Zero spread account is usually running in an STP and ECN environment, you will be able to get direct access to the market with faster order execution compared to standard accounts.
By using an account without spread, you know your entry and exit level beforehand. Since you know how much you are going to pay for other costs, you can calculate your profits and losses. In this way, every trade will be under your command.
In addition, as brokers are usually considered facilitators for this type of account; this gives you a free hand to put into effect all trading strategies. Think about it, the more deals you make, the more money the broker gets, everybody wins. Thus, if you are a day trader or a high-frequency scalper, Zero Spread Account is an ideal choice for you.
So, here’s the summary of the benefits that you will get:
• cheaper than trading with a fixed spread
• direct access to the Forex market
• real pricing and transparent costs
• available for all trading strategies
Disadvantages of Zero Spread Account
Since the broker’s main source of revenue, i.e., the spread, is gone, naturally they will have to find other ways to compensate for it. For example, by requesting a higher amount of capital, initial deposit, or a higher commission. Some Forex brokers charge a fixed commission in the amount of 5 - 20 USD for every standard lot traded on Zero accounts.
Other unfavorable conditions that you may encounter in a Zero Spread Account could be the absence of Negative Balance Protection and the possibility of slower execution speed for accounts that are offered in a non-automated trading environment.
So, here’s the summary of the disadvantages that you should know about:
• higher commission and initial deposit requirement
• slightly slower execution speed if not in an ECN enviroment or STP process
• possibility of no Negative Balance Protection
By using an account without spread, you know your entry and exit level beforehand. Since you know how much you are going to pay for other costs, you can calculate your profits and losses. In this way, every trade will be under your command.
In addition, as brokers are usually considered facilitators for this type of account; this gives you a free hand to put into effect all trading strategies. Think about it, the more deals you make, the more money the broker gets, everybody wins. Thus, if you are a day trader or a high-frequency scalper, Zero Spread Account is an ideal choice for you.
So, here’s the summary of the benefits that you will get:
• cheaper than trading with a fixed spread
• direct access to the Forex market
• real pricing and transparent costs
• available for all trading strategies
Disadvantages of Zero Spread Account
Since the broker’s main source of revenue, i.e., the spread, is gone, naturally they will have to find other ways to compensate for it. For example, by requesting a higher amount of capital, initial deposit, or a higher commission. Some Forex brokers charge a fixed commission in the amount of 5 - 20 USD for every standard lot traded on Zero accounts.
Other unfavorable conditions that you may encounter in a Zero Spread Account could be the absence of Negative Balance Protection and the possibility of slower execution speed for accounts that are offered in a non-automated trading environment.
So, here’s the summary of the disadvantages that you should know about:
• higher commission and initial deposit requirement
• slightly slower execution speed if not in an ECN enviroment or STP process
• possibility of no Negative Balance Protection
