Pepperstone Is The Best ECN Forex Broker
On the 02/01/2019 a comparison of the best Australian ECN Forex Brokers found Pepperstone was the best forex broker in Australia based on the following services/features:
- 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
Pepperstone’s Trade Execution Fastest in Australia
Pepperstone is the best forex broker in Australia when it comes to trade execution speeds. The broker boasts exceptional ECN trading speeds thanks to two key features:
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.
Pepperstone Offers 3 Main ECN Platforms
One of the things that makes Pepperstone perhaps the best forex broker in Australia is the broad choice of platform they provide for customers. Below we review the 3 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.
3) Razor Account
This proprietary platform offered by Pepperstone provides customers with direct access to the deepest liquidity pools combined with completely transparent trading fees. The cutting edge software lets traders close trades and super fast speeds thanks to advanced infrastructure. Spreads start at just 0.0 and are accessed directly from the interbank markets. In order to access these low bid/ask prices, customers are required to pay $3.50 (AUD) commission for every 100k traded. In terms of leverage, traders can access up to 500:1 on the Razor platform. Scalping, EAs and Hedging are all supported on the Razor platform.
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.
Until recently, Pepperstone stood out from other ECN forex brokers who offered high leverage because they offered negative balance protection. This was an automated margin stop system that worked to prevent Pepperstone clients from falling into negative balance. If though, in extreme volatility a client’s account still fell into negative, Pepperstone would fund the account back to zero. What this effectively meant was that trading with Pepperstone reduced traders risks. Everyone has heard of traders (particularly beginners) losing far more than their deposit in periods of extreme fluctuations. This featured stopped that from occurring. Unfortunately however, Pepperstone discontinued this feature in 2017 as have many other brokers.
Pepperstone’s Analysed Spreads
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 2019. 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.
Ways To Fund Your Pepperstone Account
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 all forex brokers due to the high merchant fees they charge the companies.
What is an ECN Forex Broker?
ECN stands for ‘Electronic Communication Networks’ and in simplistic terms it allows forex trading direct access to deep liquidity pools on the interbank market. This means that similar to the stock market you can execute trades directly with other participants in 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?
Electronic Communications Networks or ECNs essentially help 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.
What is straight through processing or STP?
Straight through processing or STP is another name that describes an ECN broker. Brokers that offer STP on their platforms, place client orders directly with liquidity providers such as banks or institutional brokers without them passing through a dealing desk. Not only does this promote faster trade execution speeds, STPs also allow for greater market depth and transparency. The same bid/ask prices (spreads) are passed onto the client but STP brokers are usually compensated for offering this service via a small fee/commission.
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.
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. Another review of Pepperstone exists in the Australia section. 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.