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Low Spread Brokers in South Africa

As a retail trader of any financial market, you most likely need a broker to help you place your trades with a security exchange. A broker is simply a company that gives traders access to buy and sell all kinds of financial instruments ranging from forex, metals, cryptocurrencies, indices, stocks, and commodities. The broker is literally an intermediary between traders and a security exchange. Traders need an intermediary because to place an order with a securities exchange, one must be a member of that exchange or trade through members. So, if you choose not to use a broker you may need to become a member of a securities exchange for your trading orders to be processed. 


Brokers need to sustain their businesses with some sort of income, so they have trading costs every trader must pay. Spread is one of these trading costs. A spread is a cost the broker set as the difference between the buy and sell price of any financial instrument. To maximize trading profits, it makes a lot of sense to choose a low-spread broker. Also, if you are in South Africa or you are trading with a zar account, you want to ensure the broker you choose is regulated by The Financial Sector Conduct Authority (FSCA) which is responsible for overseeing the financial market in South Africa.


What is a low Spread Broker?


Definition

A low-spread broker is simply a financial intermediary that executes trades on a trader’s behalf and charges a very low spread for doing so, especially when compared to other brokers in the same region. The good news is that in South Africa, there are popular global brokers that are regulated by The Financial Sector Conduct Authority (FSCA), and many of these regulated brokers offer low spreads. Before we name and review low-spread South African brokers, it is important to note that there are two kinds of spread. These are fixed and floating spreads. A fixed spread is when the difference between a broker’s buy and sell prices for trading a financial instrument stays the same no matter the market volatility. While the floating spread is when the difference between a broker’s buy and sell prices varies depending on current market volatility. 


Every financial instrument has its own spread that is allocated by the broker. You should not expect the spread to be the same across all financial instruments. Reputable brokers are always very transparent with the spread you will be charged for trading any financial instrument and you can easily find the exact spread at any given time on your trading platform if you are attached to your chosen broker. Alternatively, you may find information on any financial instrument spread on a broker’s website. You should note that the spread stated on the website may not be the most updated version so it is best to check real-time market spreads on a trading platform like MT4, MT5, TradingView, or the broker’s customized trading platform. Let’s check out some popular brokers that are regulated in South Africa with low spreads for trading financial instruments.


Forex brokers in South Africa with Low Spreads

Exness

Regulation: FSCA, IFSC, FCA, CySEC

Spreads: as low as 0.3 pips

Max. leverage: 1:Unlimited, Forex pairs: 107

Min. deposit: 170 ZAR/10$


Exness is a popular broker that is regulated by The Financial Sector Conduct Authority (FSCA) in South Africa. This broker features very low spreads and commissions. South African traders have access to trade a wide range of forex pairs including 9 pairs with the South African Rand (ZAR). The minimum trading deposit for South African traders is only 170 ZAR.


Also, with Exness you have access to popular trading platforms like MT4 and MT5. Exness has both standard and professional accounts. The standard accounts have spread starting from 0.3 pips and there are no trading commission fees charged. On the other hand, Exness has 3 types of professional accounts namely raw, zero, and pro. The raw and zero accounts have spread starting from 0.0 pips (commission fee applies) while the pro account has spreads starting from 0.1 pips and no commisions.

CFD Service. Your capital is at risk.

XM.com

Regulation: FSC, CySEC, ASIC

Spreads: as low as 0.6 pips

Max. leverage: 1:1000, Forex pairs: 55

Min. deposit: 70 ZAR/5$

South African traders have access to trade with XM.com using the ZAR account. XM.com operates in South Africa via its entity that is licensed by FSC in Belize. XM.com is regulated in Australia by the Australian Securities and Investments Commission and in Cyprus by the Securities and Exchange Commission (CySEC).

XM.com allows South Africans to trade about 55 forex pairs including the USD/ZAR and EUR/ZAR. Stock traders have access to trade on about 1300 stocks from Europe and America. XM.com also allows traders to place buy and/or sell trades on Indices and commodities as CFDs. Spreads start from as low as 0.6 pips on majors. Also, as a trader, you have access to trade with industry-leading platforms like MT4 and MT5. In South Africa, the minimum deposit required to trade with XM.com is only 70 ZAR.

CFD Service. Your capital is at risk.

Plus500

Regulation: FSCA, CySEC, FCA, ASIC

Spreads: as low as 0.6 pips (Dynamic)

Max. leverage: 1:30, Forex pairs: 71

Min. deposit: 1 500 ZAR/100$


Plus500 is a global broker that also accepts South African clients and is duly regulated by FSCA to operate in South Africa. In South Africa, Plus500 gives access to trade over 2000 financial instruments as CFDs including forex, stocks, indices, commodities, cryptocurrencies, ETFs, and options. This broker has over 23 million users worldwide and allows South African traders to operate trading accounts using the South African Rand.

Apart from being a low-spread broker, Plus500 does not charge trading commissions. Also, Plus500 offers a competitive spread across all available financial instruments. You should note that the spreads are floating and this means the exact spread you will be charged for every trade will vary depending on current market volatility. Plus500 offers one of the lowest spreads in the industry from as low as 0.6 pips (floating spreads).

CFD Service. Your capital is at risk.

Benefits of Using Low-Spread Brokers in South Africa

What are the benefits of using forex brokers with ZAR accounts?

Reduction in trading costs

The main goal of all financial market traders regardless of their geographical location is to make as much profit as possible from their trading strategies. Since the spread is one of the main ways many brokers make money, traders find it important to only trade with low-spread brokers whenever possible. A low-spread broker will execute your buy or sell trades at a price very close to the real-time market price of that financial instrument.

It takes a lot of effort to learn and master the act of trading the financial markets and the hard work does not stop at this. There is the need to constantly monitor the markets in order to determine the perfect time to place a trade that fits your trading plan. With all of this hard labor, it is very important for traders to choose brokers with the lowest trading costs in order to maximize potential trading profits. High costs on top of high losses could quickly eat away the available capital.

Ability to accurately predict a reding strategy profit

Professional traders have the habit of backtesting and/or demo trading strategies before trading in the live markets. They do these in order to get an idea of how that trading strategy will probably perform in the future. After backtesting or during demo trading, these traders often compile trading data into a spreadsheet in order to determine profitability and max drawdown of a trading strategy over a large sample size.

During backtesting, it is difficult to include brokers' trading costs (like spread) when calculating profitability because backtesting is not real-time data. This is where is it important to use brokers with low trading costs as you can rest assured that the spread is negligible and has little impact on backtesting data, especially if you are placing trades on higher time frames.

Ability to explore strategies like scalping

Every professional trader has their own trading strategies that have proven to give profits over a large sample size. Scalping is a type of trading strategy wherein a trader holds a trade for a very short time (a few seconds or minutes) to catch small profits from the financial markets. Traders using the scalping strategy need to be very conscious of trading costs such as spreads, commissions, and swaps.

The spread a broker charges a scalper to open and close a trade that is only 5 pips is the same spread that is charged if the same trade is left open for days or weeks to reach hundreds of pips. If this pip movement is positive, hundreds of pip movements will undoubtedly result in more money than just 5 pip movements, but the spread cost will be the same in both cases.

This is why it is important for scalping traders to select brokers with extremely low spreads to avoid having the trading expenses of huge spreads cut into your profits. It is also important to note that not every broker supports scalping so make sure your broker does so.

FAQ - Low Spread Brokers

Which forex pair has the lowest spread?

The Euro against the United States dollar (EUR/USD) is the forex pair with the lowest spread. It is also the most traded currency pair among traders. The fact that the EUR/USD pair is so volatile is a plus. The news, politics, social media, and the economic calendar typically serve as triggers for the USD currency. The EUR currency also fits this description.

Which broker is best for trading in South Africa?

The need of every South African trader is different and there are a handful of great brokers in the region. Hence, it is difficult to pinpoint a single broker as the best for trading in South Africa. It is more practicable for us to state some of the best brokers in the region with their specific offerings. As a trader, you are expected to do your own research on brokers and choose the best fit for your unique situation. For instance, in addition to low spreads, you may want brokers with the lowest minimum deposit amount. In this case, Exness may be more suitable for you than Plus500.


Conclusion

South Africa is the most advanced financial market in Africa. This is largely due to the country’s well-defined regulatory framework that oversees operations in the region’s financial market. Therefore, many global brokers have established a strong presence in South Africa. Traders in South Africa are not different from traders across the globe. Hence, smart traders are always seeking low-spread brokers in order to avoid paying huge trading costs that cut into potential trading profits.

You should note that it is not enough to choose a broker in South Africa just because they offer low spreads. It is also important to check if the broker is regulated by the FSCA in South Africa. We have shown you some of the best brokers that are regulated in South Africa with very low spreads. As a word of caution, you should note that trading any financial instrument as CFDs has its risks and past success does not always guarantee future results. Despite the risk, trading financial instruments can be a rewarding investment provided you know your trading strategy and can manage risk well.