June 24, 2024

Low Spread Forex Brokers

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Start your forex trading journey right with these regulated low-cost forex brokers. Read on.

What are the lowest spread forex brokers?
Here are the 6 forex brokers that offer the lowest spread in the United States:

  1. Interactive Brokers for HNWI
  2. OANDA for beginners
  3. FOREX.com for raw spreads
  4. Schwab for best support
  5. tastyfx for low minimum spreads
  6. Trading.com for simple trading

In forex, the lower the spread, the easier it will be for you to profit.

In this article, find out which regulated forex brokers offer the lowest spread and commission in the United States.

Disclaimer: The spreads included in this article are snapshots from April 2024. Note that spreads may change depending on economic factors. While this article briefly discusses the spreads published by the broker, real-time spreads can vary and depend on multiple factors, including market news and trading sessions.

Low Spread Forex Brokers

Brokers offer different types of pricing. The most common is the spread-only account, which only charges you the spread one time per trade.

On the other hand, some brokers offer ultra-tight spreads + low commissions. Read on to know your options.

What is the lowest spread forex broker for gold?
Previously, trading gold with leverage was offered by forex brokers such as XAU/USD. However, due to regulatory requirements, most US-regulated forex brokers have decided to eliminate gold from their offerings. You can switch to the futures market to trade leveraged gold instead.

What is your primary concern when choosing a forex broker?

Interactive Brokers for High-Net-Worth Individuals (HNWI)

Major Currency PairIBKR Spread Snapshot[1]Industry Average
EUR/USD0.100.23
GBP/USD0.500.89
AUD/USD0.101.05
USD/JPY0.400.54
USD/CAD0.401.18
USD/CHF0.500.96

Interactive Brokers (IBKR) is the only forex broker in the US with a spread that is very similar or sometimes lower than the industry average. It offers over 100 currency pairs.

It charges commission on top of the spread for transparency, but it's very small at 0.08 to 0.20 basis points or 0.0008% to 0.0020% of trade size.[2] The minimum per order is $2 for Tier I. To give you an idea, a USD 50,000 for EUR trade will cost you a $2 minimum commission.

You can trade forex as currency conversion or leveraged forex at Interactive Brokers. IBKR US clients can execute spot forex, but there is an additional requirement for leveraged forex.

For you to trade leveraged forex, you must be an Eligible Contract Participant, or ECP. An ECP is an individual or organization with assets of over USD 10 MM (or USD 5 MM if trades are hedging).[3]

OANDA for Beginners

Major Currency PairOANDA Avg. Spread[4]Industry Average
EUR/USD1.570.23
GBP/USD1.980.89
AUD/USD1.301.05
NZD/USD2.421.11
USD/JPY1.790.54
USD/CAD1.971.18
USD/CHF1.880.96

OANDA offers competitive average spreads and only has a minimum deposit of $0, so it's very accessible for forex beginners.

It's a platform that specializes in FX and is a popular choice among retail forex traders, so it's a great place to start trading forex.

The spread for its major pairs is pretty decent compared to other US forex brokers for beginners. However, you might see higher costs for minor pairs. It currently offers 68 currency pairs.[5]

OANDA offers two pricing models: spread-only or Elite Trader. Spread-only means the commission is automatically added to the raw spread, so you pay one time per trade.

Elite Trader is the premium account and requires a minimum of $10 million trading volume. As a benefit, you get cash rebates, a dedicated relationship manager, and VIP extras.[6]

How experienced are you with Forex trading?

FOREX.com for Accessible Raw Spreads

Major Currency PairFOREX.com Avg. Spread[7]Industry Average
EUR/USD1.20.23
GBP/USD1.50.89
AUD/USD1.31.05
NZD/USD3.01.11
USD/JPY1.40.54
USD/CAD2.51.18
USD/CHF2.00.96

Forex.com is one of the few brokers that lets retail traders access a spread + commission pricing model. It supports over 80 currency pairs.[8]

It has two types of accounts: standard accounts and RAW pricing accounts. The RAW pricing account is the one with the spread + commission pricing model.

The table above represents the FOREX.com spread for a spread-only account, but the spreads in RAW pricing accounts can go as low as 0.0 pips for major pairs.

However, the commission for the RAW pricing account is $7 per side for every $100,000 traded. A round-trip trade will cost you $14.

It also has an Active Trader program for those with a minimum $10,000 balance or $50M monthly trading volume.[9] This program offers perks such as cash rebates, wire transfer reimbursement, and a dedicated relationship manager.

Schwab (thinkorswim) for Best Support

Major Currency PairTOS Spread Snapshot*Industry Average
EUR/USD1.30.23
GBP/USD1.40.89
AUD/USD1.21.05
NZD/USD1.31.11
USD/JPY1.20.54
USD/CAD1.51.18
USD/CHF1.10.96

Note: Schwab does not publish their average spread. The spread for Schwab, as indicated here, was taken directly from a trade snapshot in the TOS paperMoney app. It's taken on a normal trading day, with no news impact, and not from opening or closing.

Schwab's thinkorswim (TOS) is not specialized in forex, but they have decent spreads. Plus, it has one of the best and most reliable customer support since it is an established financial firm.

Its spread is sometimes even lower than OANDA and Forex.com, as shown in this price snapshot during the US session on April 4, 2024. In these 7 major pairs, no pair went over 2 pips during a normal US session.

TOS offering lower spreads compared to its competitors was also a topic shared online in communities between forex traders.

However, the charting in TOS is not really ideal for forex trading since it's more focused on stocks.

tastyfx for Low Minimum Spreads

Major Currency Pairtastyfx Avg. Spread[10]Industry Average
EUR/USD1.20.23
GBP/USD1.80.89
AUD/USD1.41.05
NZD/USD2.91.11
USD/JPY1.30.54
USD/CAD2.21.18
USD/CHF2.10.96

The average spread in tastyfx is almost the same as other competitors. However, it has the lowest minimum spread, starting at 0.8 for pairs like EUR/USD and USD/JPY. It has over 80 forex pairs.[11]

tastyfx does not charge any commission, as the broker's fees are already included in the spread. There is no raw spread + commission account type.

However, it does offer a premium client service for traders with a monthly volume of $50 million.[12] You can get up to 15% in cash rebates, newsletters with high-level forex analysis, and reimbursement on certain fees.

What low-spread forex Brokers are the best for scalping?
If you can afford the minimum it requires, Interactive Brokers is a great low-cost broker. Schwab also has pretty good spreads, but its platform is more stock-centric than forex. Overall, many traders would say that OANDA is a good choice.

Trading.com for Simple Trading

Major Currency PairTrading.com Avg. Spread[13]Industry Average
EUR/USD1.20.23
GBP/USD1.80.89
AUD/USD1.31.05
NZD/USD3.01.11
USD/JPY1.60.54
USD/CAD2.11.18
USD/CHF2.20.96

Trading.com only offers 1 type of forex account, which is the T1. This account type has low average spreads, no commissions, and a minimum deposit of $50.[14]

While you would see a low spread for major pairs like EUR/USD, some may cost a little more, like the NZD/USD. Nonetheless, you can see its real-time spread here if you want to look for certain pairs.

Its trading platform is accessible via the web; no download is required. Its interface is easy to use, with a 24/5 customer support team ready to assist you.

What's your top priority when choosing a trading platform?

How Is Spread Calculated?

To get the spread in forex, you need to subtract the ask from the bid of the quoted price. Here are two examples:

Currency Pair: EUR/USD

Bid Price: 1.08674
Ask Price: 1.08687
Spread: 0.00013 (1.3 pips)

For most pairs, 1 pip is equal to 0.0001. But for the pairs of Japanese Yen, it's 0.01 for 1 pip. So don't get confused when calculating the spread of major pairs like USD/JPY.

Currency Pair: USD/JPY

Bid Price: 151.647
Ask Price: 151.659
Spread: 0.012 (1.2 pips)

This spread is now the cost of every trade. So when you open a new EUR/USD trade, for example, you're already at a loss with 1.3 pips and need just as much to break even.

Is Low Spread Good for Forex?

Yes, having a low spread is good for forex. You're at a loss when you open a new forex trade because of the spread. The lower the spread, the better the break-even price.

However, a low spread is not necessarily a deal-breaker for some trading strategies. Scalpers and day traders would need a low spread as much as possible. However, swing traders will not typically mind this as they capture big movements over a long period of time.

Methodology

We only included forex brokers regulated in the United States to protect your money from scams. While some offshore platforms accept US clients, they pose risks and could be shut down by the SEC.

Certain forex pairs naturally have higher spreads than others. Therefore, we've included the industry average to give you more information for decision-making.

The spread data was gathered from the average spreads published by each platform on their respective websites.

Since Schwab and IBKR do not publish their average spreads, we captured a snapshot of their spreads during a normal, non-high volume, news-free period within the US session.

Bottom Line

Interactive Brokers has the most transparent and lowest spread but requires significant trading volume.

New forex traders might find platforms like OANDA, Forex.com, tastyfx, and Trading.com helpful more.

Nonetheless, spread is just one factor in being a profitable forex trader. You need to master a trading edge and your risk management to further increase your chances of profitability.

References

  1. ^ IBKR. Spot Currencies, Retrieved 04/04/2024
  2. ^ Interactive Brokers. Commissions Spot Currencies, Retrieved 05/16/2024
  3. ^ IBKR. FAQ: I am resident in the U.S. Can I trade leveraged forex?, Retrieved 04/08/2024
  4. ^ Oanda. Historical forex spreads, Retrieved 04/04/2024
  5. ^ OANDA. Trade forex and cryptocurrencies, Retrieved 05/16/2024
  6. ^ OANDA. Join the elite, Retrieved 04/08/2024
  7. ^ FOREX.com Trading prices and execution, Retrieved 04/04/2024
  8. ^ FOREX.com. Forex trading, Retrieved 05/16/2024
  9. ^ FOREX.com. Active Trader, Retrieved 05/16/2024
  10. ^ tastyfx. What are tastyfx's forex product details?, Retrieved 04/04/2024
  11. ^ tastyfx. About us, Retrieved 05/16/2024
  12. ^ tastyfx. Premium Client Services, Retrieved 05/16/2024
  13. ^ Trading.com. Forex Pricing , Retrieved 4/04/2024
  14. ^ Trading.com. The T1 Account, Retrieved 05/16/2024

Write to Stella Magay at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

OANDA Corporation is regulated by the CFTC/NFA. OANDA is a member Firm of the NFA (Member ID: 0325821). CFDs are not available to residents in the United States.

OANDA CORPORATION IS A MEMBER OF NFA AND IS SUBJECT TO NFA'S REGULATORY OVERSIGHT AND EXAMINATIONS. HOWEVER, YOU SHOULD BE AWARE THAT NFA DOES NOT HAVE REGULATORY OVERSIGHT AUTHORITY OVER UNDERLYING OR SPOT VIRTUAL CURRENCY PRODUCTS OR TRANSACTIONS OR VIRTUAL CURRENCY EXCHANGES, CUSTODIANS OR MARKETS

Trading in digital assets, including cryptocurrencies, is especially risky and is only for individuals with a high risk tolerance and the financial ability to sustain losses. OANDA Corporation is not party to any transactions in digital assets and does not custody digital assets on your behalf. All digital asset transactions occur on the Paxos Trust Company exchange. Any positions in digital assets are custodied solely with Paxos and held in an account in your name outside of OANDA Corporation. Digital assets held with Paxos are not protected by SIPC. Paxos is not an NFA member and is not subject to the NFA's regulatory oversight and examinations.

Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and may not be suitable for everyone. We advise you to carefully consider whether trading is appropriate for you in light of your personal circumstances. You may lose more than you invest. Information on this website is general in nature. We recommend that you seek independent financial advice and ensure you fully understand the risks involved before trading. Trading through an online platform carries additional risks.


Best Forex Broker

May 8, 2024 - Tips
Using an unregulated forex broker in the United States can be very risky. Luckily, you have a few legal options to explore. Read on to find out more.
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