Fixed or Variable Spread: Which is Best For New Forex Traders?
I don't think there is a straightforward answer to this. It depends in my opinion. I would first assume that the broker is regulated in our discussion.
Then it depends.
a. which instrument are you actively trading?
For example, it is totally possible that the spreads at a variable spread broker may be lower for a particular instrument.
The broker I trade with has 0.3 pips fixed spread on EUR/USD (I mostly trade this only). So, it works for me. But their spreads for some exotic currency pair like USD/ZAR or index CFD like NAS100 may not be the lowest.
Also, with fixed spreads, there is a catch. See the next point.
b. what hours do you trade?
The fixed spreads depend on the trading hours. This may not be true for all brokers, but it is true for broker I trade with.
See the attached spreads table from their website. The 0.3 pips spreads on EURUSD are only from 7-22. That's the London session, and most of the NY session.
But if I want to trade before the Frankfurt open, even 5 minutes before, then I have to pay 0.6 pips. That is their spreads from 11PM to 7AM in the morning. All this is London time.
Take Exness for example, it is a variable spread broker. Their average during London session was 0.7 pips on EURUSD (with Pro Account). So, on that, I'm definitely reducing my trading cost by now paying 0.3 pips.
There are other factors as well. What I mean to say overall is there are lots of variable things to consider. There is no one shoe fits all.
Consider all the things & then decide which broker is good or bad for you, and are you paying too much in trading costs that you can save with another broker?
