Forex has become a popular choice of trading in the last decade. But, while for a while it was reserved for professionals, it has now started to be also common among the common investors looking to diversify their profile and make a significant income.
When deciding to get started in the world of Forex, traders have to make a very important choice: what broker to use?
Brokers are the intermediaries that give access to the market. They offer a platform through which investors can make their orders and deals. Brokers also determine what currency pairs traders can invest in, and make available a set of research and educational tools, which can be very useful for beginners.
So, when choosing a broker, one of the things to keep in mind is the spreads. They all offer different ones and it’s worth checking the lowest spread Forex broker, since they may prove a better choice when trying to make a profit.
But, let’s start at the beginning.
What are spreads?
When talking about Forex, spreads mean the difference between the bid price and the ask price in a currency pair.
The bid price is the sell price at which traders can sell a certain currency. On the other hand, the ask price is the value at which traders will buy that currency.
The ask price will always be higher than the bid price.
Spreads are quantified in “pips”. Because we are talking about very small quantities, we need a different and easier way to measure them. So, one pip is 0.0001 in any particular currency.
Low spreads vs high spreads
Since spreads are another way of counting how much of your earning will go to the broker, meaning a cost, those brokers offering a low spread are more advantageous.
Higher spreads are usually seen in certain less common or exotic currency pairs. Remember that 90% of the total currency exchange market is done in major currencies, like dollars, euros, pounds, and yen. These currencies will normally have the lowest spreads.
Tips for succeeding in the Forex market
These are our favorite tips for becoming a successful Forex trader.
- Set up a clear trading strategy. Ideally, learn about different ones and experiment with them to choose the right one for the trader’s style and expertise.
- Be consistent in your investments using the chosen strategy. This will guarantee better results and more efficient management of risk.
Best Forex brokers with lowest spreads
We have selected among the many available, those brokers that offer the best spreads.
Plus500. This broker has earned the reputation as the best overall for beginners, featuring an easy-to-understand platform, and interesting tools for newer traders.
Apart from low spreads they also offer a very fast execution time and very reliable customer service.
eToro. The worldwide recognition of this broker has made it a common name in the trading world. They specialize in social trading, but also offer Forex and while their spreads are not the lowest, they make it worth it thanks to a variety of very original and worthwhile tools.
eToro is one of the favorite brokers among those traders taking their first steps in the world of trading.
- IG. Another much-recommended broker offering low spreads. They have started targeting beginners in recent years, which means they have a wide selection of educational tools.
IG offers very competitive costs and has rated as the best overall Forex broker this year.
CMC markets. Beginner traders will definitely appreciate the wide variety of educational tools that this broker grants access to. A good online platform and beneficial spreads.
