Pepperstone Is An ECN Forex Broker
Pepperstone offers a razor account providing ecn forex trading which means:
1) Direct access to inter-bank liquidity
2) Transparent forex trading costs
Using an ECN trading account is ideal for several types of forex traders including
- High volume traders
- Traders who utilise scalping
- Traders who utilise EA's
- Traders who require hedging
Pepperstone’s ECN Account Was Ranked #1
While there are several other ECN Australia forex brokers, a survey of 13,000 investors and forex traders in November 2016 found Pepperstone to be the best one. This was due to the feature that are required such as execution speeds, platform reliability, prices achieved and ease of use. These are discussed further below.
1) Execution Speeds
Advanced forex trading requires on-the-spot pricing which minimal lag and fast execution speeds. To achieve this Pepperstone has partnered with the equinix data centre (a publicly listed company). These servers are located worldwide including in New York and London near the largest forex liquidity pools. This reduces lag time by minimising distances.
As these servers are located overseas, there is still a requirement to get this data to Australia. To achieve this Pepperstone is interlinked through optical fibre to these Equinix severs. Compared to conventional internet, optical fibre maximise transfer speeds cutting latency across the network. This optical fibre is also connected to several other areas of the internet to ensure data is passed to the traders at maximum speeds.
Pepperstone also allows the use of VPS (Virtual Private Servers) hosting. This can be a key requirement of algorithmic automated strategies.
2) Platform Reliability
It’s critical for a forex broker to use a mainstream platform with a proven performance over several years. It’s for this reason that Pepperstone didn’t create their own platform, rather they adopted the two most popular platforms. These are MetaTrader 4 (MT4) and cTrader.
Both these platforms allow for expert advisors (automated) traders or for manual trading straight from charts. As the chart on the right highlights cTrader is not suitable for those who prefer a Mac over a PC.
A few advanced features of cTrader include adjustable session times, detachable charting options, depth of market functionality and cloud hosted profiles. MetaTrader 4 on the other hand key advanced is access for Pepperstone users of historical data, ideal for back testing of algorithms/programs.
3) Prices Achieved
Pepperstone offer Pepperstone Price Improvement (PPI) technology to capitalise on improved prices if the market moves in your favour. The way it works it that in-built technology fills an order at the more favourable level when a higher (improved) price can be filled. The process is:
The forex traders trades normally and places trades at market prices through either MT4 (MetaTraders 4) or cTraders forex platform.
The market price moved in the favour of the traders between the time the order is placed and the executed time.
The PPI technology detects that a favourable movement in the price has occurred. When possible, the price is then filled not at the order price but the executed price. This is not a re-quote but rather an improved price only when the market moves in the favoured direction.
How To Get ECN Trading With Pepperstone?
There are two account options for any Australian forex trader with Pepperstone:
The first option ‘Standard’ offers a standard trading experience with Pepperstone quoting prices based on the market. Spreads are wider with this account to allow for an income stream for the Australian forex broker.
The second option ‘Razor’ was the basis for this ECN Pepperstone Review as this account offers a true ECN trading experience for Australian forex traders. This account offers access to Inter-Bank liquidity pools through third party servers which are global leaders. This ensures fast, flexible, fast execution speeds in lots of 0.01.
The spreads for Razor traders are set by the market with a commission instead been the source of revenue for the Australian forex broker. cTrader commission is determined by the currency pairing rather than the base currency of the traders account. The rate for cTrader is 7 units of the first quoted currency. An example is AUDUSD which will cost $7 AUD in commissions. MT4 on the other hand has flat commissions no matter what major currency pairing is traded.