An October 2018 comparison compared Pepperstone and Plus500, two of the most popular forex brokers in Australia. View our free Pepperstone vs Plus500 comparison table below and comprehensive review of each fx broker.
When Compare Forex analysed Pepperstone vs Plus500 as best forex brokers in the category of spreads, it is apparent Plus500 spreads are much wider.
Spreads on 02/10/2018
Plus500 on 13/10/2018
In the table above, our data comes from the accounts that feature the best spreads. Plus500 only offers a single account and do not provide their average spreads therefore, we have taken a
spread sample at a point in time. Our sample should not be taken to be official.
Pepperstone Edge Account
Features of Pepperstone Edge Razor Account include a minimum, maximum trade size of 0.01 per 100 lots traded, a $3.50 commission (in AUD) for swap transactions on MT4 (per 100 lots traded). The Edge account also features a $200 minimum deposit, spreads starting at 0.0, 500:1 leverage, loads of currency pairs (64 at last count) and 50 deep pool liquidity providers. Scalping, hedging and Expert Advisors or EAs are also supported.
Pepperstone’s have another account option which further reduces spreads. This account is known as the ‘Active Trader’ program which allows high volume traders to receive larger discount to more they trade.
Pepperstone Active Traders Account
200 lots traded each month will result in $1.0 commission reduction.
500 lots traded each month will result in $1.50 commission reduction.
1500 lots traded each month will result in $2.0 commission reduction.
2,500 lots traded each month will result in $3.0 commission reduction.
Those trading more than 5000 lots in a month can negotiate a commission reduction agreement with a Pepperstone representative.
Why are Pepperstone spreads narrower?
Pepperstone are an Electronic Communication Network (ECN) broker. ECN broker use technology to link investors such as yourself directly with liquidity providers who provide the spreads. Pepperstone’s accounts with the tightest spreads are ‘True’ ECN which means Pepperstone have zero control of the spreads. As Pepperstone cannot manipulate the spreads they instead make their profit by charging commission or swap for each ‘lot’ traded.
When calculating fees, you will therefore want to check that the ‘round trip’ commission and the allowable trade lot size. Larger lot size means more value for each trade.
Plus500 Live/Pro Account
Plus500 only offers 1 type of Account with the following features:
Plus500 are a Market Maker
No minimum or maximum trade size in lots applies
No Commission charged
Minimum trading deposit of $100
Spreads from 0.01
Leverage of up to 300:1
Over 60 Currency Pairs to choose from and trade
Why are Plus500 spreads wider?
Plus500 is a market maker or dealing desk broker. In practice, this means that Plus500 set their own prices for which they will commit to buy and sell for each currency pair. Market makers hold security and use this to play the role of the other side of the trade. That is if you want to buy a currency pair, Plus500 will sell you the security they have. If you want to sell a forex pair, Plus500 will buy the security off you.
Spreads which are the difference between the buy and sell price of the currency pair are wider because the broker will add 1-5 pips (percentage in point) into the spread for their services. This is how a market maker such as Plus500 make their profit.
While Plus500 do not charge commission there do have other fees. These include:
Plus500 Premium Fee (also called an overnight fee) – A fee is charged by the broker if traders hold onto their position when markets are closed.
Plus500 Inactivity Fee – Account that have no activity over 3 months will incur $10USD fee
Guaranteed Stop Order – We delve more into this lower down. If Guaranteed Stop Orders are used it generally means a wider spread
Trading Spreads and Fees Conclusion
When deciding between each account you will need to consider between 2 basic features these are
Spreads – Generally, high volume traders will benefit greater from tighter spreads combined with larger lot size despite the commissions. You will need to do the numbers but wider spreads and lower lots size may end up with greater cost saving.
Features – If you plan to use features such as scalping, hedging and EAs then you will want to consider Pepperstone as Plus500 don’t allow these.
From our perspective we consider Pepperstone offer better value as being an ECN trader means their costs are more transparent.
In our review of the available trading platforms each broker offers different trading platforms with different features.
Pepperstone Trading Platform
MetaTrader 4 offered by Pepperstone is our favourite forex trading platform. MT4 is the world’s most popular forex trading platform and includes features such as:
Easy to use interface
One-click trading for prompt order management.
Expert Traders (EAs) which is algorithmic automated trading. (Plus500s does not allow this).
MT4 is available with many brokers which means you change to other brokers that use mt4 easily.
Pepperstone MT4 Add-On
Smart Trader Tools is Pepperstone own an add-on enhancement tool for MT4. There are some 13 features that can lead better and more successful trading.
Alarm Manager – Alerts via SMS, email, web popup, sound alerts and twitter of activities. Can open, close and place pending order.
Connect – a centralised portal that provides relevant news and technical analysis to help with investment decisions
Correlation Matrix – allows for analysis of the correlation between your chosen instruments.
Correlation Trader – allows for easy comparison of market charts and direct trading from the tool.
Excel RTD – Puts account, ticket and price data into Excel spreadsheet with basic formulas. Trading commands can be sent from Excel if you have programming skills.
Market Manager – Watch lists and account and order activity can be controlled from a separate convenient window.
Sentiment Trader – this tool allows you to general sentiment of other traders regarding your chosen instruments.
Stealth Orders – Allows you to hide your pending orders and set entry and exit positions from the market.
Indicators – SO traders can see potential profit and loss results based on historically proven strategies.
Session Map – Provides a quick overview of the world’s major markets and their time zone.
Trade Terminal – provides an alternative view of your MT4 window with different analysis features. Can assist with faster and more precise trading.
Tick Chart Trader – tick display of instrument performance to help with lead to faster decision maker and therefore enhance the benefit of the one click trading feature.
Mini Terminal – An extension of the Trade Terminal for those that want a terminal for each market.
The Plus500 Forex Trading Platforms
Plus500 have their own custom proprietary trading platform and do not offer MT4. In our review of the ‘Plus500 Trading Platform” we found the platform to be a very user friendly and intuitive platform thanks to clutter-free with minimal button interface.
Available for desktops, browser, mobile and tablets the ‘Plus500 Trader Platform’ is not feature rich but still manages to make you feel that you have the tools you will need at your disposal when needed. From the main window you can see 4 sections each with a different purpose. The key feature that you can see a range of CFDs along with open positions, pending orders and quotes and price movements without needing to open different windows. Given Plus500 offer around 2000 trading instruments which can be overwhelming this simplicity is very useful. The main windows also contain charts which can show graphical representations of price movements.
One big plus is the platform is integrated with the trading section on the brokers website. This means you can trade without installing the platform once you have signed up. There are however a few limitations with the platform. No scalping or EAs are allowed and it does not have a social trading feature. With simplicity comes a lack of advanced features that can help with trade management, decision making and execution.
Plus500 Trading Platform in our opinion is great for beginners or for those looking to trade with a wide variety of CFDs. The platform however is ideal if you are looking to use EAs and advanced tools.
Forex Trading Platforms Conclusion
We believe MT4 provides is a proven platform for by both beginner and advanced users. The Smart Trader Tools offered by Pepperstone allow users a wealth of trading tools you can use EAs, hedging and scalping which are not available or allowed with Plus500, therefore we are recommending Pepperstone when it comes to platforms.
Pepperstone vs Plus500 Execution Speeds and Risk Management
In our review of execution speeds, we found that Pepperstone offer excellent execution speed while Plus500 don’t publicise their execution speeds. Instead Plus500 offer a range of risk management tools which may help manage the risks of slippage.
Pepperstone Execution Technology
Pepperstone are very active about promoting the quality of their execution technology and execution speeds on their website. The broker claims an average execution speed of <50ms and maximum speed of 240ms. This infrastructure helps ensure risks associated with ‘slippage’ are minimised. This exceptional speed is achieved via the following methods
Dedicated Fibre Optic Cable – Dedicated cables means less data congestion. Fibre Optic is currently the fastest available technology for transmitting data.
Equinix Servers near liquidity centres – Pepperstone use servers in data centres near the New York financial centres. This strategy means there less distance for data to travel when you execute an order.
VPS Partnerships – For traders needing 24/7 up-time and extra fast latency and speed Pepperstone have partnered with New York City VPS servers. A promotional code is available that for a 20% discount.
Lag time resulting in ‘slippage’ can potentially be costly. Pepperstone therefore promise extremely fast execution speeds. This means the price the client opens their trade should be the final price. Despite the low risk, Pepperstone does not give any guarantees slippage won’t occur. This means your account can still go into negative.
Plus500 and Risk Management
Plus500 are a market maker so the quoted buy and sell price at time of execution should occur. Slippage however may still occur if the broker does not hold enough liquidity at time of order. If this happens then your position will go to the next available order. Slippage can also occur if the market is very volatile and the brokers quotes are not up to date when you place your order. Plus500 therefore offer a range of risk management too
ls that can help manage your profits and losses.
Risk Management tools on offer
Pending Order – Available with both Pepperstone and Plus500. A close at Profit [Limit] / Close at Loss [Stop Loss] is an instruction to buy or sell when defined preconditions are met. When your set level of profit or loss is hit then the broker will seek to buy or sell your position. Pending orders however do not protect you from ‘Slippage’ as the broker may not have the liquidity to buy or find a buyer to sell before a price movement occurs.
Guaranteed Stop/Loss – You can pre-set absolute limit on your trading position to protect yourself against potential losses. If price movement is unfavourable, your position will automatically be closed at price limit regardless if slippage occur. You must select Guaranteed Stop Order when opening you position and a certain amount of pips will be added to the spread to cover the brokers risks. This is not offered by Pepperstone.
Trailing Stop – This helps you can lock in a certain amount of profit or protect a certain amount of loss when you place a pending order. Your position will remain open unless price has moved a certain percentage away from its current market price. Neither Plus500 or Pepperstone provide a guarantee so you are still vulnerable to ‘slippage.
Negative Balance Protection – This helps protect your funds from going into debt. Should your account balance fall below a certain level of leverage margin’ then a Plus500 will make a ‘Margin Call for you to add funds to your account. If you don’t then they close your position. Your account can still be at risks if you don’t increase the balance as slippage may still occur. Pepperstone also offer this feature.
Pepperstone vs Plus500 Execution Conclusion
“Slippage” can result in large difference between your expected profit/loss and your actual profit or loss. While Plus500 provide a range of risk management tools there is a lack of transparency in the liquidity they hold and their methods for obtaining quotes. For this reason, we prefer the tight spreads and fast execution offered by Pepperstone when managing slippage.
Leverage offered by Pepperstone is 500:1 while Plus500 offers 300:1. Unless the forex market is very volatile, changes in currency pairs tends to be minimal, it is for this reason, traders may like high leverage as higher leverage can mean greater profits for minor forex changes. On the flip side, it can just as easily mean more dramatic losses.
Pepperstone vs Plus500 Leverage Conclusion
Many regulators around the world (such as in America) are starting to reduce available leverage. Experienced traders also don’t tend to use large leverage. While using large leverage does come down to individual preference and risk tolerance we recommend Plus500 because it does not allow excessive leverage. You don’t have to use the maximum available leverage however, you are free to reduce the leverage lower if you wish.
Pepperstone vs Plus500 Other CFDS (e.g. Cryptocurrencies)
Plus500 offer one of the most diverse range of CFDs among all foreign exchange brokers in the markets. Unique offerings extend to soft commodities such as lean hogs, live cattle and feeder cattle. Instruments we have no seen available with other brokers. The also offer several cryptocurrencies which other brokers have no got around to offering yet. This includes NEO, Monero and IOTA and EOS. Shares, Options and ETF round out their trading suite which are also not necessarily available with other brokers.
The diverse range of instruments is why Plus500 have specifically designed their platform so users can take advantage of all these instruments without being overwhelmed with data.
Pepperstone offer a selected range of CFDs but they don’t aim to be an all-in-one service provider. The basic range of indices, metals etc is on offer. Their range of Cryptocurrency is quite broad but even this pales when compared with Plus500.
Pepperstone vs Plus500 CFDs Conclusion
Plus500 when compared with Pepperstone offer far larger range of CFDs. If you are looking for a broker that offers a great range of different trading options then we recommend Plus500.
Pepperstone vs Plus500 Customer Service
In our review we found Pepperstone offer superior Customer Service when we compare with Plus500. Pepperstone customer service has won numerous awards by CFD industry, a reflection of the excellent service they offer.
Plus500 got the thumbs up from us because their live chat available 24 hours a day for all 7 days of the week Pepperstone only offer this service during business hours Monday to Friday. We however felt that Pepperstone Customer Service was superior in all other ways. For example, Pepperstone offer phone and email support in a range of different countries. Plus500 on the other hand do not offer phone support at all. We found it surprising Plus500 do not offer phone support given this type of service is a basic expectation from clients.
Another example is Pepperstone provide email contact of all the individual departments you might want to address question to. Plus500 integrate their email system directly into their web portal so we don’t actually know who we are addressing our questions to.
Unlike phone and email support, live chat is available with both brokers. We put the live chat feature of each broker to the test and found Pepperstone were able to answer all some complex questions in a timely manner and professional manner. Plus500 however struggled with some of our technical questions and the waiting time seemed to be longer.
When it comes to education tools, Pepperstone have large library of educational tools including glossary of trading terms, webinars, trading guides and FAQ. Plus500 did not seem to offer any education of note.
Both brokers offer a demo account that are free to use for an unlimited time. This can be an invaluable tool for learning forex trading until you gain the confidence and experience needed for successful trading.
Pepperstone vs Plus500 Customer Service Conclusion
We believe the customer service of Pepperstone is among the best on offer in the industry. We therefore recommend them over Plus500.
Pepperstone vs Plus500 Joining Bonus
Both Pepperstone and Plus500 offer a program that gives you bonuses for signing up with them. Depending on your need, the bonus may add some value to your account.
Pepperstone joining bonus
When signing up with Pepperstone and making a deposit for the first time, for every $1 deposited clients will be rewarded 10 Qantas frequent flyer points. The more you despost the more point you will get, up till you reach 10,000 points.
Plus500 joining bonus
Plus500 has first deposit bonus program which rewards you with extra funds to trade with. The more amount of funds you make on your first deposit, the more funds Plus500 will reward you with. To earn the bonus, you will need to achieve a minimum number of trades. Please see screenshot for summary of each bonus level.
Pepperstone vs Plus500 Conclusion – Joining Bonus
Unless you have a need for Qantas frequent flyer point your more likely to receive more value with the Plus500 joining bonus. This is because you will receive extra funds to trade with that can result in extra winning.
Pepperstone vs Plus500 Deposits and Withdrawals
Funding with Pepperstone
Pepperstone do not charge fees for their funding services. If you make you withdrawal before 7am AEST in the morning then you can receive you funds on the same day. After this time and you can receive you funds a day later. Your account must be in your name and linked with your Pepperstone account. If you are using bank wire, your fund can take 3-5 working days to show in your account.
Funding with Plus500
Deposit and Withdrawal does incur fees from Plus500 however your payment merchant may charge fees.
Plus500 advise you can expect fee for the following situations:
Overseas credit cards
Withdrawals generally take about 3-7 days to process but this will vary depending on the method you have used for payment.
Pepperstone vs Plus500 Deposits and Withdrawals Conclusion
Ultimately, you’ll need to decide who you prefer to use as your payment issuer and investigate what charges with issuer has from their end. Pepperstone offer zippy deposits and withdrawals. Plus500 however offer some funding methods not available with Pepperstone.
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.