There are fees attached to forex trading. One of these charges is the spread. A currency pair or any CFD instruments usually have two price quotes for it – the bid price and the ask price. The spread is the difference between the two prices and is measured in pips.
The spread is the most important of all trading fees. Some forex brokers do not charge commissions or swaps. You will hardly find a forex broker without spreads. This is why you should know about this particular fee.
When the spread for a forex pair or CFD is high, you will pay more in terms of trading fees. This is why we have reviewed the best forex brokers with low spreads in the UK for you.
Comparison of Best Low Spread Forex Brokers UK
|Broker||FCA Firm Regulated||GBP/USD Spread (pips)||Round-turn Commission||Visit|
£4 per standard lot (Pro Account), £2 per standard lot (VIP Account)
1.19 (Standard Account)
£4.5 per standard lot (Razor Account)
Note: The spread data & commission is as per information on these brokers’ websites in Jan. 2023
Best Low Spread Brokers in the UK
Here is the list of best low spread brokers in the UK as per our research:
- Tickmill – Forex Broker with Lowest Spreads in the UK
- CMC Markets – Low Spread Broker with Most CFD Instruments
- Pepperstone – Forex Broker with Social Trading
- AvaTrade – CFD Broker with Temporary FCA Regulation
- City Index – Low Spread Broker with FCA Regulation
- ETX Capital – FCA Regulated Broker with Moderately High Spreads
Warning: Low spreads do not guarantee the safety of your funds. Make sure the CFD broker is regulated with the FCA to reduce the risk of fraud.
#1 Tickmill – Forex Broker with Lowest Spreads in the UK
Tickmill has the lowest spreads for major pairs compared to other brokers. The typical spread for EUR/USD and GBP/USD are 0.1 pips and 0.3 pips respectively. Tickmill is regulated with the FCA so they are low-risk.
The typical spread for other major pairs is low too. USD/CHF has the highest spread among the major pairs (0.4 pips). This shows how low the spreads are with Tickmill.
For other trading fees, Tickmill charges a swap on long and short positions and they are quite high. They also charge a commission on their Pro Account (£4 per standard lot) and VIP Account (£2 per standard lot). Their commission is one of the lowest compared to other brokers.
The spread for other major pairs is shown below
#2 CMC Markets – Low Spread Broker with Most CFD Instruments
CMC Markets rank second in our review. They offer low minimum spread for major pairs at 0.70 pips for EUR/USD and 0.90 pips for GBP/USD. CMC Markets are considered low-risk because of FCA regulation.
With a minimum spread of 1.5 pips, NZD/USD has the highest spread among the major pairs. It is closely followed by USD/CAD with a 1.3 pips minimum spread.
CMC Markets do not charge extra commissions per lot. Other trading fees include overnight charges for both long and short positions. This is the structure of trading fees on their CFD Account and Corporate Account.
For non-trading fees, CMC Markets charge a £10 monthly inactivity fee and a premium fee for guaranteed stop-loss orders.
Here are CMC Markets spreads for other major pairs
#3 Pepperstone – Forex Broker with Social Trading
Pepperstone offers three accounts with different spread for major pairs. For this review, our focus is the Standard Account. The average spread for EUR/USD and GBP/USD on this account is 0.77 pips and 1.19 pips respectively. Pepperstone are regulated with the FCA so they are low-risk to trade with..
NZD/USD has the highest spread among the major pairs (1.52 pips). It is followed by GBP/USD and USD/CAD (1.07 pips)
Pepperstone charges an extra commission per lot on their Razor Account alone. (£4.5 per standard lot). On cTrader, they charge $3 per standard lot. There are also overnight charges that you can find on their trading platform. No account inactivity fee.
The spread for other major pairs:
#4 AvaTrade – CFD Broker with Temporary FCA Regulation
The spread for EUR/USD and GBP/USD is 0.9 pips and 1.5 pips respectively. AvaTrade’s regulation with the FCA is temporary. Their regulation is in another European Economic Area. They are considered moderate-risk.
USD/ CAD is the major pair with the highest spread (2 pips). AvaTrade does not charge an extra commission per standard lot but you pay a swap for holding trades overnight. There is also an account inactivity fee
The spread offered by AvaTrade for other major pairs are shown below:
#5 City Index – Low Spread Broker with Zero Commission
City Index rank fifth in our review. They offer EUR/USD and GBP/USD at 0.8 pips and 1.8 pips. City Index are regulated with the FCA so they are low-risk to trade with.
NZD/USD have the highest spread of their major pairs with 2.8 pips. USD/CAD follows at 2.6 pips.
City Index does not charge extra commission. Their fees are calculated with the spread. They also charge swaps and account inactivity fees.
The table below shows City Index’s spread for other major pairs:
#6 ETX Capital- FCA Regulated Broker with Moderately High Spreads
OvalX Capital offers EUR/USD and GBP/USD at 0.74 pips and 1.41 pips. These spreads are for their MT4 account only. ETX Capital is a low-risk broker because they are regulated.
Update: ETX Capital used to be the trading name of Monecor (London) Ltd. In May 2022, Monecor (London) Ltd changed its trading name from ETX Capital to OvalX .
OvalX has moderately low spreads compared to other brokers. USD/CAD has the highest spread at 2.01 pips. NZD/USD follows closely at 1.81 pips. A forex trader will likely incur more costs in spreads trading with OvalX.
OvalX does not charge an extra commission per lot but there are overnight charges
OvalX’s spread for other major pairs:
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.
What Should You Consider as a Low Spread?
There is not a specific figure that can be tagged as a low spread. However, there are factors you can consider to help you come to a conclusion. The first factor to consider is the currency pair or pairs you want to trade. Generally, major currency pairs have lower spreads compared to minor currency pairs. Exotic currency pairs have the highest spreads of all currency pairs.
Another factor you can consider, especially for major currency pairs, is the industry average. For example, the industry average spread for the EUR/USD 1 pip. Therefore, any forex broker that offers a spread below 1 pip for EUR/USD will be considered a low spread broker for EUR/USD. The only downside with this factor is that it does not apply to all currency pairs. A broker with a spread lower than the industry average for EUR/USD might have a spread higher than the industry average for GBP/USD. This is why you should take time to research the spreads of the brokers you want to choose.
Finally, you should consider the type of spread that your broker offers. It is essential to consider this factor because it helps you take advantage of low spreads and affect your trading time. If your broker offers a fixed spread. There is really nothing you can do than trade at any time. Variable spreads fluctuate and based on market conditions, they can be high or low. When there is no big news or huge macroeconomic events going on, variable spreads are usually low. This might be the best time for you to trade with low spreads.
How to Optimize Low Spreads
Low spreads are not a guarantee that conditions are favorable for trading. You have to combine your analysis with other minute details to take advantage of low spreads. Here is how you can do this:
1. Know the kind of spread offered by your broker (fixed or variable). If it is the latter, only trade when the spreads are low. That is, when there is no significant economic event going on.
2. Find out other trading fees. Especially commissions and swaps. They tend to increase your trading fees once they are added to the fees incurred from spreads.
3. Trade with low leverage. The higher your leverage, the higher your risk of a margin call. If the market moves against your trade, you will suffer a heavy loss to your capital.
How to Check a Forex Broker’s Spread
Forex brokers are usually transparent with their spreads. There is always a section of the website dedicated to this. Spreads are part of your trading fees and every broker has them. They are charged regardless of the result of your trade (profit or loss). This is why you should always check a broker’s spreads before signing up.
Here is a systematic guide on how to go about it. Our example is CMC Markets.
1) Go to CMC Markets website (make sure that you are visiting their actual website that is listed on FCA Register, to avoid any clones). You should arrive at the homepage shown below
2) Move your cursor to markets and click on forex (in the yellow box)
3) When the page loads, you will find the spreads for currency pairs as shown in the image below.
4) The page in (3) does not display the spread for all currency pairs. To find the rest, click on “view all our costs”. It will take you to the page shown below. All you need to do is enter the currency pair in the box and click on search. The currency pair with its minimum spread, margin, and holding costs.
How to Calculate your Spread Cost
It is one thing to know the spread your CFD broker attaches to a currency pair. However, this value is of no use if you do not know how much it is costing you in real money. This is why you should learn to calculate your spread cost.
The simple formula to calculate your spread cost is (Lot size * Spread). Here is an example:
Let’s say you want to buy 1 standard lot GBP/USD at a bid-ask price of 1.2636/1.2634.
Remember that spread = bid price – ask price
1.2636-1.2634 =0.0002 (2 pips)
Spread Cost = 100,000 *0.0002 =$20.
So this trade will cost you $20.
How to Choose a Low Spread Broker in the UK
In the previous section, we covered how to 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 must confirm if your funds are safe. This is done by verifying if your broker is regulated with the FCA. Here is how you can go about this using pepperstone as an example.
1) Check your broker’s regulation in the footnote of their website. Pay attention to the company name and reference number.
From the image, you can see that the company name is Pepperstone Ltd with license number 648312. We need these details to correlate with the ones on FCA’s website.
2) On the FCA’s website, scroll down to the search area and enter the broker’s name. Select ‘Firms’ and click on ‘Search’.
The image below shows the final result. You can see that the detail match the ones we saw on the broker’s website. This is the simple way to verify a low spread broker’s regulation.
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 calculated 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 Best Low Spread Forex Brokers in the UK
Which forex broker has a Low Spread?
As per our research Tickmill has a very low spread. They have Pro Account with which they have spread starting from 0 pips, and the commission is £4/lot round-turn.
What is a Low Spread Account?
With Low spread accounts brokers charge very low spread fees. This means the difference between the bid & the ask price is very low or close to zero. But such brokers charge fees in the form of commissions. But the overall trading fees is still low. It is important to note that the spreads may be higher depending on the market conditions.
Is there a broker with 0 Spread?
There are many brokers that advertise Raw spread or Zero spread, but the actual spread is likely to be higher than 0 pips most of the time. Take into account that the advertised 0 pips do not mean that you will get 0 pips spread on all instruments, these are typical spreads that are variable.
Which forex pair has the lowest spread?
Are low spreads good in Forex?
Low spreads only guarantee reduced trading fees (specifically, spread costs). However, low spreads should not be your sole reason for signing up with a broker. You need to consider other factors like FCA regulation, execution model, other trading fees, and their range of CFD instruments.