What is a spread broker?？

As a trader, if you use a brokerage firm or an individual to help you with your forex trading, then you need to understand what spreads are。It is also important to find the lowest spread forex broker。

Each broker you designate will work on commissions and fees when trading, which is where the spread comes from。By definition, the spread is the difference between the bid and ask prices of a trade。The bid price is the price you receive through a sell transaction, while the ask price is the price you pay when you buy a transaction。

Some forex brokers may also charge you commissions and spreads for each trade。In contrast, some forex brokers may claim to offer commission-free trading, but at the same time widen the spread of each trade.。Spreads are basically a way for brokerage firms or individuals to make money。

Just like brokerage fees, you have to compare the spreads of each brokerage firm before deciding whether to work with them。

Spread Comparison of Forex Brokers in Malaysia

The following is a list of low spread forex brokers offered in Malaysia。Note that brokers are rated based on their overall platform performance, services, fees and spreads。

What is a good spread in Forex trading?？

There are two levels of spreads, the high and low spreads.。It's safe to say that the smaller the broker's spread, the better。

high point difference

High spreads mean that there is a significant difference between the bid and ask prices, and higher-than-usual spreads usually have two possibilities: high market volatility or low liquidity due to out-of-market trading.。

Low point difference

The low spread means there is a small difference between the bid price and the asking price.。It is best to trade when the spread is low, such as during major forex trading sessions。Low spreads usually indicate low volatility and high liquidity。

Types of Spreads in Forex Trading

In addition to the high and low spreads, you also need to understand the two spreads available in forex trading。

fixed point difference

Fixed spreads remain constant regardless of market conditions。In other words, even if the market fluctuates, the spread is not affected。Fixed spreads are provided by brokers operating in a market maker or "trading desk" mode.。

Variable / Floating Spread

As the name suggests, variable spreads are always changing。The difference between the bid and ask prices of currency pairs is constantly changing due to variable spreads。Since this type of spread is usually provided by non-trading over-the-counter brokers who cannot control the transaction, the spread will widen or tighten depending on the supply and demand of the currency and overall market fluctuations。

How to minimize the spread？

Fortunately, as a trader, there are two ways you can minimize trading spreads。

1. • Trade at the right time

Always trade at the most favorable trading times when many buyers and sellers are active in the market。When business demand increases, Forex brokers tend to narrow spreads to seize opportunities。

1. • Avoid trading unpopular currencies

Brokers often compete for business when you trade hot currencies such as the GBP / USD pair。If you trade a less traded currency pair when demand is low, the broker will take advantage of this to widen your trading spread。

Now, let's take a look at the list of Forex brokers with the lowest spread in Malaysia in 2023。

How Low Spread Forex Brokers Make Money？

Most of the income of Forex brokers comes from commissions charged to traders.。However, it is well known that some forex brokers offer traders low or even zero spreads or commissions。Which begs the question, how do they make money？

Spreads are one of the many ways a forex broker can profit from your trades, and when you lose money, the broker also makes money。Therefore, it is essential to examine your forex broker's fee structure to identify any hidden fees that may be incurred during your forex trading。

Why Low Spreads are Important in Forex Trading？

As a forex trader, you need to find the right broker before you start investing。

Low spreads in Forex are important because spreads are an opportunity cost that can reduce the amount of profit taken from the daily range。The higher this opportunity cost, the greater the chance that the trader will suffer a real financial loss。

In short, choose a low spread forex broker and the greater your chances of making a profit as a trader。

Conclusion

Choosing the right broker is crucial for every forex novice。Be sure to compare the list of brokerage fees and spreads available in Malaysia before you start deciding to work with them。

In addition, the road to success in Forex trading is very long, it is essential to always take the right steps and always be patient。Prepare comprehensive trading skills before you start investing。