Best Brokers by Fees

What to consider when comparing brokers’ fees?

When trying to find out the cost of trading with a broker or comparing brokers’ fees, don’t just think about commissions. Pay close attention to all the costs and fees a broker requires, and then choose the option that saves you the most money. The most common mistake people make is that they focus on trading commissions alone.

The problem with comparing brokerage prices only on commissions is that commissions constitute only a small fraction of their total costs for many investors. This is a problem when comparing brokerage costs purely on commissions. If you choose a brokerage account with extremely cheap commissions but a range of other fees that are fairly expensive, you risk paying more overall than if you dealt with a broker that had higher commissions but lower expenses overall. Moreover, a broker may hide its commission fees in the spread and claim to charge no trading commissions.

A wise cost analysis will not focus on a single charge category; it will consider every possible fee that a broker may demand you to pay and look at all of them one by one.

What are the different types of fees brokers charge?

Brokers structure their fees differently, but generally, the fees can be classified into the following:

• Trading fees – spreads, commissions, and overnight financing rates (swap charges);
• Non-trading fees – account management fees, deposit and withdrawal fees, non-activity fees.

Spreads

The spread is the difference between the ask and bid prices quoted for any currency pair. Normally, the spread should be from the raw quotes from the inter-bank market, but some brokers mark up the raw spreads to include part or all of their trading commissions. The raw spread in the EUR/USD currency pair, the most liquid and with the lowest spread, can be as low as 0.0 pips and usually around 0.1 to 0.2 pips on average. Most times, anything above this range is the broker’s markup for their services.

All zero-commission brokers make most of their money from spreads, as markups on raw spreads are their main source of revenue. Some brokers offer various accounts to traders, with some (Standard Account) having marked-up spreads and others having raw spreads. Although spreads are disclosed on all brokers’ websites, you may have to check the broker’s trading terminals to be sure.

Commissions

The trading commission is the fee a broker charges a trader for executing trades on their behalf. Commissions are charged for each trade a client places. Some brokers add them to the spread, but others (especially those who offer raw spreads) charge them separately. Many brokers offer different account types with different commission structures. Standard accounts tend to have the commissions added to the spreads, while the ECN accounts charge commissions separately.

Swap charges

Swap fees, also known as rollover fees, are fees a trader pays for holding a position overnight. Swaps are automatically calculated and applied to each position maintained overnight. Swap rates exist due to differences in interest rates supplied by the base currency and the quote currency. There is a Long Swap rate and a Short Swap rate, and brokers will list the mechanism used to determine both prices. Swap rates will either be credited or debited from the account balance, depending on whether the traders have long or short positions. A large percentage of brokers fail to provide traders with favorable swap rates.

You can verify the precise swap from your trading platform. For example, in the MT4 platform, you can see the swap rate by taking the following steps:

• In the “Market Watch” window, right-click on the selected symbol and select “Symbols.”
• Select the preferred currency and then, on the right, click “Properties.”
• Scroll down to “Swap Long” and “Swap Short.”

Non-trading costs

Unlike trading fees, which are charged on every trade, non-trading costs are not levied on every trade. Examples of non-trading fees include deposit/withdrawal fees and inactivity fees. It is common practice in the industry for brokers not to charge deposit fees, but some brokers, or the payment processor, may charge you for the transaction. Similarly, brokers will not usually charge a fee for withdrawals; however, fees paid by third parties, such as banks for wire transfers, may apply. You should be able to see an itemized list of all fees linked with deposits and withdrawals on the broker’s website.

Another fee that some brokers levy is an account inactivity fee, which is charged after a certain number of months without any trading activity on an account. The brokers see it as a fee for safeguarding your idle capital. Some brokers don’t charge inactivity fees. For those that charge the inactivity fee, it may come into play after three months, six months, or one year of no trading activity on an account. Most brokers charge a monthly fee, while others charge half-yearly.

What is the difference between trading and non-trading fees?

Trading fees are charged for each trade a trader places with the broker. For example, spreads and commissions are charged every time a trader opens a position and also when they close their position.

On the other hand, indirect trading costs are not levied on every trade. They are charged for non-trading transactions or services.

Why do I have to pay inactivity fees?

Trading brokers levy inactivity fees on customers who have an open account but have not been active for a certain period of time specified by the broker. This is to cover the costs of the service while the account is open but not in use, meaning the broker cannot charge other usage fees, such as commission rates or spread costs. Brokers see the inactivity fee as a fee for providing you with the service of safeguarding your idle capital.

Are there brokers that do not charge inactivity fees?

Brokers typically make their money from the commissions, spreads, transaction charges, and other fees they apply to active traders. But if a customer goes a period without making any trades, some brokerages will charge inactivity fees to ensure their business continues to make a buck. With so many other charges involved when trading, it is only natural that a less hands-on investor will look for a broker that does not charge inactivity fees. Interestingly, several brokers do not charge inactivity fees. These brokers include the following: Blackbull markets, IC Markets, Fxglory, XM, Blazemarkets, FBS, and more.

Why do I have to pay for swaps?

A swap, also known as a “rollover fee,” is charged when you keep a position open overnight. A swap is the interest rate differential between the two currencies of the pair you are trading. It is calculated according to whether your position is long or short. When trading on margin, you receive interest on the currency you are long and pay interest on the currency you are short. The difference between the interest rates of both currencies in a currency pair would determine whether you would be making a net interest payment or receiving interest.

Are there swap-free accounts?

There are swap-free accounts, which do not charge overnight rollover fees on clients. The swap-free accounts are specifically created for Muslim clients who cannot pay the interest due to religious beliefs.

Are there brokers that do not charge deposit and withdrawal fees?

While some brokers charge traders certain fees when they deposit and withdraw funds to and from their online trading accounts, there are many brokers who do not charge traders for deposits and withdrawals. However, the financial institution (in the case of bank wire transfers and credit/debit cards) or the online payment processor may charge for the transaction.

Why do brokers charge commissions?

Brokers charge trading commissions as a form of service fees for executing transactions or providing specialized services on behalf of clients. Commissions are one of the direct ways that brokers make money from their clients. While some charge commissions separately, others add them to the spreads.

Are there brokers that offer zero commission?

Some brokers operate on the zero-commission trading model, but many of them simply mark up their spreads by adding their commissions to the spreads. Some zero-commission brokers also use order flow arrangements with third-party liquidity providers where they would direct their customers’ orders to specific liquidity providers or market makers in exchange for a commission/fee based on volume. The revenues generated through order flow arrangements may be significant enough to operate the business around this model.

Is it preferable to trade with a zero-commission broker?

The obvious benefit of zero-commission brokers is the commission cost savings. Since these brokers cater to retail traders, their platforms can be simplified to onboard mainstream and beginner investors in a frictionless and non-intimidating manner. However, zero-commission brokers tend to have high spreads, so you end up incurring the costs from spreads.

Which type of account should you choose?

Zero-commission accounts are ideal for inexperienced new traders who want to keep things simple. With a zero-commission account, all the trading cost (aside from the swap) is in the spread, which makes it easier for the trader to evaluate their profits and losses.

What is the difference between a zero-commission account and a commission account?

Zero-commission accounts are accounts that do not charge commissions separately from the spread. All the trading costs are marked up in the spread. Many brokers offer this account type as the standard account for beginners because they make it easier for them to keep tabs on their P and L.

Commission-charged accounts are accounts that charge commissions separately from the spreads. Such accounts are often offered by brokers that use the ECN model of execution to route raw interbank spreads to the traders. This account type is suitable for experienced traders who know how to factor in the commission charges when evaluating their P and L.

Which brokers have low fees in general?

To know which broker has the lowest fees compared to the rest of the market, we assessed their per-trade commissions and real-time spreads, as well as other fees, such as deposit/withdrawal fees and inactivity fees.

As of writing these are brokers with the lowest fees

1. IC Markets — a $3.50 commission per 1.0 lots per side; no deposit/withdrawal fees; and no inactivity fee
2. Admiral Markets — a $3.80 commission per 1.0 lots per side; no deposit/withdrawal fees; a $10 per month inactivity fee
3. FP Markets — a $3.00 commission per lot per trade plus spread cost; no inactivity fees; and mostly no deposit/withdrawal fees, except for Neteller and Skrill methods
4. Blackbull Markets — a $3.00 commission per lot per trade plus spread cost; no deposit/withdrawal fees; and no inactivity fee
5. Blazemarkets — a $4 commission per lot per side; no deposit/withdrawal fees; and no inactivity fee
6. Tradeview Forex — a commission of $3.50 per lot per side; 35 USD bank wire fee and 1% to 1.5% withdrawal fee for Skrill and Neteller; and a $50 one-off fee per 6 months of inactivity
7. FBS — a $6 commission per lot; no deposit/withdrawal fees; and no inactivity fee
8. FxGlory — Only marked-up spread account; no deposit/withdrawal fees; and no inactivity fee

Comparing brokers by fees

Which broker has the lowest commission charges?

Among the brokers we reviewed, Blackbull Markets has the lowest commission charges — $3 per lot per side, but in terms of overall trading and non-trading costs, IC Markets has the lowest fees, with an average raw spread of 0.1 pips, a $3.5 commission per side, no deposit/withdrawal fees, and no inactivity fee.

Is there a broker that does not charge fees at all?

No, brokers are not charity organizations and, thus, do not offer not-for-profits services. They are in business to make money, and they achieve that through the fees they charge for their services. Whichever model a broker operates with, traders are charged some fees either directly or indirectly. Even the so-called zero-commission brokers charge higher spreads to accommodate their trading costs.