Low Spread Forex Brokers UK – Cheapest Platforms Revealed

7. Plus500 – FTSE250 Company Listed on London Stock Exchange

Plus500 is a multi-asset trading group founded in 2008 and operated is UK company base since 2011. It is a broker that is regulated in the UK by the Financial Conduct Authority and offer client money protection by holding funds in segregated accounts.

This broker is notable for being a FTSE250 company which is listed on the London Stock Exchange. The platform offers CFDs for a variety of assets from stocks, commodities, indices, forex, options and ETFs.

The platform offers clients low fees with tight spreads and zero commissions. For forex trading Plus500 charges a currency conversion fee for trading instruments that are a different currency to the main currency of a users account. The currency conversion fee is up 0.7% mark up on the trade’s realised net profit or loss.

The platform offers traders access to over 60+ currency pairs and provides advanced trading tools to assist traders to protect profits while limiting losses. Users are able to trade forex with up to 1:30 leverage and spreads are very competitive, with GBP/USD spread being 0.01% -0.015%.

The platform has a dedicated education and insights sections which provides users with resources that assist with trading. Plus500 has a trading academy with how-to videos, an e-book and reliable FAQs that can help traders to learn about different aspects or trading and navigate the platform.

Users also have the option to check out the economic calendar, news & market insights and alerts features for timely market information. One unique attribute of Plus500 is the +Insights feature, which is similar to social trading in that it allows users to analyse other traders’ trends, strategies and activity which can also be copied directly from the +Insights interface.

Plus500 is a broker that offers a wide range of payment methods including debit card, bank transfer, PayPal, Klarna, Skrill, ApplePay, among other regional popular payment forms. The platform does not charge for withdrawals, deposits, with no custodial or platform usage fees. The brokerage is available to use on desktop and mobile with the Plus500 app available on both iOS and Android, providing a user-friendly interface and simplistic easy-to-use brokerage platform for remote or on-the-go trading.

81% of retail investor accounts lose money when trading CFDs with this provider.

8. Skilling – Low Cost Forex Trading with Tight Spreads

Skilling is a CFD provider with headquarters in Cyprus, Malta and Spain. The platform offers access to CFDs in forex, shares commodities and indices. This broker offers low fees and tight spreads with 0% commission on a standard account.

Skilling offers two different account types for traders which have different deposit and trading volume requirements, with varied commissions and spreads. The Standard account type is ideal for beginners and low volume traders with the minimum deposit amount being only €100. It also offers tight spreads starting from 0.7 pips and is also commission free. Users are able to trade with leverage of up to 1:30 when trading CFDs on a standard account.

The Premium account type differs from the Standard account mainly providing even lower spreads. Spreads can be as low as 0.1 pips, and therefore, users of a Premium account are subject to trading commissions of 35 USD per million dollar volume.

Due to the Premium account providing lower spreads there is a minimum deposit requirement of €5000, or alternatively $10 million USD trading volume per month. The Premium account is more suited to higher volume forex trading considering the substantially lower spreads.

With regard to forex trading on the platform, Skilling offers access to over 70+ currency pairs including majors, minors and exotics. In 2022, Skilling won 3 awards in the Global Forex Awards for the Best Forex Trading Platform in LATAM, Europe and Globally.

The platform also offers security of funds to its clients, with funds held is tier 1 segregated banks and account insurance up to €1 million. Skilling is regulated under CySec and is also authorised by the Financial Conduct Authority to operate in the UK.

Users are able to trade on Skilling using three different trading platforms, cTrader, MetaTrader 4 and the propiertary Skilling Trader. The platform also offers a Skilling Copy interface allowing traders to browse through 400+ trading strategies in the social trading community.

These trading platforms are user-friendly and available on both desktop and mobile, while Skilling also offers a One Account-Two Platforms feature allowing users to trade using two separate platforms for a varied trading experience.

82% of retail investor accounts lose money when trading CFDs with this provider.

What Are Forex Spreads?

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 exchanges make their money.

However, 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 make their money.

What Is Considered A Low Spread In Forex?

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 a frequently traded forex pair 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  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 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.

Today, the forex market is the largest financial market in the world, with a daily turnover that has increased from $6.6 trillion in 2019 to $7.6 trillion in April 2023, according to the source.

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 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.

Ranking Criteria

When selecting trading platforms, our team of experts look at a number of important criteria. These criteria are essential in choosing the right platform for investors.

• Firstly, we look for brokers that are available in the UK and offer low spreads.
• Secondly, we look for brokers that offer the major and minor currency pairs in the market and a wide range of other digital asset classes such as: stocks, indices, ETFs, cryptocurrencies and commodities.
• We also know how important the issue of fees is, which is why in our article we have selected platforms that are convenient and do not require you to deposit a certain amount or pay extra for withdrawals. Some of them are even free, the fee only applies to premium accounts. These accounts are usually recommended for more advanced investors.
• Educational resources and analysis tools are also important. Our chosen platforms offer the opportunity to learn, test and analyse the market through these tools. Many even offer a free demo account so you can familiarise yourself with the platform and the trades.

Tips For Trading With Low Spread in the UK

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:

• Ensure that you are aware of whether the spread is variable or fixed. In case it is a variable spread, ensure that you find out when the spreads are at their lowest and only trade during these times.
• Make sure that you are aware of any other hidden charges that the broker might levy. This might include overnight fees, inactivity fees, and deposit/withdrawal fees. Such small fees can actually add up and eat into your profits, thereby affecting the effectiveness of your trading strategies.
• Make sure that you’re not trading with higher leverage than what you are comfortable with. The main thing that you need to remember is that the higher the leverage that you use, the lower your risk of margin and the higher your losses will be if the trade turns against you. Therefore, you should only use leverage if you’re comfortable with that degree of risk.
• Combine both technical and fundamental analysis. For you to be a successful trader, it is important to be proficient in either technical or fundamental analysis. However, whichever strategy you choose in order to trade, it is important for you to be aware of the other side as well. For example, if you primarily trade on technical analysis, you should still know about major events and macroeconomic announcements that might affect currency prices. Knowing both sides of the trading world is important for you to maximise your chances of success in the forex markets.

Conclusion

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 which could be advantageous for some traders. While there are several low spread forex brokers in the UK, and different brokers are suitable for different needs, not all platforms will provide the tools needed to make informed trading decisions.

In this guide, we have taken a look at several low spread forex brokers that are suitable for UK traders. Each platform offers educational tools and resources as well as charting tools, customer support and mobile capabilities. Conduct your own research before making a decision as to which broker to use.

FAQs

References:

“https://www.forex.in.rs/forex-trading-statistics/?utm_content=cmp-true”
“https://www.wallstreetmojo.com/all-courses/”
“https://corporatefinanceinstitute.com/resources/wealth-management/financial-instrument/”
“https://www.youtube.com/watch?v=FyCbKDUhBJM”