Forex brokers get compensated for providing trading services to traders. This compensation is through different trading fees and charges.
There are basically three trading charges. One of them is the spread, and the others include commissions & swap fees.
Forex and other CFDs have two price quotes – the bid price and the ask price. The Spread is the difference between the bid and the ask price. The spread cost is measured in pips.
CFD brokers have different pricing and fees condition. Some charge swap and commission. Some charge one of the two or either. However, there is no broker that does not charge a spread on their CFD instruments.
As a trader, you have to know that the higher the spread, the higher the charges you incur. This is why we have reviewed for you, the best low spread brokers in Australia.
Let’s see how they compare below.
Comparison of Best Low Spread Forex Brokers in Australia
|Broker||ASIC Regulated||AUD/USD Spread (pips)||Commission||Visit|
0.84 (Standard Account)
AUD3.50 per standard lot (Razor Account)
0.77 (Standard Account)
AUD3.50 per standard lot (Raw Spread Account)
1.4 (Standard Account)
$3 per standard lot (Raw ECN Account)
Note: The spread data & commission is as per information on these brokers’ websites in Apr. 2022.
Best Low Spread Brokers in Australia
Here the list of best low spread brokers in Australia that we have reviewed:
- Pepperstone – Forex Broker with Lowest Spreads in Australia
- IC Markets – Low Spread Broker with cTrader
- FP Markets – Low Spread Broker with ASIC Regulation
- eToro – Low Spread Broker with Copy Trading
- CMC Markets – Regulated Forex Broker with Low spreads for majors
Risk Warning: Low spreads only guarantee low charges. It does not guarantee the safety of your funds. Only trade with ASIC regulated brokers to keep your funds safe.
#1 Pepperstone – Forex Broker with Lowest Spreads in Australia
Pepperstone are regulated with ASIC so they are low-risk. Their two accounts – Razor Account and Standard Account come with different trading conditions and spread. The spread on the Razor Account is ECN type. The Standard Account has normal spreads.
Signing up with Pepperstone lets you open a Razor Account or Standard Account. The Razor Account has low average spreads for major pairs as shown below:
AUD/USD (0.24 pips), EUR/USD (0.17 pips), GBP/USD (0.59 pips), USD/CHF (0.49 pips), USD/CAD (0.47 pips), USD/JPY(0.26 pips), NZD/USD (0.52 pips).
If you choose the Razor Account, you will be paying a commission on your trades. The commission depends on your trading platform. On MT4/MT5, you will pay a commission of AUD 3.50 per standard lot (AUD 7 round-turn). On cTrader, the commission is $3 per standard lot.
You might also prefer the trading conditions on the Standard Account. Especially seeing that there is no extra commission per standard lot. However, the spreads are higher than that of the Razor Account. They are shown below:
AUD/USD (0.84 pips), EUR/USD (0.77 pips), GBP/USD (1.19 pips), USD/CHF (1.09 pips), USD/CAD (1.07 pips), USD/JPY(0.86 pips), NZD/USD (1.52 pips).
These trading conditions are competitive so the choice is yours. Razor Account or Standard Account.
#2 IC Markets – Low Spread Broker with cTrader
IC Markets are considered low risk because of their regulation with ASIC. They also offer two account types. A Raw Spread Account with ECN condition and a Standard Account. Apart from spreads, IC markets also charge swaps and commissions.
For IC Markets, the Raw Spread Account is ECN. The spreads come from about 25 institutional-grade investors. Also, there is no order distance restriction. The account is available on MT4, MT5, and cTrader with 61 currency pairs. IC Markets’ raw spreads for major currency pairs are listed below:
AUD/USD (0.17 pips), EUR/USD (0.02 pips), GBP/USD (0.23 pips), USD/CHF (0.19 pips), USD/CAD (0.25 pips), USD/JPY(0.14 pips), NZD/USD (0.38 pips).
You should also know that you will incur some charges if you choose this account. Spreads, Swap, and commission. You will pay them all. The swap for AUD/USD is AUD-2.3 (long) and AUD-1.1 (short). The commission depends largely on your choice of trading platform. The commission on MT4/MT5 is AUD 7 (round-turn). On cTrader, it is $6 (round-turn).
Now, let’s look at the Standard Account. The conditions are the same with the Raw Spread Account. The only difference is that the spreads are not raw. Also, there is no extra commission per standard lot and it is only available on MT4 and MT5 only.
You cannot open the Standard Account on cTrader.
The average spread for major pairs on the Standard Account is shown below:
AUD/USD (0.77 pips), EUR/USD (0.62 pips), GBP/USD (0.83 pips), USD/CHF (0.79 pips), USD/CAD (0.85 pips), USD/JPY(0.74 pips), NZD/USD (1.38 pips).
#3 FP Markets – Low Spread Broker with ASIC Regulation
FP Markets are regulated with ASIC (AFSL Number 286354) . We consider them low risk. FP Markets support MT4 and MT5 only. No other trading platforms. They also offer two accounts and charge swaps. The commission depends on your account type.
You have two choices as per account type. The Raw ECN Account or the Standard Account. Let us break the accounts down briefly.
The Raw Account has an ECN-pricing execution with low spreads for major pairs as shown below. The spread begins from 0.0 pips.
AUD/USD (0.3 pips), EUR/USD (0.2 pips), GBP/USD (0.4 pips), USD/CHF (0.5 pips), USD/CAD (0.4 pips),
USD/JPY(0.3 pips), NZD/USD (0.6 pips).
Other fees attached to the account include USD $3 per standard lot (USD $6 round-turn). You will also pay a swap for AUD/USD – (AUD-2.27 for long positions, AUD-1.02 for short positions).
There is no extra commission per lot for the Standard Account and the spread begins from 1.0 pips. You will pay a swap for your overnight trades as well.
You can find the average spread for major currency pairs below:
AUD/USD (1.4 pips), EUR/USD (1.3 pips), GBP/USD (1.5 pips), USD/CHF (1.7 pips), USD/CAD (1.5 pips),
USD/JPY(1.4 pips), NZD/USD (1.8 pips).
#4 eToro – Low Spread Broker with CopyTrading
We consider eToro low risk because they are regulated with ASIC. The forex broker offers just one account type. Though their spreads begin from 1 pip, eToro has comparatively high spreads. They do not charge an extra commission. But there are overnight charges
eToro offers 48 currency pairs with high spreads when compared to other brokers in this guide. Here is a glance at their typical spread for major fx pairs:
AUD/USD (1 pips), EUR/USD (1 pips), GBP/USD (2 pips), USD/CHF (1.5 pips), USD/CAD (1.5 pips),
USD/JPY(1. pips), NZD/USD (2.5 pips).
You will not incur any other trading fees other than the swaps. Also, if you compare eToro’s spread for NZD/USD to that of other forex brokers, that of eToro is higher (2.5 pips)
This is to further show you that eToro’s spreads are comparatively higher. Also, they have good conditions for copytrading.
What are Forex Spreads?
Spread is one of the ways CFD brokers make their money. When you place a trade, there is a difference between the price you are willing to pay for a currency pair and the price a seller is willing to sell. The difference between these two prices is referred to as the spread. You may be wondering how the spread which is measured in pips translates to money. We have this covered in another section of this article.
Here are the common spreads in forex trading
1) Variable spreads: A broker offers variable spreads if they pass on the best bid price at a certain time. The variability depends on the broker and the currency pair(s) or CFDs. Variable spreads are constantly changing and are cheaper when liquidity is high. However, they are subjected to high volatility due to economic news and macroeconomic events.
2) Fixed spreads: Fixed spreads are consistent. Most of the time, they remain unchanged regardless of market conditions. It is easier to plan your trading fees with fixed spreads because they are not constantly changing like variable spreads. It is important to note that fixed spreads can change dramatically during important news events. Other than this, they are constant.
How to Calculate Spread Costs
Spreads are trading fees. This means they affect your final profit or loss. This is why you should learn how brokers factor in spread costs in your overall trading fees.
Let us consider these hypothetical trading parameters. You want to buy 100,000 units (1 standard lot) of AUD/USD. The bid/ask price is 0.6933/0.6932 so your spread is calculated as:
0.6933-0.6932=0.0001 (1 pip)
Since you are buying a standard lot (100,000 units), your spread cost will be the number of units multiplied by the spread. Here is the calculation below
100,000 * 0.0001=$10.
For this trade, your spread cost is $10. This means when you open the trade, you begin with a $10. If you make a profit, the amount will be reduced by $10 when you close the trade. If your trade ends in a loss, an additional $10 will be incurred as spread cost.
So you see, the spread cost affects your trade whether you win or lose. This is why you should go for forex brokers with low spreads. Also, do not forget to check if the broker is regulated with the Australian Securities and Investments Commission (ASIC).
How to Check a Forex Broker’s Spread
Generally, forex brokers have their spreads on their websites. You only need to know how to find them. Before we walk you through it, know that it is good to check the spreads before opening your trading account.
Because spreads, like other trading fees, determine your final profit or loss when you close a trade. The essence of checking is for you to know if they are high or low.
Now let us proceed to our guide on how to check the spreads. Our example broker is FP Markets.
1) The first step is to enter the forex broker’s website. In this example, the website address is fpmarkets.com. This will bring you to the homepage.
Can you see the Australian flag at the top right corner? That generally means that the website you are visiting is for Australian clients. It is important so you don’t end up checking the data of that broker for another country.
2) Click on “Trading” (in the yellow box). You will get a dropdown with different sections. Under the “Pricing” section, click on “Spreads” (in the red box).
3) If you follow step 2 accurately, you will arrive at the picture below after scrolling down a bit. There are some explanatory notes about spreads on the page. You will need to scroll past them to get here.
Here, click on the “view spreads” tab under forex.
4) You will find all the currency pairs and their spreads under the two account types. The page looks like the picture below:
There are over 60 FX pairs in there. So use the “search bar” at the top right of the table for easy and quick navigation.
How to Choose a Low Spread Broker in the UK
In the previous section, we covered how you can check a broker’s spread. This is a major factor to consider when choosing a low spread broker. However, that is not the only factor you should look into. In this section, we cover the other important factors.
Regulation: Low spreads do not guarantee safety. Trading with a regulated broker only guarantees that. After confirming a forex broker has low spreads, you have to confirm if your funds are safe with them. This is done by verifying if your broker is regulated with ASIC. Here is how you can go about this using pepperstone as an example.
1) Check your broker’s regulation at the footnote of their website. Pay attention to the company name and AFSL number.
From the image, you can see that the company name is Pepperstone Group Limited with license number 414530. We need these details to correlate with the one on ASIC’s website.
2) On ASIC’s register, enter the broker’s AFSL number, and select Current as shown below.
The final step is to click ‘Search’. The final result will look like the picture below
Under the licensee summary, you can see that the company name and AFSL number match the details from the broker’s website. This is how you verify the regulation for low spread brokers in Australia.
Account type: It is common for a broker to have more than one account. Usually, the spreads on these accounts will differ. If one of the accounts is a raw ECN-type account, the typical spreads are usually low. Since you are looking to choose a low spread broker, you might as well go for the accounts with the lowest spreads.
This is why you should check if your broker offers varying account types.
Other trading fees: We have covered how to calculate spread costs. But spreads are not the only trading fees you incur. There are commissions and overnight charges too. For brokers with multiple account types, their ECN accounts usually combine low spreads with extra commission charges.
Swaps can be high or low depending on the broker. These fees determine your total loss or profit per trade. This is why you have to check them to know if they are high or low.
FAQs on the Best Low Spread Brokers in Australia
Which low spread broker is best in Australia?
Any forex broker with low spreads, especially ECN type account is the best. However, you should also verify if the forex broker is regulated with ASIC for the safety of your funds. ASIC Regulation with a Raw Spread Account is a good trading condition. According to our review, only Pepperstone, IC Markets, and FP Markets meet this criterion.
Which broker has the lowest spreads?
Out of the four brokers we compared in this guide, Pepperstone and IC Markets has the lowest spreads for major currency pairs. They have trading accounts with raw spreads from zero pips & are commission based.
Are low spreads good in forex?
Low spreads are good in the sense that they reduce costs incurred from spreads. However, low spreads do not reduce the risks associated with CFD trading. This is why you should only trade with low spread brokers that are ASIC regulated.
Is there any Zero Spread Forex Broker in Australia?
Zero Spreads generally mean the CFD broker will charge some sort of commissions to make profits from clients. For example, Australia forex brokers like IC Markets, FP Markets & Pepperstone, all have Raw spreads trading accounts, which generally have spreads from zero pips for majors. But there is an extra commission per lot.
For example, with Razor Account, the minimum spread for EUR/USD is 0 pips (0.17 on average), and the commission per lot is AUD 7 round turn (if your account base currency is AUD).
Which forex broker has the tightest spreads?
Pepperstone and IC Markets have tight spreads for major FX pairs in Australia. For example, the typical spread for a major pair like EUR/USD is 0.77 pips with Standard Account at Pepperstone, and there is no extra commission per lot.