Best Zero Spread Forex Brokers 2023
When it comes to opening a forex account, selecting the right type of forex account and broker becomes the prime criteria. Further, brokers can be many types depending on the commission and fee structure. That being said, a zero spread account is a type of forex account, you may sign up to maximize your profit. However, you must need the best zero spread forex brokers to trade via zero spread forex account. Trading with zero spread brokers gives the opportunity to determine the correct entry and exit point in the trading. Furthermore, a 0 spread forex broker also helps to calculate the non-loss expenses while trading.
Apart from these, forex 0 spread offers immense benefits and opportunities. With that note, we will take you through every detail of the spread 0 broker you need to know before registering with one.
What a Spread Actually is?
Usually, the spread represents the difference of the bid and ask price of a currency. The spreads can be wider or even narrower, but it depends on the currency you are going to trade. Moreover, brokers can even widen or add or adjust their bid-ask price. Therefore, the trader will have to pay more if he or she is buying and will receive less when selling. That is why you need to understand spreads to avoid paying extra.
In the forex market, the prices are actually represented as pairs or even the exchange rate, in which the relative currency unit denominates another currency. The exchange rate the customer agrees to buy is represented as a bid. On the other hand, the exchange rate customer agrees to sell is called the asking price.
Spread usually means the service cost of the broker, which ultimately replaces the transaction fees. The brokers that impose spread fees are known as market makers. However, there are other types of brokers too.
Best Zero Spread Forex Brokers List
Effects of Spread in Forex
In simple words, the spread is the price differences in the currencies. Whenever you are trading the forex currencies, you are not paying for having the actual spot price. Instead, you are paying due to the difference between the two currencies. In other words, you will be buying a currency at a specified fixed price and sell another currency at that same specified price.
When it comes to the spreads, you will find two types, fixed and variable spreads. In a fixed spread, the price stays unchangeable. So, you will be paying for the spot price instead of the differences of the currencies. Nevertheless, a fixed spread might be the least expensive trading option you can have as your capital get benefits from the fewer trades.
On the other hand, variable spreads have a small change in the bid and ask price. Traders can get advantages from these changes from the price fluctuations. However, traders may face the risks too. The initial risk can be trading against yourself as well as other investors. Further, you may also lose a big amount of money from trading.
Therefore, it is recommended to stay with the fixed spreads such as zero spreads. Most importantly, if you are new in forex trading, you can have low risk through zero spreads.
Definition of a Zero Spread Account
Zero spread account is a forex trading account that doesn’t offer any difference between the “bid and ask price.” This type of account gives the opportunity to trade without any spread. Therefore, brokers don’t make money from spreads but impose commissions for this account. Again, it all depends on the broker you choose and the commission or charges applied by the broker.
The good thing about a forex 0 spread account is that you can easily know the entry and exit point without worrying about any unnecessary trading costs, fees, or commissions.
Even if a commission is incurred, calculating becomes easier as there are no spreads that you are required to do complex counting. Usually, commissions are displayed in a separate column while created reports are in most brokerages.
How to Identify the Zero Spread Brokers?
Usually, the zero spread forex brokers are those types of brokers that provide the STP or ECN broker model. They are exactly “opposite of market makers and they don’t offer any dealing desk operator. Instead, they take the client’s order and provide direct access to the forex market. Therefore, no broker can set the price, but the market has the full authority to set the price. Nevertheless, the zero spread ECN broker offers direct market access. So, if you find an ECN or STP broker that offers the same bid and asks price, you can be sure that it is a 0 spread forex broker.
Comparing the Zero Spread Account
If you closely look at the accounts that are offered by the best forex brokers, you may see variable spreads along with some other trading costs such as fees and commissions. So, it is important to know the details of the zero spread account you are registering.
Usually, you may get offered multiple accounts by the forex brokers with the variation in certain features, for instance, commission. You may also find the variation in the trading platform, execution methods, a wide range of markets based on the 0 spread forex broker you choose.
Should you Choose a Zero Spread Account?
For a spread-sensitive trading strategy zero spreads can make the difference. Moreover, if you want to decrease the trading cost, a zero spread account will come in handy. So, if your main criteria are to cut the trading cost or have a spread sensitive trading strategy, you should choose a zero spread account. On the other hand, if you have such intentions, you can proceed with any account other than the forex zero spread account.
Furthermore, if your forex strategy depends on specific execution quality, choosing the zero fixed spread account will not be a good idea.
Zero Spread Brokers Basics
You may guess from the name that; zero spread forex brokers offer zero pips spread. Usually, the ask and bid difference is represented as pips, which is basically a fraction of a currency. Apparently, this type of broker adds a small trading cost as the trading takes place in a margin account as the trading volume increases.
- EUR/USD spread a decade ago was 3 pips.
- EUR/USD spread present day is 0.8 pips.
- EUR/USD spreads in the zero spread brokers is 0.1 pip.
Prices in the interbank market originate from major dealers. Further, a spread quotation works like a fraction of a pip or sometimes a bit more due to the market volatility. Usually, 0 pip spread forex broker may start from 0 and may go up to several fractions or sometimes more because of the volatile market condition.
Money Earning Procedure for Zero Pip Spread Forex Broker
The zero spread no commission brokers that offer no spread and don’t change the spread at all, will mostly add the commission. Further, brokers may also operate as dealing desks to make money while providing the trading service to the traders.
The way brokers with zero spread and different CFD Forex brokers make money depends on the service or business model. Therefore, all the best zero spread broker is most likely to do the following:
- Earn a rebate or add a spread markup: When you trade with the agency brokers they lead you to the third-party forex market maker to get the compensation.
- Charge Commission: Charging commission is another way for the best zero spread brokers to make money while forwarding your order to a third-party market maker.
- Manage risk as Dealer: Both market maker and agency broker tend to manage the risk as a dealer for the zero spread cent. It is also possible that some spread 0 broker may combine some of these processes and offer a hybrid execution model. Nevertheless, each of these methods may also work as individuals. Furthermore, some brokers may also let you choose the desired method while you open a zero spread account.
Is Zero Spread Worth it?
While it is great to avoid any fees, a zero spread account forex broker may still end up costing more than the spreads. However, it all depends on how good your strategy is! When considering your trading needs and strategy, trading with a zero spread account may not be a good idea, if the broker is unable to offer some specific execution methods. In addition to that, the spreads can be changed even in the promised zero spread account. So, you will need to know the average spreads and any pre trading commissions. So, if you want to get the best outcome from the forex 0 spread you must check these factors and decide accordingly.
How can you Verify a 0 Pip Spread Broker?
When you search for the zero spread brokers, you may find may broker claiming to offer zero spread cent account. However, most of them provide this offer to grab the attention of the traders. But in reality, most of them don’t offer such zero spread. Instead, they put spreads along with the commission and fees. So, you will need to identify them before start trading.
To verify a zero pip forex broker, you may open different small trading positions and get to know the bid and ask price. After that observe if there is any difference between those prices. If you don’t get any difference between the bidding and asking price, you can be sure that the broker is 0 pip spread forex broker. Furthermore, you can also open a demo account too.
Zero Spread Demo Account
The demo account is a great way to understand a broker or the account types or ins and out of a broker. While most of the brokers offer forex demo accounts for regular accounts, some brokers may also offer zero spread demo account. So, with this kind of demo account, you can initiate a trade and observe every detail. If you see the zero spread demo account meet all the criteria of a zero spread trading, you can come to the conclusion that the broker is one of the authentic best zero spread forex brokers.
Advantages of Zero Spread Brokers
It is evident that with the help of zero spreads forex traders can gain access to the live spreads from different liquidity providers without having marked up imposed by the forex broker. However, this is not the only advantage you will get.
Nevertheless, zero pip spread forex broker offers let the traders trade forex or even the CFDs. So that the investor knows the entry or even the exit position when they work with any open position. Moreover, these forex account types are also beneficial for identifying non-trading losses. For example, you can easily know the slippage amount while trading with the zero fixed spread account. Moreover, this account is also helpful for some specific trading strategies such as high-frequency scalping trading or even for day trading.
Another good thing about the zero spread account forex broker is that you will get superior trading conditions as well as fast execution speeds. Also, the zero spread ECN broker shows all the common charges, hence it is transparent. Alternatively, the broker charges a fixed commission instead of charging through the spread mark-up. On top of that, the ECN can also offer after-hours trading opportunities, which is ultimately a superior benefit while trading forex.
Besides, zero spread account work through the direct market technology, which involves accessing the price quotes from multiple liquidity providers. Therefore, no re-quotes are necessary to determine the fixed price. Moreover, the zero spread ECN platform accepts all types of trading strategies including scalping. Nevertheless, the ECN zero spread brokers earn money from deal flow instead of losing or winning trades by the customers.
It also works with the EAs (Expert Advisors) to have automated trading and get benefits from speed and accelerations. Nevertheless, you can continue the zero spread trading through the MetaTrader 4 (MT4).
Disadvantages of Zero Spread Forex Brokers
When it comes to the cons of the brokers with zero spread, the first thing you will face is the trading cost. It is more expensive than the regular forex trading account. It is because you are subject to charge the commissions and fees via the spread markups.
This type of broker usually imposes commission on each trade the trader places. So, it gives economic benefits for the large traders, not the small traders. So, zero spread brokers are highly expensive for retail traders whose trading volume is low. However, the usual commission price stays between $2.5 to $5.00 It is normally determined with the equivalency of 100,000 units.
Liquidity requirements remain high as the traders deal with the liquidity providers directly. However, if the 0 spread forex broker works via the market maker model, the market maker is responsible to offer the liquidity service. On the other hand, the ECN model traders are responsible to meet the liquidity requirement. Therefore, the ECN model requires a high deposit to initiate forex trading.
The other disadvantages you may face are bigger or smaller leverage, high minimum deposit, high beginning account opening balance, lack of negative balance protection, tight margin calls, and tight level of stop loss process.
Choosing the Best Forex Broker Zero Spread
The first thing we always recommend is choosing the regulated broker. You can choose a broker that is regulated by a good regulator such as FCA (UK), ASIC (Australia), CySEC (Cyprus), or IFSC (Belize). A regulated zero spread no commission broker gives the ultimate safety for the traders.
Apart from this, you can also look at the requirement for the minimum deposit, the transaction methods, trading costs, and more like the regular forex broker.
Another thing you should not forget to look at is the trading commission and charges. While choosing the zero spread brokers we always recommend selecting the low commission with the minimum charge.
Zero Spread Forex Brokers vs Raw Spread
The spread can be variable sometimes. So, it is mandatory to know the exact spread amount and the ranges of variables. While the zero spread brokers offer the 0.0 spread, the raw spread may offer the ultra-low spreads. So, according to your strategy, you can choose the desired account types.
For both raw and 0 pip spread broker the commission rate might be $3.5 per lot. However, the commission depends on the instruments, and the exact rate based on the instrument may vary based on the account type you are using.
However, the minimum deposit for both raw and best broker with zero spread might starts from $200. The leverage amount for account type is 1: unlimited. A margin call can be 30% and stop out is 0% for both account types. Finally, the order execution mode is market execution for both.
Thing You Must Look for A 0 Spread Forex Broker
As you already know that, you will find numerous zero spread brokers in the industry, but how do you know which one is the best forex broker zero spread?
The first thing you need to do is monitor the commission and spread. Besides, looking at the fast execution feature with low spread can help on any sort of trading strategy. For example, if you are a scalper, you will need a fast execution feature.
These are the main criteria you can look for to find the best 0 spread forex broker.
Standard vs Zero Spread Account
The first difference we observed between the standard and broker spread 0 is the primary deposit. While the minimum deposit for the standard account can be $100, the minimum zero spreads deposit can be $200-$500.
Zero spread accounts impose commission from the traders while the standard doesn’t impose any commission. Instead, they make money from the spreads. The spread in the standard account can be floating from 0.5 pip while on the other hand, it is 0 in the zero spread accounts.
Can You Trade Without a Broker?
After reading all those about the zero spreads, you may wonder if you can trade without a broker. So, here is your answer.
You cannot trade forex without a broker, whether it is the best broker with zero spread or the standard or the raw account. “Brokers work as a bridge between the market and the traders.” So, you must need the broker to access the market liquidity.
Final Words
While the zero spread brokers come with potential benefits, it also has some demerits too. So, you have to think wisely if you want to trade with zero spread forex brokers. Nevertheless, it is recommended for the newbies as you don’t need to pull out your hair to calculate the commission and charges.
If you decide to open a zero spread account, make sure you choose the best forex broker. Furthermore, this article will surely help you to know everything related to zero spreads. Hence this will work as a guideline for selecting the best broker spread 0.
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