The following article will take a look at the advantages and disadvantages associated with fixed spreads. It will also detail the best brokers to rely on and some of the features that you should look for in such agencies. So, without further ado, here is what you need to know.
How Fixed Spreads Can Benefit You
Let’s first take a look at why fixed spreads are something you should consider when you register with a particular broker.
Now, as you are aware, the spread is the difference between the Asking and Bid price during a trade. The spread can be affected by a number of different factors including global events and information releases.
Such elements can result in volatility, which means that the price can jump rather quickly.
When such situations take place, you will often find that the spreads can widen rather significantly. Therefore, you may end up paying a bit more than you typically would.
As you can imagine, this ends up cutting into the profits you make, decreasing the overall amount. Fixed spreads, however, seek to minimize such losses.
As you can tell from the term, fixed spreads don’t change, regardless of the market situation.
This can come in useful for different kinds of traders. For instance, if you are new to trading, fixed spreads create a more stable trading environment for you. Such spreads are also helpful to traders involved in day trading or trading around major events.
Top Australian Brokers with the Lowest Fixed Spreads
Now that you have a better understanding of fixed spreads, it is time for the next step. Below, you will find the local brokers that will offer the best fixed spreads:
easyMarkets only offers fixed spreads. Here, though, the spreads do differ according to the account type, as well as the currency that you wish to trade with. As a result, you may find that the spreads range from around 1.8 pips to 4 pips. For the most part, the more VIP accounts tend to offer the lowest fixed spreads for traders. There are quite a few advantages to be appreciated with this particular broker. Not only is their customer service top-notch but their trading platforms are highly rated as well. All in all, it is a rather well-rounded broker and one that is ASIC regulated to boot.
AvaTrade is one of the better-known brokers and offers up fixed spreads as well. On average, the fixed spread for a currency pair is around 1.9 pips. Although this may not be the cheapest, there are several advantages working in AvaTrade’s favour.
To start with, this is an ASIC regulated broker, which makes it a more reliable option. There are also a number of different trading platforms to select from, including the very popular MetaTrader 4. The broker provides traders with enough resources to help with trading decisions as well.
eToro does provide traders with fixed spreads but they tend to be slightly higher than most other brokers. So, you may discover that these fixed spreads can be as high as 3 pips in some instances.
Despite this, quite a number of traders rely on this well-regarded broker.
This is largely to do with the fact that the interface and platforms are user-friendly and suitable for most types of traders.
To add to this, it also boasts some rather impressive social trading tools.
Read the eToro review.
Are Fixed Spreads Always Profitable?
The above points reveal that fixed spreads help to create a more normal trading situation, particularly for novice traders. At the same time, though, there is one downside associated with this type of spread.
This, of course, is the fact that under normal conditions, there may not be as many advantages to reap with fixed spreads.
Under regular trading situations, there is always the chance that market liquidity will be rather low. During these instances, traders that have opted for floating spreads will be able to enjoy much lower spreads than usual.
Nonetheless, if you have opted for fixed spreads, you will end up paying a fixed amount that may be higher than the spread currently being quoted in the market.
Tips for Selecting Australian Brokers with Fixed Spreads
While the brokers mentioned above are highly rated, you will discover that they are not the only options around. With such a selection to choose from, you may be wondering how to determine which brokers are your best options. Well, the following tips will come in handy when searching for such brokers:
- ASIC Regulated Brokers are Key: as you are aware, not all forex brokers are regulated by ASIC .Now, this doesn’t automatically mean that non-authorised brokers are fraudulent. Nevertheless, sticking with regulated brokers is often advised. For one thing, they are less likely to be engaged in scams. For another, should there be any fraudulent activity, you will have peace of mind knowing that there are proper security measures in place.
- Double Check Fixed Spreads: it is important to double check that a forex broker does, in fact, provide fixed spreads. What’s more, you should be aware of all the variations in fixed spreads in regards to account types and currency pairs.
- Understand Terms and Conditions: in many instances, there are terms and conditions associated with fixed spreads. For example, in some cases, you may find that the broker has the right to alter the fixed spreads temporarily. Therefore, it is important to be aware of when this can take place.
- Fixed Spreads aren’t the Only Factors: last but certainly not least, fixed spreads aren’t the most important element of a broker. Make sure that they are legitimate, easy to use, and offer suitable currency pairs before registering with them.
These are the top things you need to understand regarding Australian forex brokers who provide you with fixed spreads. As long as you keep these details in mind, you will be able to utilise the advantages associated with this type of spread.