Broker to Trading

These brokers offer spreads for the most liquid Forex pairs which can go as low as 0 or 0.1 pips. The spread is the bid/ask spread. The broker is compensated by the difference in the bid and ask price. Some brokers offer ECN services. ECN brokers connect traders with liquidity.

In the Interbank market Forex is traded in large volumes and spreads can be very low. These kinds of spreads are brought to the trader. However there is also a commission charge added by the broker, which is typically taken at the open and close of the trade (or each side), though it may be quoted round trip, including open and close of the trade. Thus the cost of the trade includes the spread plus the commission charge. To give an example, for a $3.5 commission charge per side of the trade, for a 1 lot zero spread trade, the cost of spread plus commission to open and close a trade could actually be 0.7 pips (0.35 + 0.35 + 0), given 1 lot = $10 per pip (the actual value of a pip per lot can vary depending on the account currency and the Forex pair).

ECN trade costs are not necessarily lower than trading at a broker which has a competitive bid/ask spread (which will typically be higher) and no commission charge, especially since ECN broker spreads are typically variable spreads and there can be a spread cost included as well (i.e. the spread can range higher than zero even for the most liquid pairs and for many pairs may not reach zero).

These are variable spreads, and the trader may wish to trade with fixed spreads. Fixed spreads can be low at some brokers and normally do not have a commission charge. But the lowest spreads which can be seen are normally at ECN Forex brokers on the most liquid Forex pairs.

Some brokers can offer low ECN spreads without a commission charge, but this is typically for higher deposit accounts or other particular trading conditions. Higher deposit accounts at ECN brokers may also simply charge a lower commission charge. Some brokers charge a lower commission charge with higher volumes.

Thus ECN brokers can be seen offering the lowest spreads because they are connecting traders with liquidity providers via their ECN. But the cost includes the spread plus the commission charge. Because the cost of the trade is not necessarily lower, there are other reasons for using an ECN broker, including no dealing desk trading conditions, rapid order transmission, and the capacity to use a wide range of trading styles, including automated trading. The spreads are available from the online trading platform and all the platforms in the table support both discretionary and automated trading strategies.