Best Low Spread Forex Brokers UK 2024

Most traders always seek for the brokers that offer lowest spread to book best profits in forex trading. We have considered 10 aspects apart from spreads to list out the best low spread forex and CFD brokers regulated by the FCA in the UK.

Spread is the most important aspect of forex trading for a majority of forex traders. Many traders choose the broker only based on the spread as low spreads are highly advantageous for CFD and forex traders.

Indeed, low spreads can increase profits, reduce the loss, and increase the probability of making profits. However, choosing a broker only on the basis of spread might not be the smartest move as some fake brokers or scammers may offer very low unrealistic spreads to lure deposits from traders.

If you wish to trade with the best forex brokers in the UK that incur low spreads, it is important to consider FCA regulation and several other factors. To assist the traders in the UK, we have created a list of the best forex brokers with low spreads in the UK after considering 12 different aspects other than spread.

The list of best low-spread forex brokers in the UK is an unbiased and honest opinion that is aimed to help traders in choosing a forex broker. The listing order of the brokers does not represent rankings.

Traders must open their accounts with the ones that are most suitable for them. Beginners are advised to check suitability with the demo account before opening a real account.

List of Best Low Spread Forex Brokers in the UK

Following the forex brokers in the UK that offer the lowest spreads on currency pairs and CFDs. We have also mentioned important features along with the pros and cons of trading with them in the UK.

#1 Pepperstone – Best Low Spread Broker with Multiple Platforms

Pepperstone Limited is regulated by the Financial Conduct Authority (FCA) under license number 684312. They also hold a license from multiple top-tier authorities like ASIC in Australia, BaFIN in Germany, and CySEC in the EU.

Pepperstone offers 2 account types differentiated on the basis of pricing structure. The Razor account is ideal for large-volume traders as the spreads are as low as 0.1 pips but an additional commission of $7 would be incurred on a round trade of a standard lot.

The average typical spread for EUR/USD at Pepperstone is 0.69 pips with the Standard account that does not involve commission. Pepperstone is one of the lowest-spread brokers in the UK. They do not charge any inactivity fees from clients residing in the UK.

They allow trading through MT4, MT5, as well as cTrader. Each client can choose the most suitable trading platform with an ideal pricing structure and account type. This makes Pepperstone ideal for different types of traders.

They allow trading on more than 1200 instruments with a minimum deposit as low as $1.

#2 City Index – Lowest Spread FCA Regulated Broker in UK

Stonex Financial is a legal entity regulated by the Financial Conduct Authority (FCA) with license number 446717. Stonex Financial is also regulated by the ASIC of Australia, MAS of Singapore, CFTC of the USA, etc. It is also a listed company on NASDAQ which makes it safe for traders.

The lowest spread at City Index is 5 pips on forex pairs. The average spread for EUR/USD at City Index is 0.8 pips. They do not offer multiple account types with different pricing. The trading fees are built only into the spread.

City Index allows trading on the MetaTrader 4 trading platform with GBP as the base currency of the account. They also incur an inactivity fee if no trades are executed for more than 12 consecutive months.

More than 4500 financial instruments are available to trade as CFD. They also offer a rich variety of research and education tools to assist traders.

#3 CMC Markets – Best Overall Low Spread Broker

CMC Markets UK Ltd is regulated by the Financial Conduct Authority (FCA) under license number 173730. They are also regulated by BaFin of Germany, IIROC of Canada, ASIC of Australia, FMA of New Zealand, MAS of Singapore, and DFSA of the United Arab Emirates.

CMC Markets is also listed on London Stock Exchange with the ticker symbol CMCX. It is among the safest forex and CFD brokers in the UK.

The minimum spread at CMC Markets is 0.7 pips which is also the average typical spread on EUR/USD during peak trading hours. They do not incur any commission on trading forex pairs.

They do not offer choices for account types and the trading fees are built only into spreads. They do charge an inactivity fee of GBP 10 per month after 12 months of inactivity.

The trading platform supported at CMC Markets is MetaTrader 4. More than 10,000 financial instruments are available to trade at CMC Markets including 338 forex pairs. The number of available forex pairs is highest at CMC Markets among the FCA-regulated brokers in the UK.

#4 Plus 500 – Best Low Spread Broker with Proprietary Platform

Plus 500 UK Ltd is the legal entity regulated by the Financial Conduct Authority (FCA) under license number 509909. They are also regulated by ASIC of Australia, FSCA of South Africa, FMA of New Zealand, CySEC of EU, and MAS of Singapore.

They do not offer multiple choices between account types. The trading fees are built into the spread only with a minimum spread of 0.8 pips. This is also the average typical spread for EUR/USD. They do not charge any trading commission but an inactivity fee of $10 per month is incurred each month after 3 months of inactivity.

Their trading platform is user-friendly and ideal for beginners. No other trading platforms like MT4, MT5, or cTrader are available to choose from at Plus500.

What is Spread and How Does it Change?

If you wish to trade forex pairs at low spreads, it is important to understand how spreads fluctuate and the time when the spreads are lowest.

Spread is the difference between the bid and ask price of the underlying instrument. Spreads are the major source of revenue for brokers and liquidity providers. A higher spread will reduce the profit amount and increase the losses at a given broker.

Spread is a major constituent of trading fees in forex trading. Most brokers do not charge any trading fee apart from spreads while some also incur a fixed or variable commission.

In the forex market, spreads might fluctuate multiple times within an hour. Spreads on forex pairs are volatile and fluctuate depending on the market sentiments and liquidity in forex pairs.

For example, if the EUR/USD pair has an ask price of 1.1050 and a bid price of 1.1048, the spread is 2 pips (0.0002). When you enter a trade, you start with a loss equal to the spread. To profit, the currency’s value must move beyond the spread.

For instance, buying at 1.1050 and selling at 1.1060 yields an 8-pip profit after accounting for the 2-pip spread. The spread is essentially the trading cost and is crucial, especially in short-term trading strategies.

Volatility in Spread Due to Different Time Zones

Currencies are always traded in pairs. Major price movements are commonly witnessed when the markets of nations that represent the currency are active.

For example, the EUR/USD currency pair has the highest liquidity from 13:00 GMT to 16:00 GMT. This is because both the London and New York sessions are active during this interval. The spreads for EUR/USD will be the lowest during this interval.

Similarly, the liquidity of EUR/USD will be slightly lower when either one of the London or New York sessions is active. The spreads will be slightly higher when only one of the sessions is active and highest when both sessions are inactive.

The widening and narrowing of spreads can be witnessed daily due to time zones. Apart from this, several other factors can affect the spread. Any sudden price movement in currency pairs due to national or international reasons can also fluctuate the spreads.

Each forex pair or capital market can have different spreads at different times of the day. The best time to trade forex pairs is when the involved currency is the most liquid in the nation that uses that currency.

How to Choose a Low Spread Broker?

Each broker can have a different spread for any currency pair. It is always better to check the spread on the instruments you wish to trade and compare them with other brokers. However, several other important factors must be checked before choosing a broker.

Regulation

Traders residing in the UK must make sure that the chosen broker is regulated by the financial regulatory authority (FCA).

FCA is the financial regulatory authority in the UK that keeps the participants of financial markets in the UK safe. The FCA overlooks the activities of regulated entities and safeguards the interests of traders and investors.

To check the FCA regulation, clients must check the FCA regulatory license number and the name of the legally registered entity. Most brokers mention this in the footnote of their website. If you cannot find it, you can inquire through the customer support staff of the broker. This license number can be entered at the register of FSPs at the official website of FCA to cross-check the authenticity of the license.

Traders in the UK must only choose a forex broker that is regulated by FCA. Most unregulated or fake brokers may offer unrealistically low spreads to attract new traders.

Other Fees

Spread is not the only source of income for brokers. Some brokers also charge trading commissions with lower spreads. Traders must calculate the overall cost of trading forex pairs before opening their accounts.

Non-trading fees include deposit/withdrawal fees, inactivity fees, account opening/maintenance fees, currency conversion fees, etc. All the costs associated with the broker must be acknowledged and compared before choosing any broker.

Trading Platform

The trading platform is where you will spend most of the time trading forex pairs and CFDs. MetaTrader 4 and MetaTrader 5 are the most widely used forex trading platform for trading forex and CFDs. However, each broker can offer a different trading platform. Some brokers only support their own proprietary trading platforms.

Traders must ensure the chosen broker supports the trading platform that is convenient for them. Each feature and terminology of the trading platform must be well understood and it should be available on the device you wish to trade on.

Available Instruments

Each broker allows trading on different instruments. It is always better to check the available instrument before opening an account. It is important to check whether the instruments that you wish to trade are available on the trading platform. Spreads, as well as contract specifications for each instrument, can be checked and compared separately.

Deposit and Withdrawal Methods

Each trader can have a different preference for the method of transaction. If the chosen low-spread broker does not support the method preferred by you, you may face consequences.

Local bank transfers, credit/debit cards, and e-wallets are the common methods used for deposits and withdrawals by the majority. Some forex brokers also allow cryptocurrency deposits and withdrawals.

Why is it a Mistake to Choose a Broker only Based on Low Spread

When selecting a broker for Forex trading, it’s essential to consider more than just low spreads as the sole determining factor. Here are several reasons why:

• Hidden Costs: Brokers offering low spreads may offset that advantage with hidden fees or commissions. It’s crucial to examine the complete cost structure, including transaction fees, overnight swap rates, withdrawal fees, and account maintenance charges. Opting for a broker with slightly higher spreads but transparent fees could be more cost-effective in the long run.
• Trade Execution Quality: Low spreads don’t guarantee optimal trade execution. Issues like slippage, requotes, or delays in order execution can affect the actual price at which trades are filled. It’s important to consider a broker’s execution speed, reliability, and order execution policies to ensure smooth and efficient trading.
• Impact of Market Volatility: Spreads can significantly widen during periods of high market volatility. Brokers offering consistently low spreads may widen them during volatile market conditions, leading to less favorable trading conditions. It’s important to assess how spreads behave in both normal and volatile market conditions to gauge a broker’s reliability.
• Trading Platform and Tools: Merely focusing on spreads overlooks the importance of a broker’s trading platform and available tools. A user-friendly platform, advanced charting tools, access to real-time market data, and a range of technical indicators are essential for effective trading. Evaluating a broker’s platform capabilities and tools is crucial to support your trading strategies and analysis.
• Regulatory Compliance and Reputation: It’s crucial to choose a broker that is reputable and well-regulated to safeguard your funds and ensure fair trading conditions. Opting for low spreads from an unregulated or lesser-known broker can expose you to higher risks, such as poor customer support, inadequate financial safeguards, or potential fraudulent activities. Prioritize brokers regulated by reputable financial authorities.
• Customer Support and Service: Timely and reliable customer support plays a critical role in resolving technical issues, account inquiries, or trading-related concerns. Assessing the quality of a broker’s customer service, including response times, availability, and support channels, is essential. A broker with low spreads but subpar customer service can result in frustrating experiences when assistance is needed.

While low spreads are important, it’s crucial to evaluate brokers comprehensively, considering factors such as overall cost structure, trade execution quality, platform features, regulatory compliance, and customer support. By taking a holistic approach, you can choose a broker that meets your trading requirements and offers a reliable and satisfactory trading experience.

Benefits of Trading with Low Spreads

When you trade with low spreads in the financial markets, you enjoy several advantages:

Cost Efficiency: Low spreads reduce the expenses associated with your trades, making it more economical to enter and exit positions.

Improved Profitability: With smaller spreads, you get to keep a more significant portion of your profits, enhancing your overall trading profitability.

Faster Break-Even Point: Low spreads help you reach the break-even point more quickly, meaning that smaller price movements are required to cover your trading costs.

Scalping and Day Trading: For traders who engage in scalping and day trading, low spreads are crucial. They allow you to profit from small price movements within a single trading session.

Enhanced Liquidity: Markets with low spreads are often more liquid, reducing the risk of slippage and ensuring smoother order execution.

Effective Risk Management: Tight spreads facilitate better risk management, especially when you use stop-loss and take-profit orders to protect your trades.

Transparent Pricing: Low spreads typically indicate a fair and transparent pricing structure, which is beneficial for traders seeking honesty and clarity in market conditions.

Competitive Advantage: Accessing favorable spreads allows you to stay competitive in the markets, particularly when dealing with fast-moving price fluctuations.

Lower Trading Costs: Over time, low spreads translate into reduced trading costs, benefiting traders who are active in the markets or those who deal with significant trading volumes.

Suitable for Various Strategies: Whether you’re a short-term or long-term trader, low spreads are advantageous for a wide range of trading strategies.

Difference in Spread due to Trade Execution Method

The spread in forex trading represents the gap between the bid and ask prices, reflecting the trading cost and broker’s profit. This spread can differ due to distinct trade execution methods utilized by brokers. These methods include Market Execution and Instant Execution, each affecting the spread in its own way.

Market Execution:With Market Execution, orders are executed at the best prevailing market price. Commonly used, this method sees spreads varying based on market conditions. High volatility or low liquidity can lead to wider spreads, increasing trading costs. Conversely, stable and liquid conditions result in narrower spreads, reducing costs.

Instant Execution:Instant Execution involves placing orders at specified prices. If the price is available, the trade occurs immediately; otherwise, a requote might be offered. Instant execution grants traders more price control but introduces potential delays and uncertainty, particularly during market turbulence.

It’s vital to recognize that execution methods influence the spread, alongside other factors. Selection should align with trading style, currency pairs, and preferences regarding execution speed. Brokers provide spread and execution information on their platforms. Evaluating these, along with regulation and support, aids informed decisions.

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