I was having a mull about spreads - as you do, what with the Holiday season looming like a mother-in-law with a violent moustache - and have been interwebbing looking for low spread brokers (not market makers - I mean brokers that don't actually trade against you).
The stand-out among them was excel markets (although doesn't operate in US), offering spreads around 0.4 on the EUR/USD - you don't see manyy regulated brokers offering that. And then I thought, "Or do you?" and started rooting around for a dynamic spreads comparison monitor.
myfxbook seems to be yards ahead of the competition on this one, which auto-calculates commission built-in. However, and having said that, it is Christmas so if any of you elves out there know of a comparable or better spreads comparison tool, shout out...
I don't trade FX but I've been researching it recently. One of the things that surprised me is everybody's fascination with bid/ask spreads and none of the other costs. Specifically the unseen cost there can be when trading Forex if you hold positions at all.
Last time I did this analysis the 6E Z/H futures roll was flat which is what you would expect given the interest rate parity. If you put this position on in Forex at Interactive Brokers though – somebody who advertises a lot about how great their bid/offers are, they are going to charge you a financing cost of 1.627% to buy USD-EUR and also a financing cost of 1.59% to sell it! (For positions less than $100k for large positions >$200M they still charge 0.59% and 0.62% respectively). Yes they charge you a financing cost whether you buy or sell it! Oanda on the other hand will charge you 0.325% to buy, and nothing to sell. On some of the more exotic currencies, the bid/offer on the carry charge at Interactive can be as much as 5% (Czech/Danish/Israeli etc). If your holding a position for days or even weeks, the difference in those financing costs far outweigh a tiny difference in bid/ask or commission.
The following 4 users say Thank You to SMCJB for this post: