FxBrokerReviews.org – Whether you are an advanced trader or a beginner, it is very important to understand spreads, and how they work in forex trading. Spreads are of different types and affect the proportion of profit that you have to share with your forex broker.
Spread is the difference between the bid (buy) and ask ( sell) price. As you might be aware that foreign currency is always traded in pairs and the price is quoted of a pair instead of a single currency, so the spread majorly depends on the price movements of the currency pairs in the forex market.
Now, spreads are not necessarily the same all over, different forex brokers charge different spreads. Some have tight (low) spreads, while some charge wide ( high). Spreads also depend on market conditions, time of trading, and the type of spread you are trading with.
You will find two types of spreads: variable spreads and fixed spreads in forex trading. This article will cover everything you need to know about fixed spread accounts, their benefits, and the best fixed spread broker list.
What is fixed spread?
As the name suggests, fixed spreads do not change owing to market fluctuations, volatility, or time of trading. They remain unaffected by all external factors. Fixed spreads are a good option for short-term traders or traders who do not want to take many risks, while forex trading. They make the entire trading process more predictable for traders who have an estimate of how much they need to make a profit.
However, in a situation of high volatility or low liquidity, the spread may change temporarily. The range may be transferred to a new spread level, but even there it will be fixed and not change constantly. When the market returns to normalcy, the spread is changed back to its general level.
Best fixed spread broker list 2022
Below we have compiled a list of the lowest fixed spread broker in 2022. We have studied and taken into consideration the following points:
- The fixed spread account types and offering
- The assets with fixed spreads
- The minimum fixed spreads on forex
- The minimum deposit
- The platforms that accept fixed spreads.
Lowest fixed spread forex
Avatrade allows fixed spread to all its traders, irrespective of the account type. Traders are charged fixed spreads on the trade of all kinds of assets including forex, indices, stocks, commodities, crypto, options, ETFs, and bonds.
The spread offered by the broker is tight in comparison to the rest of the other brokers. It starts from 0.9 pips for normal account holders and for the premium ones the spread range is 0.6 pips.
The platform is one of the most trusted platforms in the UK and is heavily regulated. It offers traders access to third-party trading platforms like MT4 and MT5, loaded with advanced charting and technical indicators.
Moreover, the broker also provides quality educational resources to all traders to understand the market well. The only, drawback that comes across is the minimum deposit fee which amounts to $100.
Also read: Review AvaTrade: Key Findings for 2022
2. FX Pro
Fx Pro offers fixed spread forex trading on 7 major forex currency pairs. The spread starts from 1.6 pips for all account types. The platform is best known for its MetaTrader platform which is available for desktop, web, as well as mobile. FxPro is regulated under the FCA and is a secure broker for trading various investments.
The platform offers traders the to buy or sell more than 400 CFDs, including forex, shares, indices, metals, and cryptocurrencies. The platform provides daily market updates through its blog. FxPro has good-quality educational articles, along with a record of videos that mostly features webinars, and platform tutorials.
The drawback of this forex broker is that as per the forex broker spread comparison, the spreads are high and the platform can have high trading fees for new traders. However, regular traders are offered low trading fees and tight fixed spreads.
3. Easy Markets
Easy markets charges fixed spreads on forex as well as other available assets like crypto, shares, options, commodities, and indices. The fixed spreads start at 0.8 for all account holders. The broker also supports platforms like MT4 which offers tight spreads starting from 0.7 pips.
The trading platform is regulated under CySEC, ASI, and FSA-Seychelles. The Standard Account of the trading platform only requires a minimum deposit of only $25 making it accessible to beginner traders. It is known to be one of the most innovative forex trading brokers in the market. The broker has multiple tools to help traders analyze the market and carry out smooth trades.
The platform lacks behind when it comes to providing copy trading features. Other than it perfectly fits the most suitable fixed spread broker list.
XTB is a well know fixed spread forex broker for trading stocks, mutual funds, cryptocurrencies, CFDs, and more. The spreads are set at an average of 0.1 pips depending on the instrument. The spread on the Standard account is a minimum spread of 0.9 pips. The spread on the Pro account is the market spread, and the minimum spread is 0 pips.
The forex broker offers quality educational content for both beginners and advanced traders. To keep the traders up to date with the market for forex trading, the platform also provides market news and analysis. XTB supports micro lot trading and is a highly regulated platform.
Also read: XTB Broker Review 2022
5. City Index
City index comes with fast execution, tight spreads, and low margins. The forex broker charges fixed spreads on various assets including, indices, commodities, bonds, and interest rates. The minimum spread that it charges starts from 0.6 pip and ranges to 1 pip.
Licensed by the Financial Control Authority (FCA) and the European Securities and Market Authority (ESMA), City Index comes across as a heavily regulated broker which protects the interests of all traders. The broker supports third-party trading platforms like MT4 and WebTrader with advanced indicators and tight spreads. The minimum deposit needed is $100 to start trading with City Index.
Forex broker spread comparison
|AVA Trade||Starts from 0.9 pips||MT4, MT5, Webtrader|
|Fx Pro||Starts from 1.2 pips||MT4, MT5|
|XTB||Starts from 0.7 pips||MT4, MT5, Webtrade|
|Easy Markets||Starts from 0.8||MT4, MT|
|City Index||Starts from 0.8 pips||MT4, MT5|
What is a fixed spread account?
Fixed Spread accounts are designed for forex traders who trade using fixed spreads in the forex market. These accounts help traders manage their trading costs efficiently as a fixed spread account informs the trader before hand the pip difference between the bid and ask price.
The biggest advantage of these accounts are that, irrespective of the market trading conditions, the trader is most of the time guaranteed of the diﬀerence between the buying (ask) and selling (bid) price.
Having a fixed spread account also reduces the risk of slippage. Slippage occurs when prices move so quickly that sometimes before you make your trade, the prices change. Therefore having a fixed spread in the forex market, protects trades from the risk of slippage and random price fluctuations due to increased market volatility.
What are the benefits of a fixed spread forex broker?
Fixed spreads in forex trading means transparency. When there is a fixed spread you exactly know what spread amount you are going to pay for each time you buy or sell any forex or financial asset. Irrespective of the condition of the market, liquidity, time of day or even the volume of trade you will have to pay a fixed spread. It would not be wrong to call it a transparent cost as it ensures that a brokers can’t manipulate a trader into paying higher spreads.
Better trade planning
It is easier to make and follow forex trading strategies, if you have to pay a fixed spread. This is because trades are aware of the spread that they will have to pay if they buy or sell a particular asset at any given time. Therefore, they make plans which will benefit them the most and ensure higher returns with tight spreads.
Not affected by market news
Variable spreads, that keep on changing are quite when there is increased volatility in the market, whereas traders with fixed spreads remain unaffected by this. For those who trade with variable spreads always have to keep a check on the forex market news, whereas it is not necessary do to the same with fixed spreads in forex.
Good for Scalping
Scalping is a forex trading strategy that involves taking very small profits in many trades within a day. Now in such a situation having fixed spreads proves to be very beneficial as the spread impacts on any profits which is made, therefore scalpers will be better served using fixed spreads.
By registering with a fixed spread forex broker, you can significantly reduce the cost of trading. Fixed spreads offer no surprises, and hidden costs. In fact they help you to budget the costs of transactions well in advance. This greatly improves your ability to manage costs over the course of your trading career. To know the best fixed spread broker check the forex broker spread comparison above.
What are the disadvantages of fixed spread forex?
Requotes are very common with fixed spread. Sometimes due to the supply-demand dynamics, the prices may move very fast due to this your broker might ask you to accept a new entry price provided for the trade as there won’t be any room to make the price adjustments.
As the spread is fixed, it is quite possible that the forex broker may set some restrictions on the platform, so that they are able to charge you more incase the spreads are extremely tight.
What are the different types of fixed spread forex traders?
Scalping is a forex trading strategy which traders make numerous short-term positions in a day and close them within a few seconds or minutes. In simple words scalpers are those who get in and out of trades very quickly. Scalpers take a few pips at a time therefore fixed spreads are suitable for them.
Traders who trade news greatly benefit from fixed spreads. Some traders have experienced spreads widening to as high as 50 pips during news trades with variable spread brokers, therefore choosing a broker with the fixed spreads brokers could prevent spreads moving at such high rates.
Micro accounts traders:
Low-frequency traders and those who trade with small deposits usually open micro accounts. These traders are better off with fixed spread brokers as they won’t have to pay any extra commissions on trades, unlike with variable spread brokers who charge commissions on buying or selling of trades.
In this guide above we have mentioned all the required information about fixed spreads. If you are confused about the type of spread to choose, then remember if you are someone who is not willing to take much risk or a little inexperienced with the market changes then you should consider fixed spreads.
Q1. what is the difference between a fixed spread forex broker and variable spread broker?
Ans : Fixed spreads do not change according to the market conditions or price movements, whereas variable spreads change as the market changes.
Q2. Which is the lowest fixed spread broker?
Ans : According to the fixed spread broker list, XTB and AvaTrade are the lowest fixed spread broker in 2022.
Q3. Can I trade on a fixed spread ECN forex broker?
Ans : A fixed spread broker and an ECN broker are two different types of tradings. Currently, there are no platforms that support a fixed spread ECN forex broker or even fixed spread and ECN individually.
Q4. Which is better : a variable spread or fixed spread?
Ans : the type of spread depends on the type and lot of trade. If you are short-term trader and do not want to take risks due to market volatility, then fixed spread is for you. But if you are a long term trader then you should consider variable spreads.