Do you pay attention to spreads when choosing a broker? Most beginners focus on trading commissions and withdrawing fees mainly, but they do not take into account that there can be additional charges included in spreads. Read on to learn how to select the brokerage platform with the most advantageous conditions.
First, let us explain in short what a spread is. It is the difference between the bid and ask price of an asset. In practice, it is the key source of income for most brokerage services.
For traders, it is crucial to choose deals with low spreads as that reduces their expenses. Besides, when spreads are low, it is a sign that, at a current moment, volatility is low, while liquidity is increased. Consequently, it is the most beneficial moment to initiate trades. Besides, a trader should take into consideration that spreads depend on the asset. For example, for EURUSD, the spread is usually lower than for other pairs.
Another helpful prompt ― when choosing the lowest spread Forex broker, focus on average spreads rather than on minimal ones. Naturally, spreads will change throughout a session.
Again, many brokers offer extremely low spreads to attract as many clients as possible, but they do not mention that they charge an additional fee of about $1–5 for every lot.
Also Read: Learn from the Richest Forex Traders: 5 Secrets
To make your choice easier, we have singled out 5 reputable brokerage services with the most advantageous terms and compared them against spreads, commissions, deposit limits, and other aspects. Our top list includes Interactive Brokers, RoboForex, Admiral Markets, Tickmill, IC Markets. So, in terms of the lowest spreads, the winner is Interactive Brokers. Their spreads for the 5 most sought-after currency pairs are only 0.1 pips. But there is also a trading fee ― $2 per lot. Another great news is that this broker has set a $0 initial deposit limit for the overwhelming majority of clients. However, you can also safely choose any other company from our list.