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Spread is the difference between the bid and the ask price. It is how brokers’ make money and can influence your level of profit or loss in a trade.
Seeing the unavoidable impact of spread on trades, traders prefer to trade with brokers who offer low spreads. However, it is important to keep in mind that spread is just one of the fees brokers charge.
There are other fees like overnight fees and commission.
Notwithstanding, just like other fees, spread is an important fee to take note of before choosing a broker. Since brokers with low spread are usually preferred and sought for, we have compiled a detailed list of some of the best low spread brokers in Malaysia and what you should know about their spread cost.
| Forex Broker | Regulation | EUR/USD Spread | |
|---|---|---|---|
| AvaTrade |
CySEC, ASIC, BVI, FSCA, etc.
|
0.9 pips
|
Visit Broker |
| IG Markets |
FCA, ASIC, BaFin, MAS, etc.
|
1.1 pips
|
Visit Broker |
| Saxo Bank |
FCA, MAS, ASIC, Japan, etc.
|
0.7 pips
|
Visit Broker |
| FXCM |
FCA, ASIC, FSCA, CySEC, etc.
|
0.9 pips
|
Visit Broker |
| Eight Cap |
ASIC, VFSC
|
1 pip
|
Visit Broker |
| Tickmill |
FCA, CySEC, FSCA, FSA Seychelles, Labuan FSA
|
0.1 pips
|
Visit Broker |
| Octa |
SVGFSA, CySEC, FSCA
|
o.9 pips
|
Visit Broker |
Here is the list of lowest spread brokers for traders based in Malaysia.
AvaTrade charges a fixed spread.
In 2021, AvaTrade was recognised as the best fixed spread broker by investingoal, and compare forex broker as well as the award of lowest fixed spread broker by compare broker.
This broker offers fixed spread, which means that irrespective of the market situation, the spread does not change. However, there are some exceptions to this.
The spread you will be charged when trading with AvaTrade depends on the instrument you are trading. When trading Forex, you will be charged a fixed spread of 0.9 for high demand currency pairs like EUR/USD and 1.5 for GBP/USD.
Avatrade offers a spread of 0.13% on stocks like Tesla, Amazon, Microsoft, Apple, Netflix, PFIZER, and Goldman Sachs Group. For commodities like Gold and Silver, Avatrade charges a spread of $0.29 over the market. However, between 22:00 – 02:00 GMT, the spread may be wider.
Aside from spread, Avatrade charges other fees like overnight fees, but does not charge any commission on trades.
AvaTrade Pros
AvaTrade Cons
Read more about AvaTrade features on our detailed post AvaTrade Review.
IG Markets has various types of accounts with different levels of spread.
IG Markets charges variables spread. This means that the spread may change from time to time depending on the prevailing market condition.
Aside from the current prevailing market condition, another factor that determines the spread you get to pay when trading with IG market is the instrument you are trading.
For FTSE 100, the minimum spread is 1, however for other indices like; Wall Street, Germany 40, and Hong Kong HS50 the minimum spread is 2.4, 1.2, and 5.
For Forex trade, the minimum spend starts from 0.6. A currency pair like EUR/USD has a minimum spread of 0.6, an average spread of 1.0 and however, between 00:00-21:00 GMT, the average spread for EUR/USD is 0.75.
The minimum spread, and average spread for other currency pairs like GBP/USD, AUD/USD and USD/JPY also differs. The minimum spread for Oil Brent Crude and Oil US crude is 2.8.
IG Market charges other fees like overnight funding and commission.
IG Markets Pros
IG Markets Cons
Remore more about IG markets trading conditions on IG Markets Review.
Saxo Bank is a highly reputed broker and one of the oldest international forex brokers.
Saxo Bank offers up to four different account types and platforms and the forex spread irrespective of account or platform starts from 3 Pips on EUR/USD. You can trade up to 40 currency pairs with this broker.
Saxo Bank allows you to go long or short on up to 9000+ instruments. When trading Forex with this broker, you should expect a spread that starts from 0.7 on US500.
Aside from spread, Saxo bank also charges a commission that varies depending on the instrument you are trading.
According to details on Saxo official website, you will enjoy better transaction rates as your trade volume increases. However, it is important to bear in mind that trading comes with risks.
Saxo Markets Pros
Saxo Markets Cons
FXCM offers different types of accounts with different spread and commission levels.
FXCM is another broker that is operative in Malaysia that offers competitive spreads. One noteworthy thing about FXCM spread is that it is variable.
This means that the spread keeps changing as market activities go on. You can stay updated with the current spread for different asset classes by keeping tabs on the ‘spread cost’ page on FXCM website or with your trading platform.
Unlike brokers that offer fixed spread, when trading on FXCM, you can track the spread cost until it gets to a price that you are willing to trade with. However, you should keep in mind that with variable spread, you may be at risk or slippage.
According to FXCM up to 85% orders get positive or zero slippage. If it’s a zero slippage, it means that the trade was executed at the price you clicked and a positive slippage means the trade was executed at a better price.
Notwithstanding, it’s not impossible to get negative slippage. This means that your order was executed at a more expensive spread than what you clicked on.
It is also noteworthy to add that as an active trader, you may get a discount on spread depending on the volume of your trades.
FXCM Pros
FXCM Cons
Learn more about the trading features on FXCM by reading our detailed FXCM Review.
Eightcap has a zero spread account which charges a commission.
Eightcap also offers competitive spreads that start from 0.0 pips. However, the spread you may have to deal with as an Eightcap client varies depending on the account type you are trading with.
For Forex trade, the minimum spread when trading in Eightcap Raw account is 0.0pips for currency pairs like; AUD/USD, EUR/USD, GBP/USD, NZD/USD, USD/CHF, and USD/CAD.
However, for the Eightcap standard account, the minimum spread is 1.0 pip for AUD/USD, EUR/USD, GBP/USD, NZD/USD, USD/CHF, and USD/CAD.
When trading indices the spread also varies depending on the particular indices and the account. However the minimum spread for SP500 is 0.55USD. for commodities like silver, oil-US Crude, and Brent Crude oil , the average spread is about $0.55, while the average spread for gold is 0.12 USD.
When it comes to shares, Eightcap charges an average spread of $0.02 per share, per side ($4 per lot round turn) on top companies shares’ on US stock exchange like Tsela, Amazon, Netflix, Coca-Cola, Microsoft, Nike, Facebook, Google, etc.
For stocks of companies on the London stock exchange, Eightcap charges an average of 0.1% Per Lot for the shares of major companies like; Unilever, Royal Dutch Shell, etc.
You should also keep in mind that Eightcap charges a commission of $3.5 per standard lot traded.
Eightcap Pros
Eightcap Cons
Octa offers low spread with commission-free and swap-free trading.
Octa is one of the brokers that offers low spreads on trades. Octa also does not charge commissions on trades and as from June 2022, Octa (formerly called OctaFX) announced that they no longer charge swap fees on trades.
Octa offers floating spread for trading financial assets on their platform. The spreads change in response to moves on the market.
The spread you will be charged when trading with Octa depends on the instrument you are trading. When trading Forex CFDs, you will be charged spread that start from 0.9 pips for major currency pairs like the EUR/USD pair.
Octa offers CFDs trading on other financial instruments such as 2 pips on XAU/USD (gold). Spreads on indices averages around 3 pips for assets like AUS200. Overall, the spread you’ll pay depends on how the market is moving.
Aside from spread, Octa does not charge other fees like overnight fees or any commission on trades.
Octa Pros
Octa Cons
Read more about the offerings of Octa to traders in Malaysia on our Octa Review.
In forex trading, the spread refers to the difference between the bid price and the asking price of a currency pair.
1) Bid price: This is the price at which you can sell your base currency in exchange for the quote currency. It’s essentially the maximum price a buyer is willing to pay for the base currency.
2) Ask price: This is the price at which you can buy the base currency in exchange for the quote currency. It’s the minimum price a seller is willing to accept for the base currency.
The spread represents the broker’s fee for facilitating the trade. It’s usually expressed in pips, which is the smallest price movement for a particular currency pair. For example, a pip in EUR/USD is 0.0001.
Here’s an Example:
-Suppose the EUR/USD exchange rate is quoted at 1.1234/1.1238.
-The bid price is 1.1234 euros per US dollar.
-The ask price is 1.1238 euros per US dollar.
-The spread is 4 pips (1.1238 – 1.1234).
So, for every euro you buy at the ask price, you’re effectively paying 4 pips more than the price at which you could sell it (the bid price). This 4-pip spread represents the broker’s commission for executing the trade.
Here are the common type of 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.
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.
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.
4. Be flexible. Combine technical analysis and fundamental analysis. Every successful trader needs to work with both analysis. You might naturally prefer one to the other. However, you need to be aware of what is going on with both sides. As you use indicators and trendlines, also pay attention to economic events and releases that might have a strong impact on the market.
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.
A zero spread trading account is an account that has no significant difference between the bid (sell) and ask (buy) prices for certain currency pairs. Forex brokers do not offer zero spread on all of their currency pairs. It is easy to see why because forex brokers make money from spreads. In addition, some currency pairs do have enough liquidity that may allow for zero spread.
So, if a broker offers a zero account, it will usually be for major currency pairs like GBPUSD and EURUSD. These pairs have high trading volumes and are liquid. Since a zero account likely means zero spread cost, it does not mean you are not incurring other trading costs. Your forex broker might charge a commission or have other hidden fees.
Therefore, it is important you do your research if you see a forex broker offering a 0 spread account. Make sure you find out the structure of their trading costs before opening an account.
As per our research, IG Markets is the forex and CFD broker that offers the lowest spread for traders in Malaysia. Spreads start from 0.6 pips for majors forex pairs like the EUR/USD. The broker requires a minimum deposit of $300 to start trading.
Since forex trading is not regulated in Malaysia, traders from Malaysia need to rely on forex brokers that are regulated by reputable foreign financial authorities. Hence, for traders from Malaysia, the most reliable broker is AvaTrade according to our research. They are highly regulated and have a strong reputation.
There are many brokers that advertise Raw spread or Zero spread, but the actual spread are likely to be higher than 0 pips during most of the times. Take into account that the advertised 0 pips does not mean that you will get 0 pips spread on all instruments, these are typical spreads which are variable. Also note that brokers who offer 0 spreads usually charge commissions to compensate for the low spreads.
Uusally,forex brokers determine the spreads of forex pairs. If the forex and CFD broker is an ECN broker or STP broker, their spreads are usually lower. In addition, major currency pairs have lower spreads than minor currency pairs and extoic pairs.
No doubt, spread is one of the important fees to look at when choosing a broker to trade with. However, you should keep in mind that a low spread does not make a broker the best. You may also want to consider their track record, regulations, and account and platform features as well as other fees they charge.
