Our exclusive Pepperstone review found both razor and standard account types have the same minimum deposit, customer service, trading platform and currency pairing but different Pepperstone spreads on all leveraged products of the fx broker.
1. Experienced high volume traders (Active Traders) 2. Traders utilising automated trading and scalping 3. Forex traders who value competent customer support
1. Beginner traders 2. Low volume traders 3. Forex traders who value competent customer support
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Pepperstone Razor vs Standard Account
As part of your research into Pepperstone Group limited it was noted there are two main account types. This is the Pepperstone Razor Vs Standard account. Both these foreign exchange account types offer the same features including the same:
Forex Trading Platform (MT4 and cTrader)
80+ Currency Pairings
CFD Leveraged Products
Leverage of 500 to 1
Fast Trade Execution (as low as 0.05 of a second)
The key difference is that each Pepperstone account type charge traders like yourself differently. Each of the Pepperstone online fx accounts use a different technology and charges differently. To help you choose the right account for your needs we explain the differences in technology and costs between each account. When you open a Pepperstone account you select your base currency. In the examples below apply AUD as our base currency. Our calculations will also assume you are using the MT4 platform (cTrader uses different calculation).
Pepperstone Standard Account – No Commission
In our comparison of Pepperstone spreads you will see the Pepperstone Standard Account has a wider spread when we compare with the Razor Account. In the table you will notice the Pepperstone spread difference between the two accounts is 1 PIP. This is added by Pepperstone to the raw market price is how Pepperstone make a profit for each online forex trade you make.
Pepperstone Standard Account Technology
Pepperstone use Straight through Processing (STP) to determine your spreads for the Standard Account. What this means is they send your buy and sell position to a liquidity fx broker and add 1 PIPS to the Pepperstone spreads set by the market. This might sound slightly like a Market Maker but it is quite different. While a traditional Market Maker fx broker sets their own buy and sell price and deal with their own liquidity, an STP online forex broker does not set their own buy or sell price or hold any liquidity but instead forwards your position to financial merchants who will buy or sell the online forex. There is no dealing desk intervention. Pepperstone then add the PIP to the price.
Benefits of Standard (no commission) Accounts
Adding a PIP to the spread and not applying commission charges fees is similar to service provider that provides a flat fee for their service. The cost is up front and transparent. You know what your costs will be with little calculations required on your part. No commission accounts are therefore more convenient to manage and thus, great for beginner traders.
Pepperstone Razor Account
A commission account like the Pepperstone’s Razor account on the other hand requires a bit more work to determine your final cost but the final cost is usually cheaper because the Pepperstone spreads are tighter and commission charged is low.
The Pepperstone Razor account offers tighter spreads because they use Electronic Communication Network (ECN) to determine the buy and sell price. ECN technology allows for the tightest spreads because Pepperstone does not interfere or manipulate the spread in any shape or form. Pepperstone spreads are set completely set by liquidity providers and Pepperstone do not add any PIPs to the spreads.
Understanding the role of lots.
When you trade forex online you trade with Lots. Lots represents the trading volume. There are three types of lots a micro lot is 1000 units, a mini lot is 10,000 units and a standard lot is 100,000 units. The table below shows the value of a selection of lots with Pepperstone. You will notice AUD USD is 10 USD for 1 Standard Lot.
Comparing calculations of Standard and Razor Account
For our examples we have taken the average spread for AUS USD from the Pepperstone website. AUS is the base currency and USD is the quote currency.
Calculating pepperstone commission with micro lots Standard vs Razor
Standard Trading with 0.01 lot (ie. 0.10 USD) with 1.27 pip value and no commission is 0.10 x 1.27 = 0.127 Razor Trading with 0.01 lot (ie. 0.10 USD) with 0.27 pipe value plus 0.07 commission is 0.10 x 0.27 = 0.027 + 0.07 = 0.097
0.03 cents for each standard lot can be saved using the Razor account.
Calculating Pepperstone commission with mini lots Standard vs Razor AUS USD
Standard Trading with 0.10 lot (ie. 1 USD) with 1.27 pip value and no commission is 1 x 1.27 = 1.27 Razor Trading with 0.10 lot (ie. 1 USD) with 0.27 pip value plus 0.70 commission is 1 x 0.27 = 0.27 + 0.70 = 0.97
0.30 cents for each standard lot can be saved using the Razor account.
Calculating Pepperstone commission with standard lots Standard vs Razor AUS USD
Standard Trading with 1 lot (ie. 10 USD) with 1.27 pip value and no commission is 10 x 1.27 = 12.70 Razor Trading with 1 lot (ie. 10 USD) with 0.27 pip value plus 0.70 commission is 10 x 0.27 = 2.7 + 7 = 9.7
$3 for each standard lot can be saved using the Razor account.
Observation and conclusion of the Pepperstone Razor vs Standard account.
Pepperstone ECN Razor account outperforms its Standard Account when it comes to trading costs regardless of the number of lots you trade with. This is why we recommend Pepperstone’s ECN account for most traders.
So if Razor is cheaper, why choose a standard account?
Our Pepperstone review found 3 reason why you might choose Standard over Razor:
Pepperstone currently applies $0.07 roundtrip commission for micro lots, $0.70 roundtrip for mini lots and $7 roundtrip commission for standard lot. If the lot commission was to increase in future then Standard Account might be more cost effective.
Pepperstone currently apply 1 pip to the spread on Standard accounts. This is very low but it is possible Pepperstone could reduce the pip amount added to the spread in future.
You are trading with micro lots. If you are a beginner trader then it is wise to trade with micro lots until you gain confidence in your forex trading. This is because the difference trading with micro lots between standard and razor account is minor then choosing to trade with micro lots can reduce the risks of losses while you learn how to master forex trading can be.
Removing the need to calculate commission when trading keeps things simple thus allowing you to focus on understanding you trading strategies.
Our Pepperstone review found it was one of the only forex brokers in Australia that offer a frequent flyer points promotion. This is based on 100,000 units traded with 10 points per lot. This is irrespective of the account balance.
CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.