Best Low Spread Forex Brokers in the UK for December 2024

UK forex traders are keenly aware of the difference a low spread can make to trading profits, and this is why they seek out the best low spread brokers. Brokers make money through the spreads they add on to both buy and sell orders, and traders must factor this in along with commissions, when choosing one.

Zero spread brokers and accounts also do exist, but there’s a trade-off, as they will charge a higher commission. Our guide will help you find the top low spread brokers in the UK right now. See our picks below:

Reviewing the Top-Ranked Low Spread UK Forex Brokers

Let’s take a closer look at the pricing structure and features of the lowest spread forex brokers and compare them based on other metrics, such as other supported markets and choice of trading platforms. All but two brokers, FP Markets and AvaTrade, on our list are regulated by the UK market watchdog, the Financial Conduct Authority (FCA). 

1. eToro: Best Forex Broker for Beginner Traders

• 55 currency pairs
• GBP/USD spread from 2 pips

eToro stands out as a good broker for new traders because of its wealth of educational materials, its AI-influenced stock analysis and most of all, for its social trading features. It has an unlimited demo account with $100,000 of virtual funds to practise with. 

On top of that, it has a simple, easy-to-understand interface. Its Copy Trader feature is free to use and enables novice investors to mimic the trades of more experienced investors and do so automatically.

Its forex spreads are about average for the industry, but at least its fees are transparent. All of the forex and CFD trading on eToro is commission free, as well as forex, but of course, the spreads are built in for forex and all CFD trading.

It has a good assortment of tradeable assets, more than 5,000 overall, including 55 currency pairs. One downside for eToro, at least for more advanced traders, is it doesn’t have all the technical charting capabilities that other brokers might have.

2. XTB: Best Forex Broker for CFD Trading

• More than 70 currency pairs
• GBP/USD spread from 0.9 pips

XTB covers more than 70 forex pairs, so that’s more than most brokers. Overall, it offers more than 6,000 financial instruments, including stocks, ETFs and CFD trading. It also offers passive investment plans with automatic investing and pays 4.75% interest on uninvested funds.

XTB uses its own platform, xStation and doesn’t support MetaTrader. That may be seen as a negative for experienced forex traders, but not a big deal to new forex traders. It has an unlimited demo account with $100,000 in virtual funds for traders to test-drive its platform.

Unlike some brokers, it doesn’t have guaranteed stop losses. It has commission-free trading for stocks and ETFs for traders investing less than $100,000 in a given month. For amounts above $100,000, the fee is 0.2%, or a minimum of €10. Its forex trading is also commission free, with better-than-average spreads for most pairs.

3. AvaTrade: Best Low Spread Forex Broker for Day Traders

• More than 60 currency pairs
• GBP/USD spread of 1.3 pips

AvaTrade offers forex trading in more than 60 pairs and has 1,250 tradeable assets overall, including regular trading and CFD trading in forex, stocks, bonds, treasuries, commodities, cryptocurrencies and indices. As a market maker with its own dealing desk, AvaTrade keeps spreads on popular forex pairs fixed throughout the day, which helps day traders keep their costs in check. 

It provides access to popular trading platforms such as MetaTrader 4 and 5, as well as its proprietary AvaTrade platform. These platforms cater to both beginner and experienced traders, offering a range of features and tools for technical analysis and trade execution.

AvaTrade also offers, as part of its AvaSocial trading app, copy trading services DupliTrade and ZuluTrade that offer you a choice of automated trading packages that mimic successful investors. It also has solid educational support, including videos, tutorials, webinars and market analysis, particularly useful to those new to forex trading.

One of its other popular features is AvaProtect, a program to limit losses on some trades. One downside for AvaTrade is its relatively high inactivity fee of £50 per month, which begins after only three months of inactivity. 

4. FP Markets: Best Low Spread Broker for Advanced Platform Choices

• More than 60 forex pairs
• GBP/US spread from 0.0 pips on its raw account

FP Markets has a good number of tradeable assets (more than 10,000), including more than 60 forex pairs, plus, stocks, indices, commodities, and cryptocurrencies, but no non-CFD trading. It offers the advanced MT5 platform, which is built for charts, indicators and other analysis tools. It also offers the MT4, Iress, cTrader and TradingView platforms. It recommends MT4 for forex trading, however.

It offers relatively low spreads on its raw account, from a minimum of 0.0 pips for the GBP/USD cross, but this account type carries a commission. Its standard account, though, with no commissions, has slightly higher spreads with the GBP/USD pairing showing an average spread of 1.8 pips, compared with an average of 0.7 pips on its raw account.

It has social trading, with the ability to automatically mimic the trade of advanced investors, so plenty of options. FP Market isn’t regulated by the FCA, though it is licensed by another major watchdog, the Australian Securities and Investments Commission (ASIC).

5. Pepperstone: Best Forex Broker for Low Raw Spreads

• More than 90 forex pairs
• GBP/US spread from 1.0 pips (raw account: from 0.0 pips) 

While Pepperstone offers a wide range of forex pairs (more than 90), its non-forex instrument selection is relatively limited compared to other brokers. It has a little more than 1,200 tradeable assets overall, but all of the CFD variety. 

The broker has two types of accounts: the Razor account, which has tight spreads and low commissions and is designed for high-frequency traders and scalpers.

The standard account is commission-free, but has higher fixed spreads, perhaps better suited for swing traders or other long-term trading strategies. For example, its Razor account, using a GBP/USD pairing has a minimum spread of 0.0 pips, plus commission. The standard account charges 1.0 pips with no commission.

Some of Pepperstone’s advanced features and platforms may be overwhelming for novice traders. The broker does have a good selection of articles, guides and webinars for beginning traders. It also has a limited demo account, good for only 60 days, with $50,000 in virtual currency to practise on.

6. Trade Nation: Best Spreads for Commission-Free Forex Broker

• 46 currency pairs
• GBP/USD fixed spread of 0.7 pips

The broker focuses on CFD trading and offers slightly more than 1,000 tradeable instruments, a relatively small number that includes 46 forex pairs. It does focus on low-cost spreads, as it charges a minimum of 0.3 pips on a EUR/USD trade and 0.7 pips on a GPB/USD pair.

Trade Nation uses an in-house platform, TN Trader, as well as the TradingView platform and Metatrader 4, which comes with a copy trader option for novice traders who want to mimic what experienced traders are doing. Some of its better features include an intuitive web site and no minimum deposit requirement. It also offers advanced charting through ChartIQ. 

The broker also has a demo account with $10,000 in virtual currency attached. It also sponsors a knowledge base that includes articles, videos and podcasts, but the articles are on the basic level, not very advanced.

7. Plus500: Good Forex Broker for Financial Protection

• More than 60 currency pairs
• GBP/USD spread 1.8 pips

It has an easy-to-use website, making it inviting to novice traders. The site makes it easy to analyse charts, place and monitor trades and create watchlists. It has a free and unlimited demo account. 

It offers trading on more than 60 forex pairs and overall, it offers trading on 5,500 financial instruments, including more than 2,800 CFD trades. The site offers a good array of educational content, including Trading Academy articles and webinars from the Corellian Academy.

Plus500 doesn’t charge commission on forex trades, with its fees built into the spread. For example, on a EUR/USD pairing, the minimum spread would be 1.6 pips, so higher than some brokers. Its fees are competitive for index and commodity strategies but at the higher end of average for forex, equity, and cryptocurrency trades.

It also offers guaranteed stop-loss orders and negative balance protection, preventing investors from losing more than what is in their account.

8. IG: Best Forex Broker for Plenty of Pairs

• More than 80 currency pairs
• GBP/USD spread from 0.9 pips

IG is known for its wide choice of financial instruments, more than 19,000, including CFD and non-CFD trading. It offers a huge amount of forex pairs, more than 80, making it a popular choice for forex traders. It even has a demo account for forex, designed for traders who are not yet familiar with trading currencies. 

Its platform is renowned for its user-friendly interface, robust charting tools, and real-time market analysis, enabling traders to make informed decisions. IG provides access to a wide range of currency pairs, including major, minor, and exotic crosses, catering to diverse trading strategies.

One of the best things about IG is its transparency. All of its fees are built into the spread, with no separate commission. The EUR/USD average spread, according to the company, is 0.85 pips with the minimum spread being 0.6 pips with the average GBP/USD spread being 1.4 pips and the minimum spread being 0.9 pips.

The Lowest Spread UK Brokers Compared

What Is a Spread in Trading?

A spread in forex trading is the difference between the bid price (the price a trader receives when selling a currency pair) and the ask price (the price a trader pays to buy a currency pair). In simpler terms, it’s the cost of entering a trade and compensates the broker for their services.

Spreads are measured in pips (percentage in points), the smallest price movement in a currency pair. It’s typically the fourth decimal place for most pairs, representing 0.0001. For instance, if the EUR/USD moves from 1.1200 to 1.1201, it has moved one pip.

A lower spread means a smaller difference between the buying and selling price of a currency pair. If a trader enters a position with a 1-pip spread and the market moves 2 pips in the trader’s favour, he or she has already covered the spread cost and has a profitable trade. Conversely, a wider spread would require a larger price movement to break even.

What Are Raw Spreads? 

A raw spread provides traders with the most favourable market conditions possible. It offers the true underlying price of a trading instrument, free from any additional markups added by the broker.

For instance, when trading the USD/CAD pair at 1.2768, a raw spread ensures you’ll execute trades at this exact price, without any additional costs. Most raw spreads, though, in forex are between 1 pip and five pips.

What Is the Difference Between the Minimum Spread and the Average Spread?  

The minimum spread is the smallest price difference between the bid and ask prices observed during a specific timeframe. In contrast, the average spread is the calculated mean of all the spread values recorded within that same period, reflecting the typical price difference between the bid and ask across various market conditions.

Essentially, the minimum spread represents the tightest possible spread a broker can offer, but it’s not always available. The average spread, on the other hand, indicates the overall mean spread during a specific period of time. When a broker quotes average spreads in their pricing table, they should disclose over what time period the average was measured. 

How Are Forex Spreads Calculated? 

To calculate the forex spread, subtract the bid price from the ask price. This difference, measured in pips, represents the cost of entering a trade. For instance, with a GBP/USD quote of 1.3089/1.3091, the spread is 1.3091 – 1.3089 = 0.0002, or 2 pips.

What Counts as a Low Forex Spread? 

There are a lot of factors that go into what is considered a low forex spread. Time of day, liquidity of the market and type of forex pairs make a difference in the spread. However, generally, a tight spread will be between 0 and 3 pips.

Other Trading Instruments with Spreads 

Indices: CFDs on stock indices, like the S&P 500 or FTSE 100, often involve spreads.

Commodities: Contracts for Difference (CFDs) on commodities like gold, silver, oil, and natural gas are commonly traded with spreads.

Cryptocurrencies: CFDs on cryptocurrencies like Bitcoin and Ethereum are frequently traded with spreads.

Stocks: While many stockbrokers offer commission-based trading, some use a spread-based model, especially for options trading.

Are There Any Zero Spread Brokers?  

Yes and no. While there are brokers that may not charge any pips on a forex transaction, they still have to make money, so they charge other types of fees, like commission per trade. So, it’s not really a free trade, but for many investors, the cost savings on zero spreads can be significant, especially for frequent traders and scalpers.

Pepperstone, for example, offers 0 pips on some forex trades on its Razor account, but charges a commission, for example on USD trades of $7 for every 100,000 units of the base currency traded, called ‘a lot’. So, if you trade two lots of USD/EUR, you will pay a total commission of $14.

This means that for every 100,000 units of the base currency traded, you will be charged a specific commission. For example, if the commission per lot is $7 and you trade 2 lots of EUR/USD (which is €200,000), you would pay a total commission of $14.

What Is the Difference Between a Standard Account and a Zero Spread Account? 

A standard trading account typically has a built-in spread (the difference between the buying and selling price of a currency pair), while a zero spread account offers near-zero spreads, meaning the bid and ask prices are essentially the same.

This type of account, though, usually incurs a small commission on each trade instead of a wider spread; making zero spread accounts more appealing to scalpers and high-frequency traders who need precise entry and exit points.

What Is the Best Time of Day to Trade for the Lowest Spreads? 

The best time of day to trade for the lowest spreads is during the overlap of major market sessions. This is when market activity is highest, leading to increased liquidity and tighter spreads.

For example, in the UK, the best time to trade would be between 8 a.m. and noon, which would be the most active period for Euro and British Pound pairs. However, if you are trading dollars, the best time to trade would be when the US markets overlap with the LSE, between 2:30 p.m. and 4:30 p.m.

How to Choose a Low Spread Broker

Here are some of the most important factors to consider:

Regulation:

To choose a good low-spread forex broker in the UK, first prioritise FCA regulation. Ensure the broker is authorised and regulated by the Financial Conduct Authority to guarantee adherence to strict financial standards and consumer protection rules.

Spreads, commissions, other costs: 

Next, assess the spread and commission structure. Look for brokers offering raw spread accounts with minimal or no markup and compare commission fees across different brokers to find the most cost-effective option. Be aware of any hidden fees that may impact your overall trading costs.

Platforms, trading tools:

A good broker should offer a user-friendly trading platform with fast execution speeds and advanced features like charting tools, technical indicators, and automated trading options.

Customer and educational support:

Reliable customer support and educational resources are also crucial. A responsive customer support team can assist you with any questions or issues, while access to educational materials, webinars, and tutorials can help you improve your trading skills.

Additional safeguards: 

Finally, consider additional features and benefits like negative balance protection, segregated client funds, and a diverse range of trading instruments beyond forex.

By carefully considering these factors, you can select a low-spread forex broker that aligns with your trading goals and risk tolerance.

Conclusion

Forex trading is the most liquid market in the world and for traders, provides plenty of opportunity. A significant portion of forex trading is speculative, with traders seeking to profit from exchange rate fluctuations.

UK investors trading forex are keenly aware of the impact of low spreads on their trades, making it essential to find the best low-spread forex brokers. However, when you look for a good forex broker, you need to factor in the company’s full fee structure, whether it charges commissions on trades, how many forex pairs it offers and what kind of platforms it allows trades on. In this guide, we tried to show you some of the best brokers to trade forex.

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