Recently, brokers are increasingly began to meet the account with zero spread, where instead of spread commission on trading volume. In this account without a spread a bit different from the classic accounts, ECN, since in the latter case will be charged and the spread and commission, but unlike standard accounts spread is very narrow from 0 pips. Let us see in what cases brokers will be useful without a spread, and where better to trade in the classical way without commissions.
What’s more profitable — spread or commission?
When you open an order to buy or sell, the transaction immediately goes into the minus, that is, you will be charged the spread. But there are no account spread when instead of spread deducted from your commission. Many traders believe that the accounts with zero spread more profitable, but in fact it is not. In fact to have held the average fee, which can be compared with a fixed spread. If you wish to save on commissions, you need to look for a broker who offers accounts with a minimum commission, but in the long run you will not notice the difference between the spread and commission. If you’re trading a plus, you will not be afraid of no spreads or commissions. Here you need to put another question: «What is more convenient — the spread or commission?», Since, depending on trading style you may be more convenient to the account without a spread.
If you are a scalper
For scalpers accounts will be more comfortable without a spread. No need to wait until the price comes out of a minus, as a result you get a psychological advantage, which has a positive effect on the profitability of the strategy.
If you are important accurate inputs
There are strategies which are important inputs as accurate, especially when you trade pending orders. Sometimes, because of the spread occurs early triggering of a pending order (stop orders) or on the contrary the price does not reach a limit order and goes in the right direction, leaving you with no profit. In this case, you will be useful to the account without a spread, because they do not have to calculate anything, set a pending order and wait, when they will work.
If you trade with exotic currency pairs
On the exotic currency pairs spreads are much higher than in the main, while the size of the commission is the same for all trading tools, therefore more advantageous to use the account with zero spread. Usually, however, the account without a spread apply only to the major currency pairs, therefore, this recommendation does not always work.
If you are trading the major currency pairs
For major currency pairs all the way around — more profitable accounts with floating spread. If we take the most popular currency pair EURUSD, the Commission for it to be more than the spread.
Thus, if you are trading scalper or pending orders within the day, choose a broker without a spread, in other cases, you will be more profitable trade on the minimum spread accounts.