In 2023 we wanted to not just take forex brokers on their word but actually test and compare their fees. Based on that goal, each month we compare and tabulate each broker’s published fees data and then have tested this in controlled enviroments.
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25% of our overall Forex Broker Score is devoted to Forex trading costs.
The trading cost is the amount your trade must move before you make a profit. For example, if you go long (buy) 1 lot (100,000) with a trading cost of $10, your trade will need to increase by $10.00 before making any profit. The lower the trading cost, the more profit you can make.
Low trading costs are crucial to your success if your trading strategy relies on profits of just a few pips (e.g., scalping) or automated trading.
We collate published data from brokers’ websites to compare trading costs across brokers. We also use a freely available MT4 indicator, Spread Monitor, on live trading accounts. We open Standard Accounts (those with no commission but with variable spreads) and Raw Accounts (those with a fixed commission and lower variable spreads) and perform our tests over 24 hours.
Standard Accounts charge no commission but have variable spreads (the difference between the bid and ask price). The spread is the only trading cost we need to account for this type of account.
We compare spreads for Standard Accounts in two ways:
We collate data from brokers’ websites monthly. The table below shows the published spread data our team collated in September 2023. The most recent data can always be found on our lowest spread broker page.
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Standard Account Spreads
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|---|---|---|---|---|---|
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0.62 | 0.77 | 1.27 | 0.83 | 0.74 |
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1.10 | 1.20 | 1.40 | 1.40 | 1.40 |
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1.13 | 1.01 | 1.71 | 1.66 | 1.12 |
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0.90 | 1.30 | 1.40 | 1.40 | 1.40 |
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0.70 | 2.20 | 1.10 | 1.10 | 0.60 |
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1.20 | 0.90 | 1.50 | 1.80 | 1.80 |
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1.20 | 1.40 | 1.50 | 1.60 | 1.50 |
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1.10 | 1.20 | 1.40 | 1.50 | 1.20 |
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1.10 | 1.30 | 1.30 | 1.30 | 1.30 |
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1.20 | 1.30 | 1.20 | 1.30 | 1.10 |
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1.70 | 1.60 | 1.70 | 2.00 | 1.60 |
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1.20 | 1.80 | 1.90 | 1.90 | 1.60 |
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1.30 | 1.70 | 2.10 | 1.40 | 1.50 |
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1.12 | 1.64 | 0.86 | 1.30 | 1.38 |
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1.32 | 1.95 | 1.37 | 1.70 | 1.40 |
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1.20 | 1.30 | 1.50 | 1.30 | 1.20 |
Avg. spreads are taken from each broker's website and updated monthly. Last update on 01/09/2023
The six major currency pairs – AUDUSD, EURUSD, GBPUSD, USDCAD, USDCHF and USDJPY are used to conduct our testing. The spread monitor’s screen output looks like this on an AUDUSD chart for H1 (hourly) data:
The indicator also writes the results to CSV files, providing us with data to perform our analysis. A typical CSV (for GBPUSD data at IC Markets) looks like this.
| Time | MaxSpread | AvgSpread | MinSpread |
|---|---|---|---|
| 2023.03.14 08:00 | 1.40 | 0.92 | 0.60 |
| 2023.03.14 09:00 | 1.40 | 1.09 | 0.60 |
| 2023.03.14 10:00 | 1.40 | 1.22 | 0.60 |
| 2023.03.14 11:00 | 1.40 | 1.08 | 0.60 |
RAW Accounts charge a fixed commission and have variable spreads (generally lower than for Standard Accounts). RAW accounts at some brokers are also known as “Zero”, “Pro”, “Prime”, “Direct”, “FX-Active”, “Plus+”, “Razor”, and “Edge” accounts. It seems brokers like to attach their branding to these accounts.
We compare spreads for Raw Accounts in two ways:
We collate data from brokers’ websites monthly. The most recent data is below (commissions “per side”).
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ECN Forex Spread Comparison
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|---|---|---|---|---|---|
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0.06 | 0.20 | 0.23 | 0.42 | 0.27 |
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0.10 | 0.30 | 0.20 | 0.30 | 0.20 |
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0.12 | 0.50 | 0.47 | 0.40 | 0.22 |
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0.20 | 0.30 | 0.20 | 0.40 | 0.20 |
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0.30 | 0.60 | 0.50 | 0.50 | 0.50 |
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0.30 | N/A | 0.30 | 0.50 | 0.40 |
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0.44 | 0.83 | 0.20 | 0.40 | 0.42 |
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0.17 | N/A | 0.24 | 0.54 | 0.30 |
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0.20 | 0.70 | 0.30 | 0.50 | 0.40 |
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0.10 | 1.10 | 0.30 | 0.60 | 0.50 |
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n/a | 0.30 | n/a | 0.60 | 0.50 |
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0.44 | 1.41 | 0.77 | 1.13 | 1.23 |
Avg. spreads are taken from each broker's website and updated monthly. Last update on 01/09/2023
We create lists based on this data such as the Australian lowest spread forex broker or UK lowest spread forex broker page.
Again, we use the spread monitor across the six major currency pairs to conduct our testing for Raw Accounts. Spreads for Raw Accounts are typically lower than those for Standard Accounts. Often, spreads for these accounts are zero, justifying the “Zero” in some brokers’ account branding.
For Raw Accounts, we compare Commission Rates by collating the commission rates published on broker’s websites. We then test that the published Commission Rates are correctly applied by opening and closing small trades in each of the six major currency pairs.
Brokers publish their commission rates in the base currency of your account. The commission is calculated per lot (100,000). If your broker’s website shows a 7.00 commission and your account is based in AUD, your commission is AUD 7.00 per lot.
Brokers publish Commission Rates either on a “per side” or on a “round trip” basis (per lot).
The following example is a report from an MT4 terminal’s Account History, showing an open trade of 0.01 lots with a commission of -$.05 (-$5.00 x 0.01). This could have been from either a $2.50 “per side” commission or a $5.00 “round trip” commission (per lot).
Some brokers charge commissions as a percentage of the transaction size rather than quoting a fixed commission per lot.
For example, CMC Markets charges 0.0025% per side. This equates to a total commission of $5 per lot (100,000 x 0.0025 / 100 x 2). Unlike other brokers, CMC markets also show the commissions as a separate line item in its Account History, as below:
We listed the best in this category on the lowest commission forex broker page.
This table shows the calculations we use to compare spread costs across the currency pairs. A standard USD spread cost allows us to compare spreads across brokers and currency pairs.
| CurrencyPair | Close | Unit Size (1 lot) | Pip Size | Spread | Value of a Pip (USD) | Spread Cost (USD) |
|---|---|---|---|---|---|---|
| AUDUSD | 0.669 | $100,000 | 0.0001 | 0.82 | $10.00 | $ 8.21 |
| EURUSD | 1.061 | $100,000 | 0.0001 | 0.73 | $10.00 | $ 7.31 |
| GBPUSD | 1.208 | $100,000 | 0.0001 | 1.15 | $10.00 | $11.52 |
| USDCAD | 1.374 | $100,000 | 0.0001 | 1.00 | $7.28 | $ 7.26 |
| USDCHF | 0.924 | $100,000 | 0.0001 | 1.40 | $10.82 | $ 15.15 |
| USDJPY | 132.897 | $100,000 | 0.0100 | 1.09 | $7.52 | $ 8.21 |
Spreads are always stated in pips in forex trading, a pip being 1/10,000th (0.0001) of a standard “lot”. A “lot” is 100,000, so a pip in the case of an AUDUSD trade is USD $10 (0.0001 x 100,000).
If the average spread for AUDUSD is 0.821 pips (for example), the cost of the spread is USD $8.21 (0.821 x $10). This method of calculation is used in the same way to give USD spread costs for EURUSD and GBPUSD spreads.
To calculate USD spread costs For USDCAD and USDCHF spreads, it’s a little more complicated. Pips are always stated in terms of the quote currency, or the second currency in the pair. So, USDCAD pips are in CAD and USDCHF pips are in CHF.
To convert CAD and CHF to hourly USD spread costs, we use the hourly close prices of the USDCAD and USDCHF respectively. For example, if USDCAD had a closing price of 1.374, the value of a pip is USD $7.27 (10 / 1.374).
Finally, to calculate USD spread costs for USDJPY, we use the same method as for USDCAD and USDCHF, with the exception that a pip is 1/100th (0.001) instead of 1/10,000th.
For Raw Accounts, the total trade cost is the sum of
We standardise spread costs across currency pairs by calculating a USD cost. However, commissions are charged in the base currency of the trading account. Our site therefore converts all trade costs to a single currency for comparison purposes.
To help traders calculate and compare the costs of individual trades we create the forex fee calculator (the first of it’s kind). This combines the average published monthly spreads with the commission rates of each broker. Of course, the commission rate is dependent on the base currency a trader selects when opening an account and this is factored into the calculator. The spread is also dependent on the currency which again is factored into the calculator. The only other factor is the forex cross value which is collected through an API.
Simply select your preferred base currency and then the currency pair and volume you want to trade to learn the forex fees by broker.
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