In forex trading a low spread is crucial, not only to give traders a more favourable entry price, but also important for those employing scalping or hedging strategies.

A 0.0 pip spread (or nearly), is the perfect spread for both strategies, as investors trading the price action on M1 or M5 charts, might open and close several positions for a small profit, and with wider spreads that would be nearly impossible.

But above all, spreads are an important part of the overall trading costs, meaning, smaller spreads, more profit for traders. In this page we offer a complete list of the lowest spread forex brokers, including trading commissions, deposit and withdrawal fees, leverage available, and other important features.

Lowest spread forex brokers

What is the Spread in Forex

The spread is forex is the difference between the bid and the ask price, for each single currency pair. This difference between the selling and buying prices of a currency pair is also the profit of the exchange providers, including forex brokers, who buy the base currency at bid price (lower) and sell the quote currency at ask price (higher).

What is the Spread in Forex

A practical example, of a forex broker spread, for the GBP/USD pair, and from the trader’s perspective, would be:

    Buy price (ask price) 1.38381 vs sell price (bid price) 1.38371 = spread 1 pip.

This means that the forex broker is willing to buy the base currency (GBP) from the trader at 1.38371 (bid price) in exchange for selling the quote currency (USD) to trader at 1.38381 (ask price).

By selling at a higher price and buying at a lower price, the forex broker makes a profit on the spread. But this also means that investors will, invariably, start a trade in loss, precisely because traders always buy at a higher price, and sell at a lower price.

The spread in forex is measured in pips. Each pip in the spread will cost traders 10 USD (converted to the account currency and trade size).

Of course, if the spread is 0.0 pip, hypothetically, a trader can open and close a position on the same instant, without a profit or a loss. But in reality, it’s impossible, as ECN forex brokers (the only one’s offering 0.0 pip spreads) also add trading commissions to the total cost of opening a trade.

    For traders, a currency pair real trading cost is the broker’s spread plus the trading commissions.

These commissions are normally calculated in USD, and they have the equivalent value in pips (1 pip is 10 USD on a standard 100,000 units forex lot).

For example, when a broker advertises 0.0 pip spread on the EUR/USD pair and charges 7 USD commission per 1 traded lot of EUR/USD, a trader opening a buy lot at 1.20565 will only reach breakeven if the price goes up to 1.20572 (up by 0.7 pip).

Thus, trading commissions in USD can be easily converted in pips (1 pip size is 0.0001), to find out how many pips the price needs to move to reach breakeven (or to know the real spread cost), with the following formula:

Commission in USD/pip value (7 USD/10) = commission in pips (0.7 pip or 0.00007)

Comparatively, a “normal” forex broker offering a 0.6 pip spread on the EUR/USD pair is cheaper than an ECN broker offering 0.2 pip spread plus a trading commission of 7 USD on the same pair (the total spread will be 0.9 pip).

To find out what would be the brokers’ commissions for different size lots, (assuming a 7 USD commission), simply divide the broker’s commission by 10 and then multiply the currency units of the trading position by the commission in pip size, or, check the table below:

Lot Size Currency Units Commission in Pip Commission in USD
0.01 1,000 0.00007 0.07
0.10 10,000 0.00007 0.70
1 100,000 0.00007 7
10 1,000,000 0.00007 70

How to Lower Your Broker Spreads

What are forex rebates

There’s a way, legal by all means, that thousands of traders are using to lower even more the broker’s spreads, even ECN brokers with 0.0 pip spread plus trading commissions.

As we saw the trading commissions can also be converted in pip size and value. Clever traders are taking advantage of forex rebates programs, like the one offered by our site.

Forex rebates allows traders to reduce their trading costs and spreads and at the same time, to earn extra cash from their trading, regardless if a position is closed in profit or loss.

Rebates are a cashback program offered by a third-party provider, linked to a forex trading account, paying a cash rebate for each closed trade.

Forex rebates are a portion of the transaction cost, spread or commissions, or a combination of both, that is paid back to the client on each trade, resulting in lower spreads, and above all, improved win ratio.

    For example, if the rebate from the broker is 0.3 pip for the GBP/USD and the typical spread is 0.8 pip, then the net spread is only 0.5 pip.

Also, there is no ‘catch’. The broker spreads will never increase as a result of using a rebates service!  In the end, with this service, resulting in lower spreads, it is more beneficial to a trader’s financial position to work via a rebates provider than solely with the forex broker.

Rebates Calculator

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 TIP Try our Forex Rebates tool to accurately calculate how much you can earn in cashback from your closed trading positions with your favorite broker.

To find a complete list of all the brokers, linked to our cashback program and paying rebates, we recommend a quick visit to our Brokers Page. We have several partnerships with brokers paying rebates on forex and cryptocurrencies trades.