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Pepperstone Is The Best ECN Forex Broker
On the 05/01/2017 a comparison of the best Australian ECN Forex Brokers found Pepperstone provided the best value based on the broker offering:
- The fastest execution speeds of any ECN Forex Broker
- The leading platforms including MetaTrader 4 ECN & cTrader
- A raw ECN network ensuring accurate pricing and speedy settlement
- Low spreads starting at 0.1 Pips
How Does Pepperstone Achieve the Fastest ECN Trading Speeds?
1) A direct optical fibre connection to trading servers
The sheer distance between Australia liquidity hubs can be a disadvantage for Australian traders.
Pepperstone offset this through a direct optic fibre connection from Sydney to New York.
The end result is a reduction in up to 10x times latency for Australian traders.
2) Usage Of Equinix Servers
Just having a fast connection isn’t enough if the server has a poor response rate.
To overcome this, Pepperstone partnered with Equinix that have servers near Wall Street.
Equinix houses over 60 exchanges and over 400 sell and buy side firms.
Not only do currency exchange firms use these servers but also banks which Pepperstone can directly exchange data with.
What Are Pepperstone’s ECN Forex Platforms?
Pepperstone offers the two most popular platforms.
This is the worlds most popular ECN forex platform due to the easy to use interface.
This interface also offers enhanced charting to track detailed market fluctuations.
MetaTrader also offers an expert order management tool providing control to traders.
The platform uses MQL language for developers and Expert Advisors for automated strategies.
cTrader was created by forex traders with the focus of creating a user friendly platform.
Features include detachable charts, pre-set charting options and an easy order system.
By using cTrader Pepperstone can access liquidity from Goldman Sacks and other institutions.
By accessing tier on liquidity providers low spread can be achieve on most currency pairings.
There is also the ability to conduct automated trader and a back-testing facility for strategies.
What Is The Maximum Leverage Offered By Pepperstone?
Pepperstone offers 500:1 spreads which is high considering it’s one of the elite ECN forex brokers. It is even higher than several others as shown in the comparison table below.
500:1 is extremely high both by local and international standards and means that you can effectively trade 500 times your deposit. This means that a $100 deposit will allow up to $500,000 on currency markets maximising both profit potential and the associated risks. An example is a movement in currency of 0.02% which is relatively modest would almost leave a trader to either double their money or lose the whole amount.
Pepperstone though are different from all the other ECN forex brokers who offer high leverage because they have negative balance protection. This is an automated margin stop system that works to prevent Pepperstone clients from falling into negative balance. If though in extreme volatility a client’s account still falls into negative Pepperstone funds the account back to zero. This effectively means trading with Pepperstone reduced traders risks with many in the industry hearing stories of beginner traders losing far more than their deposit in periods of extreme fluctuations.
What Spreads Does Pepperstone Offer?
Pepperstone is one of Australia’s fastest growing companies not only based on their execution fees but also their spreads which start from 0.1 pips.
Below shows Pepperstone spreads as of January 2017. As the table highlights, many major currency pairings start at 0.0 and average at approx 0.5 for Razor accounts which also has additional minor trading commissions. The standard account on the other hand has no commission but spreads are higher.
Accounts can be funded through a variety of payment methods including credit cards, bank transfers and bPay. In fact, all major payment portals are offered by Pepperstone with the exception of paypal which isn’t offered by most forex brokers due to the high merchant fees they charge the companies.
Australian Business & Company Number
Pepperstone is regulated in Australia and is audited by Ernst & Young. This means they must meet strict guidelines such as training standards and the requirements for customers deposits to be segregated in a separate account.
ECN stands for ‘Electronic Communication Networks’ and in simplistic terms it allows forex trading direct to liquidity pools. This means that similar to the stock market you can make trades directly with other participants within the market with the ability to see buy/sell orders (or in currency markets bid/ask spreads).
ECN Forex brokers essentially match trades between individuals and can’t make trades against their own clients. This provides peace of mind for some forex traders as they may be worried that the broker may trade against them which has occurred in the past by poorly regulated and run brokers.
The opposite of an ECN is a ‘market maker’ forex broker. These brokers can make both ask and bid prices which they can take from their customers. This means that the forex broker will take the opposite position to their traders positions and must buy/sell from you when trades are made. These brokers often have higher spreads but may offer some enhanced features such as ‘guaranteed stops’ which may make them more suitable for beginner traders.
How Does an ECN Help?
An Electronic Communications Network or ECN essentially helps speed up the settlement of trades between brokerage houses and individual traders. With an ECN, no 3rd party or middle man exists. This helps to reduce settlement costs as there is one less party involved in a trade that needs to get paid.
An ECN also helps by allowing traders in a range of geographical locations right around the world to access markets no matter where they are. It also allows them to trade quickly and seamlessly.
About This Best Forex Broker Comparison
Compare forex brokers was created by Australians who have worked with the forex industry over several years. The aim of their comparison tables has been to simplify the process of comparing brokers to find the best forex broker for individual Australian forex trader’s needs. The tables were made based on information from providers websites and review websites with no automation used to compile information on the tables or reviews.