The spread in forex trading is the difference between the selling price and the buying price for currency pairs. On most forex brokers, the spread is the primary cost of trading. This is how forex brokers make money from trades. Unsurprisingly, the most traded currency pairs involve the lowest spreads in the market. While the spread changes from broker to broker, it is lowest on the most traded currencies. Let’s look at the forex currency pairs with the lowest spreads.
Main Categories of Currency pairs
A forex currency pair means two national currencies that are traded against each other. Traders make money by buying a national currency that is lower in value and selling it off when the value rises. On the other hand, forex brokers make money from the difference between the buying price and the selling price. As mentioned above, this is called the spread.
Currency pairs are in three main groups. These include major currency pairs, minor currency pairs, and exotic currency pairs. The major currency pairs involve the currencies of the countries with the largest economies. These currency pairs include the US Dollar, as it is the top reserve currency in the world. Major currency pairs include:
Minor currency pairs do not involve the US Dollar on either side of the trade. The major currencies you will find on minor currency pairs include GBP, EUR, YEN, or even AUD. Examples of minor currency pairs include:
Exotic currency pairs have a major currency on one side and the currency of a rising economy on the other. Some examples of such currency pairs include:
Now, let’s look at forex currency pairs with the lowest spreads.
As we mentioned, the heaviest traded currency pairs tend to have the lowest spreads. Well, the EURUSD currency pair is the most traded in the world. This currency pair involves two of the biggest national currencies in the world. The heavy liquidity associated with this currency pair leads to some of the lowest spreads on forex broker sites. For example, the EURUSD currency pair has the lowest spread on FP Markets, with an average spread of 1.3pips. In comparison, this currency pair’s average spread on Exness is 1 pip.
This currency pair has the US Dollar as the base currency and the Japanese Yen as the quoted currency. It is the second most heavily traded currency pair in the forex market. Its liquidity is high, leading to low spreads on most forex broker websites. For example, the average spread on OANDA for this currency pair is 1.5 pips.
The Great British Pound against the US Dollar is the third most traded currency pair in the forex market. As a result, this currency pair also comes with great spreads on most forex broker websites. This is due to its high trading volume in the markets. As an example, the minimum spread for this currency pair is 1.7 pips on XTB.
This currency pair has the US Dollar as the base currency and the Swiss Franc as the quoted currency. It tends to move opposite the EURUSD and the GBPUSD pairs. As such, it is fairly more predictable for all kinds of traders. Its trading volume is also reasonably high, meaning the spreads are low. For example, the average spread for this currency pair on AvaTrade is 1.6 pips.
The US Dollar paired with the Canadian Dollar is not as heavily traded as some other major currency pairs. However, it is fairly popular among professionals and beginners. It still has considerably high trading volumes in the market. This means the spreads are not too high on broker sites. The average spread for this currency pair on FP Markets is 1.9 pips.
Where To Trade Forex Currency Pairs With Lowest Spreads
Forex.com is a premier forex and CFD broker licensed and regulated by the FCA in the UK, the IIROC in Canada, the CySEC in Cyprus, and the NFA and CFTC in the US. On top of this, the company has a long history in the market. Forex.com launched its services in 2001 and now has over 450,000 active clients.
There are over 80 different currency pairs available for trading on Forex.com. Some of the best currency pairs to trade on Forex.com include EURUSD, USDCHF, USDJPY, GBPJPY, and EURGBP, among others. Fortunately, Forex.com spreads are low for most major currency pairs. Additionally, you can diversify your portfolio on Forex.com with assets from the Gold and Silver and Futures and Futures Options markets.
74–89% of retail investor accounts lose money.
FP Markets offers clients some of the lowest spreads in the market. The company features variable spreads starting from 1 pip for major currency pairs. Clients can trade some of the best currency pairs on FP Markets, including EURUSD, USDJPY, AUDUSD, and GBPUSD, among others. FP Markets features over 60 tradable currency pairs on its platform.
On regulations, FP Markets is licensed and authorized by CySEC and ASIC. These are two of the best regulators in the market. While regulation alone is not enough, FP Markets continues to operate within rules and regulations.
74–89% of retail investor accounts lose money.
eToro is one of the best multi-asset brokers in the market today. The company has been operating in this space since 2007 and serving millions of clients. Some of the currency pairs you can trade on eToro include EURUSD, GBPUSD, USDCAD, and USDCHF, among other 45+ currency pairs.
Deposits and withdrawals are easy on eToro as it supports various payment options. These include Credit/Debit cards, Wire Transfers, Skrill, Neteller, PayPal, WebMoney, and UnionPay. The minimum deposit is $200 in most countries. The company also offers tight spreads to its clients for the best trading experience. Further, eToro has regulatory licenses from the FCA, the CySEC, and ASIC.
79% of retail CFD accounts lose money
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs (such as forex, commodities and stocks).
Evidently, the most heavily traded currency pairs feature the lowest spreads in the market. Hence, major currency pairs will always have lower spreads in the market. While trading these major currency pairs, invest with a reputable and legitimate forex broker. We have provided a few options in this review. Make sure you do your own research before investing. This is the best way to ensure the broker you invest with best meets your trading needs.