A great Forex broker with the best trading deals and services can help boost your trading endeavor by a lot. Having a low-spread Forex broker by your side can give you better maneuvering abilities in your trades.
The most important advantages of trading with low-spread Forex brokers are as follows:
👌 1. Reducing Costs
Forex traders aim to earn more profits and keep their funds secure by spending as little money as possible. A low-spread Forex broker will enable you to do just that. In this way, instead of worrying about the high costs of trading, you’d be able to focus on making more profits.
Trading with these brokers is beneficial, especially during volatile market hours when currency prices move a lot. For example, if the price of EUR/USD increased by 60 pips and you paid a large spread of 6 pips, then you would make a profit equal to 60 - 6 = 54 pips. Now, if you were trading with a Forex broker that offers spreads as low as say 2 pips, then you'd earn more profit given the 4 pips reduction in your transaction cost (60 - 2 = 58).
👌 2. Opening Multiple Positions at Once
Different traders have different trading styles. Some traders like to form one long and detailed strategy with a large set of stops for a single trading position, while others like to move quickly on many positions with smaller stop rates. If you prefer the latter method, then you need to work with brokers that offer lower spreads.
Working with Forex brokers with low spreads allows you to open many trading positions at the same time because there are no high transaction costs per position. In this way, you get to try out many different strategies to figure out which strategy is the right one for your trading needs.
Let’s say, you want to open 3 different positions in a trade with a 6-pip spread, in this case, the total cost of your trade will be 6 x 3 = 18 pips. If you can make the equivalent of 60 pips in profit on one position, then your total profit will be 3 x 50 = 150 - 18 = 132 pips.
Now if you had the same trading conditions at a low spread broker that charges a 2-pip spread, you would have saved 12 pips (150 - 6 = 144).
👌 3. Scalper Friendly
Many Forex traders are prone to Scalping to achieve more profits without wasting much time. Once again, this will be very easy if you choose a Forex broker with low spreads, as the lower costs will allow you to earn more profits.
In scalping strategy, traders focus on making small profits from many trading positions. These traders make many trading positions per day; therefore, they cannot afford to pay extra out of their small profits. Thus, Scalpers must find Forex brokers with the lowest possible spreads to maintain most of their profits.
