard | No | 1.1 | 2.0 | 0.9 | 0.8 | 3.0 | 5.0 |
| GEMFOREX | All-in-One | No | 1.3 | 1.3 | 1.3 | 1.5 | 2.0 | 3.0 |
| HotForex | Premium | No | 1.2 | 1.7 | 1.8 | 1.5 | 1.9 | 1.9 |
| TitanFX | Standard | No | 1.2 | 1.33 | 1.57 | 1.52 | 1.55 | 2.23 |
| LAND-FX | Live | No | 0.8 | 0.8 | 1.2 | 1.3 | 1.2 | 3.5 |
| Axiory | Standard | No | 1.2 | 1.2 | 1.5 | 1.8 | 2.1 | 3.0 |
| Tradeview | X Leverage | No | 1.7 | 1.8 | 2.0 | 1.9 | 2.9 | 2.4 |
| iFOREX | Elite | No | 0.7 | 1.0 | 1.5 | 1.0 | 2.0 | 3.0 |
| TMGM | Standard | No | 1.6 | 1.8 | 1.9 | 1.7 | 2.1 | 3.9 |
ECN Account Spread List
*Unit: pips / Actual spread in parentheses
| Account Name | Fees (Round) | EURUSD | USDJPY | GBPUSD | AUDUSD | USDCAD | XAUUSD | |
|---|---|---|---|---|---|---|---|---|
| XM | ZERO | $10 | 0.1 (1.1) | 0.1 (1.1) | 0.3 (1.3) | 0.4 (1.4) | 0.5 (1.5) | 2.1 (3.1) |
| FXGT | ECN | $10 | 0.3 (1.3) | 0.3 (1.3) | 0.4 (1.4) | 0.5 (1.5) | 0.6 (1.6) | 2.4 (3.4) |
| FBS | ECN | $6 | 0.0 (0.6) | 0.3 (0.9) | 0.5 (1.1) | 0.3 (0.9) | 0.6 (0.9) | – |
| GEMFOREX | *No ECN | – | – | – | – | – | – | – |
| HotForex | ZEROスプレッド | $8 | 0.1 (0.9) | 0.2 (1.0) | 0.4 (1.2) | 0.6 (1.4) | 0.4 (1.2) | 2.0 (2.8) |
| TitanFX | ブレード | $7 | 0.2 (0.9) | 0.33 (1.03) | 0.58 (1.28) | 0.52 (1.22) | 0.55 (1.25) | 2.11 (2.81) |
| LAND-FX | ECN | $7 | 0.2 (0.9) | 0.3 (1.0) | 0.6 (1.3) | 0.3 (1.0) | 0.5 (1.2) | – |
| Axiory | Nano | $6 | 0.2 (0.8) | 0.2 (0.8) | 0.5 (1.1) | 0.6 (1.2) | 0.9 (1.5) | 1.0 (1.6) |
| Tradeview | CTrader | $5 | 0.2 (0.7) | 0.1 (0.6) | 0.5 (1.0) | 0.2 (0.7) | 0.3 (0.8) | 1.8 (2.3) |
| iFOREX | *No ECN | – | – | – | – | – | – | – |
| TMGM | ECN | $7 | 0.0 (0.7) | 0.1 (0.8) | 0.2 (0.9) | 0.7 (1.4) | 1.1 (1.8) | 0.6 (1.3) |
Recommended Forex Broker Ranking with Low Fees (STP Account)
From here, I will introduce the brokers that can be recommended with low fees in order of ranking format for each STP and ECN account type.
As mentioned above, the comparison results of brokers will vary depending on the account type and target currency pair.
Just because you didn’t see a broker into the rankings doesn’t mean that broker is bad.
Please select the most suitable broker and account type according to your trading style.
STP Account 1st : iFOREX
The 1st place is iFOREX “Elite” account.
iFOREX spreads are the narrowest level in the world.
Although iFOREX offers bonuses, it is able to offer such narrow spreads, so I think iFOREX is fairly stable management as a company.
＼Just 3 minutes!!／
STP Account 2nd : FBS
The 2nd place is FBS “Standard” account.
FBS is very strong at major currencies (USD pair).
Especially EUR/USD, GBP/USD and AUD/USD are the narrowest levels.
It is highly recommended for those traders who mainly trade these currencies.
Regard to FBS spreads review, please visit separated article “FBS All Spreads Review | FBS spreads are very narrow!“.
＼Just 3 minutes!!／
STP Account 3rd : LAND-FX
The 3rd place is LAND-FX “Live” account.
LAND-FX generally offers narrow spreads for all currency pairs.
Regarding USD/JPY, it is probably the narrowest of the brokers I introduce.
EUR/USD is also very narrow, so it is recommended for traders who mainly trade these major currencies.
Regard to LAND-FX spreads review, please visit separated article “LAND-FX Spreads Review | Really narrow spreads!!“.
＼Just 3 minutes!!／
STP Account 4th : GEMFOREX
The 4th place is GEMFOREX “All-in-One” account.
GEMFOREX does not have currency pairs which are outstandingly narrow, but spreads are generally narrow.
GEMFOERX is recommended as an account that can be used for almighty.
However, I feel that GEMFOREX spreads tend to widen a little.
When it’s spread out, it’s about the same as XM.
Please open a real account instead of a demo account and check the chart.
Regard to GEMFOREX spreads review, please visit separated article “GEMFOREX All Spreads Review | Spreads tend to widen?!“.
＼Just 3 minutes!!／
STP Account 5th : TitanFX
The 5th place is TitanFX “Standard” account.
Like GEMFOERX, TitanFX offers narrow spreads on all currency pairs.
It seems that it can be used for almighty, and gold is narrower than other companies, so it will be a candidate for traders who want to trade metal.
Regard to TitanFX spreads review, please visit separated article “TitanFX Spreads Review | TitanFX Spreads are Narrow“.
＼Just 3 minutes!!／
STP Account 6th : Axiory
The 6th place is Axiory “Standard” account.
Axiory spreads are relatively narrow on major currencies.
Axiory is an easy-to-use forex broker, so it is highly recommended for those traders who trade mainly in major currencies.
Axiory discloses real-time spreads on its official website.
This is a point that can be evaluated. Please check the official website once.
Regard to Axiory spreads review, please visit separated article “Axiory Spreads Review | Spreads are really narrow!“.
＼Just 3 minutes!!／
STP Account 7th : HotForex
The 7th place is HotForex “Premium” account.
Currency pairs are fairly normal, but metal trading spreads are narrow.
Recommended for those who mainly trade gold.
HotForex also has a cashback program, so the real spread will be narrower than showed spread.
Regard to HotForex spreads review, please visit separated article “HotForex Spreads Review | Are HotForex Spreads Narrow?“.
＼Just 3 minutes!!／
STP Account 8th : XM
The 8th place is XM “Standard” account.
XM spreads are bit wider, but XM offers gorgeous bonus programs and cashback program that earns points every time you trade, so considering these, the actual spread will be narrower.
Assuming that you will use XM for a long time, it is well worth choosing as your main account.
Regard to XM spreads review, please visit separated article “XM Spreads Review | Is that really wider?“.
＼Just 3 minutes!!／
STP Account 9th : FXGT
The 9th place is FXGT “Standard” account.
FXGT offers four account types, three of them are STP method accounts.
Spreads are generally wide, but in reality, spreads of cryptocurrencies such as Bitcoin are very narrow.
There are not so many Forex brokers that can trade cryptocurrencies, but you can trade at the cheapest commission in FXGT among them.
Regard to FXGT spreads review, please visit separated article “FXGT Spreads Review | Crypto spreads are narrow!“.
For the conditions of cryptocurrency trading, please visit the separate article “The Reason Why FXGT is the Best Broker for Bitcoin Trading“.
＼Just 3 minutes!!／
Open an Account
STP Account 10th : TMGM
The 9th place is TMGM “Standard” account.
TMGM has a wide variety of account types, and there are a total of four STP accounts.
I compared the standard account as a very general spec account, but in fact, the spread is very narrow for the premium account and Pro account which are high spec accounts.
However, the minimum deposit amount is $50,000 and $100,000, respectively, which are quite high.
For those who have enough capital and can open a high-spec account, you can trade with very good conditions.
＼Just 3 minutes!!／
Recommended Forex Broker Ranking with Low Fees (ECN Account)
Next is the ECN account edition.
ECN accounts will be introduced in order of recommendation, taking into account not only spreads but also transaction fees.
ECN Account 1st : Tradeview
The 1st place is Tradeview “CTrader” account.
Tradeview is the very best on ECN account.
There are two types of ECN accounts in Tradeview, but CTrader has a lower fee.
The transaction fee is $ 5 for a round trip, which is the lowest class in forex brokers, but it is far cheaper than the actual fee including spreads.
Also, since it is generally cheap in any currency, it is a highly recommended broker for those who want to trade various currency pairs with their ECN account.
＼Just 3 minutes!!／
ECN Account 2nd : FBS
The 2nd place is FBS “ECN” account.
FBS has a low fee of $ 6 round trip, and spreads on almost all currency pairs are narrow.
All currencies spreads are narrower, so I highly recommend FBS for long-term use.
Please note that gold is not available for ECN accounts.
If you want to trade GOLD and metal CFDs, select a standard account.
Regard to FBS spreads review, please visit separated article “FBS All Spreads Review | FBS spreads are very narrow!“.
＼Just 3 minutes!!／
ECN Account 3rd : TMGM (TradeMax)
The 3rd place is TMGM (TradeMax) “ECN” account.
he transaction fee is a normal level of $ 7 for a round trip, but the spread is very narrow.
In particular, EUR/USD has an average spread of 0.0 pips, which is almost always zero.
It can be a good candidate for those who want to trade at low cost.
＼Just 3 minutes!!／
ECN Account 4th : Axiory
The 4th place is Axiory “Nano” account.
Axiory has a low transaction fee of $ 6 for a round trip, and the spread is narrow, so the fee is generally cheaper.
Axiory has a relatively narrow spread for standard accounts as well, so it can be said that it is a highly rated broker overall.
Regard to Axiory spreads review, please visit separated article “Axiory Spreads Review | Spreads are really narrow!“.
＼Just 3 minutes!!／
ECN Account 5th : LAND-FX
The 5th place is LAND-FX “ECN” account.
To be honest, it’s neither good nor bad. It’s quite normal.
This is a general fee level.
Please note that, like FBS, metal CFDs are not offered on ECN account.
Regard to LAND-FX spreads review, please visit separated article “LAND-FX Spreads Review | Really narrow spreads!!“.
＼Just 3 minutes!!／
Summary
How was that?
The narrowest spread doesn’t mean it’s the best.
Please evaluate the real spread considering bonuses and cashback services, with considering your trading style and taste.
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