Most forex brokers in the UK allow you to trade in the forex markets without having to pay any commissions. However, their alternative to commissions is making you pay spreads, some of which can occasionally be quite high. The solution to that is to trade through a forex broker that charges low spreads, and therefore allows you to save on paying fees as much as possible. In this guide, we review some of the top low spread forex brokers that you can use in the Uk during 2021.
In This Guide
There are several brokers out there that allow you to trade on forex currency pairs with low spreads. However, only some of them have all the characteristics that it takes in order to be called one of the best low spread forex brokers in the UK. The list of some of the top low spread forex brokers is as follows:
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Now that you have seen the list of some of the best low spread forex brokers in the industry, below is the detailed review of the top 3 brokers on the list. The review also contains a pros and cons list for each of the brokers, making it easier for you to choose the right broker that suits your needs.
eToro is easily the best overall low spread forex broker in the UK. It offers a variety of instruments that are available to trade, including 45 forex CFDs. It includes all the major and minor currency pairs, and the platform even has some of the more exotic currencies that you can trade. At the same time, they also allow you to trade several other asset classes such as stocks, indices, ETFs, cryptocurrencies, and commodities. Their spreads start as low as 1 pip, which makes them an extremely affordable low-cost platform.
eToro has its own trading platform that has been designed for both web portals as well as a mobile app. The platform has a clear interface and is also very easy to navigate. At the same time, eToro also offers a demo account to all its users where they can trade with virtual capital before deciding to risk real money. This provides traders with an opportunity to get familiar with the platform and its navigation, in addition to trying out some of their strategies to test them under market conditions. Their platform also includes over 100 built-in technical indicators and charting tools that you can use for your analysis.
eToro is also, at its core, a social trading platform. This has several advantages. The first advantage is that at any point in time, you can easily find out what other analysts and traders think about a particular product. This is an extremely useful tool because it enables you to understand the market sentiment behind any product, which can inform your trading decisions. Another advantage of this being a social platform is that you also get access to expert analysis and articles written by a variety of experienced traders and forex analysts. At the same time, the platform also has a news feed that will keep you updated with the latest happenings in various major economies and markets. This is a very convenient and easy way for you to be able to keep up with major events and announcements that could affect your portfolio.
Lastly, another advantage of eToro being a social trading platform is that they provide you with the ability to copy trade with other more experienced traders. This enables you to capitalise on the experiences of someone else and profit from making the same trades as them. All you have to do is to go to the eToro copy trading page, select the trader you wish to copy, and allocate a certain amount of money into copying them. You can also filter among traders who have had over a certain percentage of gains in their portfolio, or those who only trade a particular asset. This will allow you to put your forex portfolio on autopilot as you copy someone with a higher degree of experience than you.
eToro is a highly regulated platform, as it is regulated by numerous agencies across the world including the UK’s FCA. They have a very low minimum deposit requirement, at just GBP 200. This can be deposited through either bank transfer, credit/debit card, or PayPal.
Very low spreads, starting at just 1 pip Ability to trade forex, cryptocurrencies, stocks, indices, and more Easy to use platform for both web and mobile Supports social trading and copy trading Provides a demo account Several different modes of payment accepted Regulated by the UK FCA
Not suitable for advanced technical analysis or charting Does not support forex signals for trading
67% of retail investor accounts lose money when trading CFDs with this provider.
Capital.com is one of the most preferred brokers for traders who wish to trade on exotic currency pairs. The platform allows you to trade CFDs of over 140 currency pairs, many of which are very difficult to find on any other competitive forex trading platform. They also allow you to use a leverage of up to 30x for retail trading accounts. Together, these two factors have contributed to making Capital.com the broker of choice for most experienced traders who do not like trading major currency pairs.
The proprietary trading platform that Capital.com has is very well-equipped and easy to navigate. It contains a wide variety of tools that you can use in order to perform technical analysis and deploy your strategies. The platform also supports price alerts and other forms of signals that you can use. However, the best aspect of the platform is the AI technology that they use in order to help you automate your trading strategies and provide you with tips and guidance as to how you can maximise your profits while minimizing risk and ensuring that you are best positioned to consistently be on the right side of trades.
The platform has a very low minimum deposit requirement, with only 20 GBP required to open an account with them. Since they accept a wide variety of payment methods, it is quite easy for you to be able to move money in and out of your account. At the same time, they do not charge withdrawal, deposit, or inactivity fees, which not only helps them stand out from other brokers but also means that they are among the cheapest brokers out there.
Capital.com is highly regulated as a platform, by both the FCA and the CySEC. They offer 24/7 customer support through phone, email, as well as live chat, and their customer service is known as being one of the best in the industry.
Ability to trade over 140 currency pairs Leverage of up to 30x Uses AI to improve your trading and maximise your profits A minimum deposit of 20 GBP required 24/7 customer support available Regulated by the FCA and the CySEC
Price alerts are only available for the mobile app and not the web portal
76.72% of retail investors lose money trading CFDs at this site
Unlike most other CFD forex brokers that are present in the market, Libertex has taken an entirely different approach. They charge fixed commissions instead of charging variable spreads. This is something that most advanced and experienced traders prefer, since when they trade using a fixed commission, they can always know how much a particular trade is going to cost them, and thus, they are in a much better position to be able to account for this in their strategies. The commissions that Libertex charges are also pretty low, and they start at just 0.008% of the trade, making it one of the cheapest platforms available for low spread forex trading.
Libertex offers its own forex trading platforms for both the web and a mobile app, which are equipped with a variety of tools and functions to assist forex traders in making the best possible decisions. At the same time, the platform is also compatible with both the MT4 trading platform and the MT5 trading platform, making it the broker of choice for most traders who wish to trade using these platforms. These platforms allow traders to create forex signals, custom technical indicators, and even backtest strategies to see how they would have performed historically.
Libertex does not charge any deposit or withdrawal fees, and they have a very low minimum deposit required to create an account. You can set up an account through Libertex in a few minutes by simply adding 10 GBP as your initial deposit. They offer a selection of 60+ currencies, ranging from major to minor and even exotic pairs, therefore you will not find their collection lacking. They also provide leverage of up to 30x for retail traders. The platform is regulated by the CySEC and is considered widely to be one of the most trustworthy low spread forex brokers.
Fixed commissions as opposed to variable spreads Supports both MT4 and MT5 60+ currency pairs Provides leverage of up to 30x Very low minimum deposit Regulated by the CySEC
Customer service only available through email
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83% of retail investors lose money trading CFDs at this site.
A tabular representation of the spreads for major currency pairs, deposit/withdrawal fees, as well as any other fees they may charge has been provided below for several major low spread forex brokers.
A forex spread is one of the many ways in which a forex brokerage platform makes its profits. Whenever you place an order on the market, there is a difference between the price at which you are willing to buy a particular forex currency pair and the price at which the seller is willing to sell their currency pair. The difference between these two prices is called the spread, and it is how most exchanges make their money.
However, most forex trading platforms these days are market makers. Therefore, they do not directly fulfill your order at the exchange. On the other hand, they observe the current price of whatever currency pair you are looking to trade, and then they give you their own buy and sell price based on the current market price. If you, for example, place a buy order on the USD/EUR pair, then your broker will take on the other side of the transaction and sell you USD/EUR pairs. They will then set off this position in the market or by combining a buy position from you and a sell position from someone else. What this means is that market maker brokers do not actually fulfill your order directly at the exchange, but they take on the other side of the transaction themselves. The fee that they charge for doing this is called the spread and is visible as the difference between the buy and the sell prices of the pair.
This is why, if you decide to buy and sell something instantly, you will actually end up booking a loss, because the selling price for a currency pair on a market-making platform is always lower than the buy price at any given point in time. This is called the spread. This is the way commission-free platforms such as eToro and Capital.com make their money.
The spread that will be considered a low spread really depends on the currency pair that you wish to be trading. For example, if you were to trade a major currency pair, then a low spread would differ significantly from the low currency spread for a minor pair. So, based on the currency pairs you wish to trade, you need to decide which broker offers you the lowest spreads. As a general rule, major currency pairs have the highest spreads, followed by minor currency pairs, and then exotic currency pairs, which have the highest spreads of all.
For example, the EUR/USD pair is one of the most frequently traded forex pairs in the world, and it is commonly used as a metric for comparing spreads between different brokers. The industry average spread for the EUR/USD pair is 1 pip. This means that any broker who charges a spread lower than 1 pip is going to be considered a low spread broker. There are several brokers who charge such low spreads, and thus are more preferable for forex traders who are looking to primarily trade on major currency pairs.
It is important here to note that different forex brokers can have lower spreads than the industry average for different forex pairs. What this means is that a broker who has the lowest spreads in the industry for the GBP/USD pair might not necessarily have the lowest spreads for the EUR/USD pair. Different brokers tend to price currencies differently, and it is important for you to know this. Therefore, if you are looking to trade one particular currency pair more often than others, then you should definitely do your research to identify the broker that identifies the broker with the lowest spread for that particular currency pair.
Another major factor to keep in mind is that some brokers offer variable spreads whereas others have fixed spreads. This is important for two reasons. The first reason why knowing whether your broker offers variable or fixed spreads is important is that this will affect your trading time. Usually, currencies can be traded around the clock, and the forex markets never reality close. If you have a broker with a fixed spread, then there is no issue and you could trade the currency pair at any time. However, if your broker offers variable spreads, then this means that the lowest spreads will only be present at certain times during the day. What those times are, depending on what currency you wish to be trading.
For example, if you choose to trade major currency pairs, then the best time for you to trade, in order to take advantage of the lowest variable spreads, would be to trade when both the European and the US markets are open since these are the markets wherein traders provide the maximum liquidity and activity in the forex markets. There is a 4-5 hour time period in the day wherein both these markets are open, and therefore, the trading volumes are at their highest point. At this point during the day, since there is a very high buying and selling volume, it is quite likely that you will be able to trade with much lower spreads. This time wherein spreads are the lowest for variable spread brokers will differ if you were to trade minor currency pairs or exotics.
The second reason why knowing whether your broker offers fixed or variable spreads is important is that sometimes you might be misled by brokers into thinking that their spreads are low. For example, a particular broker might tell you that their spread for EUR/USD is 0.5 pips, but what they will bury in the fine print is that this is actually the lowest spread that they will offer, and that the spread can differ at various times during the day. Therefore, in effect, you will usually end up paying a spread of more than 0.5 pips at most times during the day. This is not a problem with brokers that offer fixed spreads, but their spreads are usually higher, making it the same thing in effect anyway.
If you are looking to trade with a low spread broker, then there are several things that you should keep in mind. Some of these things have been listed below in detail:
Now that the advantages of trading with a low spread broker have been identified and discussed in detail, the next step is to set up a trading account and begin trading in an account. The best overall low spread UK broker for the forex markets is eToro, and it is quite a simple and straightforward process to begin trading with them. The process has 4 steps, and each of these steps has been discussed in detail below.
The first thing that you need to do is to navigate to the eToro homepage and click on “Join Today”. Then, you will be asked to fill a short form that asks for your contact details and makes you set up your login credentials. Alternatively, you can also sign up via your Facebook or Google account for easier sign-ins and to avoid having to remember your username and password.
The next step is for you to verify your identity. Since eToro is a regulated platform, they have to complete the KYC (Know Your Customer) process before they allow you to trade. This verification process has two parts to it. The first part involves verifying your identity. For this, you can upload a copy of any government-issued ID, such as a passport, driving license, or visa. The next part is an address proof, for which you can either upload a bank statement or utility bill.
Once you have uploaded the documents, eToro has a quick response time, and will usually verify your account in a few hours.
The third step is to then deposit funds into your account. The minimum deposit on eToro is 200 GBP. This can be done in a variety of ways. For starters, you can add money to your eToro account via bank transfer or via credit/debit cards. They also accept a variety of e-wallets such as PayPal and Skrill. You can add funds in different currencies too, such as USD, GBP, and EUR. There are no fees or charges associated with depositing funds into your account, and they show up almost immediately.
Before you get started with risking real capital and trading, it is better to first use a demo account for a while. This has multiple advantages. Firstly, it enables you to get familiar with the platform and its navigation, so that you do not struggle later when you’re actually trading. Secondly, it is a good way for you to test out any strategies you have in a real market environment and see how it performs. Lastly, successfully tested strategies can be fine-tuned and made more profitable through demo trading without having to risk a lot of money, boosting your confidence and making you a better trader.
Once you are confident in your strategies, the next step is then to begin trading using low spreads on the forex markets. To do this, simply head over to the search bar and enter the pair you wish to trade. Alternatively, you could also head over to their forex market page and select the currency pair you wish to trade from among the options that are available. Then, select the amount you wish to trade with, select the leverage you wish to employ on the trade, and click on buy or sell. The order is executed almost instantaneously.
In summation, trading forex using a low spread broker gives you access to among the biggest capital markets in the world. Having low spreads enables you to trade while paying minimal fees, therefore it is important for you to ensure that you are only trading with the broker who charges you the lowest spreads. While there are several low spread forex brokers in the UK, and different brokers are suitable for different needs, the overall best broker in the UK for low spread forex trading is eToro.
Put very simply, the spread is the difference between the buy and sell price of a particular security or a currency pair.
A pip is 1/100th of a percent, or 0.01%.
The amount of money you need to trade forex in the Uk will depend on the minimum deposit requirements of the particular broker you wish to use. Since most brokers in the UK provide a high leverage, they have low minimum deposit requirements and do not require you to put up a large amount of capital to begin trading. For example, in order to set up an eToro account, you only need to deposit 200 GBP.
Different brokers have low spreads for different currency pairs, so depending on the products that you mainly want to trade, the perfect broker will differ.
Yes, through a platform like eToro, you can also trade cryptocurrencies in addition to forex pairs on very low spreads.
I'm a second year Accounting and Finance student at the University of Warwick, in addition to being an incoming Trading Analyst at Morgan Stanley. I'm passionate about the financial markets and all things finance.
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