Plus500 is one of the world’s largest CFD providers. Plus500 Ltd is listed on the AIM section of the London Stock Exchange. It has a market cap of just under $1.5 billion dollars. Our Plus500 trade review found there are one of the most recognised brands within the forex trading circle and have major sponsorships with football clubs such a Athletico de Madrid.
As below highlighted, they have over 70,000 active customers worldwide. The group operate across 50+ countries allowing individuals to trade CFDs and currency markets. Below shows the growth of their active customer base with strong growth recorded since 2012.
What sets Plus500 apart from other forex brokers is the plethora of financial products offered. While forex trading is the main market traded, our Plus500 review found they also offer:
- Share CFDs trading across 20 markets
- Indices CFDs trading
- Commodity and EFTs trading
- Option CFDs trading
Each of these financial products can be traded within the same trading platform as the forex trading tool making it easy to trade multiple services worldwide. Combined with this is international customer service that include live chat and e-mails which led to the high review score shown below.
Plus500 Trade Spreads
The strongest feature of Plus500 is that they don’t apply spreads to any of their financial products. When forex trading in Australia only spreads are applied and some fees for premium features such as guaranteed stops (explained later).
While the exact (or lowest) spreads are not published on their website or marketing material, to the right shows spread snap-shot from October 2016.
These spreads differ by time and markets as they are not fixed unlike EasyForex.
Other fees apply if you hold a position open for over an hour. The ‘Instrument Details’ shows the price of the associated funding required. This will be higher if a position is held over the weekend.
An additional $10USD is charged for inactive traders to offset the costs of providing the platform and service for Australian forex trading.
Plus500 leverage is one of the highest globally and was recently increased to 300:1. While many other Australian forex brokers exceed this level, when compared to forex brokers globally, this is in the top percentile.
What 300:1 means, is that if you for example have $200 deposited, you can trade up to $58,800 on currency markets. This means that a small fluctuation such as a 0.1% movement would lead to a $58.80 profit or loss. This may sound small but when you consider only $200 was deposited, it’s over a 25% figure. What this highlighted is the high risk that can be involved when forex trading so two elements should be considered to those new to currency trading that Plus500 offers.
Stop Loss Orders
A stop loss is quite standard across forex trading, index, commodity and stock markets trading. It allows traders to place instructions within the forex platform at what price a position should be closed. This can be set after a loss is reached (eg $200) or alternatively, when a profit target is achieved.
When the price is reached, a ‘market order’ trade is made. This aims to close out the position at the best price Plus500 can achieve in the market at that time. Volatile markets that move fast can make it difficult for an exact position to be achieved (called slippage). In some circumstances, slippage can lead to losses exceeding the stop loss order which should be factored into trades.
Guaranteed Stop Loss Orders
Based on the key negative of slippage above, a guaranteed stop order may be considered for those new to forex trading or with a low risk appetite. A guaranteed stop loss places an absolute limit on the risk. A trader can’t lose more that the amount specified. This removes the concept of slippage.
A guaranteed stop is not the default so it needs to be ticked by the trader when making a new trade. It should be noted once the trade goes active, it can’t be cancelled (on the values can be).
The key reason that traders don’t use guaranteed spreads often is that the spreads widen when adopting this option. Therefore, long-term, trading costs will be substantially higher if only trading using this feature. It’s therefore designed more for those new to forex trading or currency traders who are worried about how turbulent the market (or pairing) is at that time.
Latency Of Plus500
Slippage is often caused by the speed of the forex broker. A broker with poor latency can lead to delays in trades which in turbulent markets can cause traders not to achieve the price quoted. Plus500 has reasonable speed as shown below, helped by the substantial infrastructure of the worldwide forex broker.
Slippage is also impacted by the platform(s) offered. Plus500 only offers it’s own propriety platform which limits the options when forex trading. The upside of this platform is that you can trade all financial products offered by the broker including commodities and shares.
Another key strength of the Plus500 Forex trading platform is that it’s cross device. You can use your PC without the need for a download using the webtrader. There is a more advanced windows trader that can also be downloaded. Alternatively, there are apps for all mobile/tablet devices that can be downloaded for free.
Our Plus500 trade review found the forex broker is ideal to intermediate forex brokers. The company is one of the largest CFD providers worldwide, bringing with it the reputation and infrastructure you would expect from a global player. While not having a choice of forex platforms may be restrictive to advanced traders, for most Australian forex traders the standard platform will suit their needs. Additionally, having no spreads and the option of placing guaranteed stop loss orders help provide a good trading environment. Overall, Plus500 should be considered for most Australian forex traders and compared with other Australian forex trading firms such as EasyForex to make sure the broker is right for your needs.