Pepperstone Review (January 2021)

Pepperstone Spreads And Fees – Strength 1

Pepperstone offers three account types:

1. Standard account – No commission forex account (designed for beginner traders)
2. Islamic account – Swap-free account avoiding interest (designed for Islamic traders)
3. Razor account – Raw spreads account plus commission (designed for advanced traders)

Our 2021 analysis the leading ECN broker found the Pepperstone razor account has the lowest spreads. The razor account achieves this through straight-through processing (STP) of orders with no dealing desk. The account also has direct access to 60+ Exchanges, 400+ buy/sell firms and 150+ financial service providers to achieve tight spreads for traders.

Pepperstone Spread Comparison	AUD/USDEUR/JPYUSD/JPYUSD/CADEUR/USDAUD/JPYEUR/GBPGBP/USDUSD/SGD	AUD/USDEUR/JPYUSD/JPYUSD/CADEUR/USDAUD/JPYEUR/GBPGBP/USDUSD/SGD	AUD/USDEUR/JPYUSD/JPYUSD/CADEUR/USDAUD/JPYEUR/GBPGBP/USDUSD/SGD	AUD/USDEUR/JPYUSD/JPYUSD/CADEUR/USDAUD/JPYEUR/GBPGBP/USDUSD/SGD	AUD/USDEUR/JPYUSD/JPYUSD/CADEUR/USDAUD/JPYEUR/GBPGBP/USDUSD/SGD
	0.27	0.34	0.16	0.28	0.16
	0.20	0.30	0.20	0.50	0.10
	0.20	n/a	0.20	0.30	0.20
	0.42	0.30	0.20	0.83	0.44
	0.30	0.68	0.24	N/A	0.17
	0.40	0.70	0.30	0.70	0.20
	0.50	0.80	0.30	1.10	0.10
	0.50	0.50	0.30	0.60	0.30
	1.03	0.75	0.32	1.16	0.40

Data taken from broker website. Accurate as at 05/01/2021

The table above shows, the average spreads for brokers commission accounts, these spreads are updted each month.

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Price Improvement Technology

Another reason Pepperstone offers the lowest average spreads is through Price Improvement Technology. This works in volatile markets when large price movements occur with price improvement technology working in three steps. Firstly, the trader makes a forex or CFD trade through the forex platform. Secondly, the trade is executed and a more favourable price movement with is detected. Finally, the price improvement technology aims to fill the price at an improved level.

Razor ECN Broker Commissions

As Pepperstone acts as an ECN broker for Razor account traders a commission is charged based on volume. This commission is based on the forex trading platform chosen (discussed in the next section) and the base currency chosen.  The table below shows the commission charged for those who select MetaTrader 4.

As a benchmark, the commission rate of $3.50 AUD per lot is extremely competitive for Australian Dollar base currency accounts and £2.29 GBP per lot for British Pound base currency accounts. These rates can be further reduced due to the active trader program. This program offers rebates per fx lot starting at 10% when over 100 lots are traded over a three month period.

Conclusion On Trading Costs

ECN brokers have the lowest trading costs with no markup on spreads and straight-through processing. By combing the 2020 average spreads and commissions of the leading ECN accounts Pepperstone came out the best in this category.

Calculate Your Trading Costs Below

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There are no deposit or withdrawal fees from the primary funding methods with the Razor account. There are also standard fees for overnight rollovers and ongoing premium subscriptions.

Pepperstone Razor is the best low fee account for forex traders.

Traders can open a free Razor demo account or start trading after individual details are provided.

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Pepperstone Forex Trading Platforms – Strength 2

Pepperstone offers three trading platforms:

1. MetaTrader 4 – The most popular forex trading platform
2. Metatrader 5 – The most popular CFD trading platform
3. cTrader – Advanced platform with automation  + charting

1) MetaTrader 4

Pepperstone was awarded the best MT4 broker based on:

• The lowest spreads on major currency pairs including the AUD/USD, EUR/JPY and USD/CAD
• Competitive razor account commissions with further rebates through the active trader program
• The fastest execution speeds (explained below)
• 15 charting indicated and 16 smart trader tools to improve MT4 functionality

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Once an order is received within Pepperstone’s bridge most orders were executed within 30ms through the ASIC regulated Australian subsidiary called Pepperstone Group Limited. The FCA regulated United Kingdom subsidiary Pepperstone Limited reported 60ms speeds. In independent tests done through MT4 demo accounts verified these fast speeds with the market order execution speeds of 85ms.

2) MetaTrader 5

One of the main features of MetaTrader 5 (MT5) is the ability to trade share CFDs in addition to the instruments MT4 offers from currencies, commodities to cryptocurrencies. Below shows the main share CFDs offered and the margin through Pepperstone Group (pepperstone.com).

Commissions for MT5 are the same as MT4 except for those that choose USD as their base currency with a lower rate of USD $3.50 per lot. If you’re unsure which MetaTrader platform best suits you then view our exclusive MT4 vs MT5 guide.

MetaTrader Smart Trader Tools

Traders that choose MT4 or MT5 have the benefit of smart trader tools which is a package of 16 trading tools and 15 custom indicators.  The 10 most popular features include:

• Correlation Matrix that shows relationships between instruments
• Autochartist that highlights statistically significant market movements
• Alarm Manager alerts traders of key price changes or market events
• Sentiment Trader that shows the sentiment of past and live market data
• Connect Feature that delivers news, analysis and an economic calendar
• Excel RTD that pushes market data in real-time to excel
• Trade Simulator that for MT4 only allows testing of strategies
• Stealth Orders that allows pending orders to be hidden from the market
• Session Map that highlights which currency markets are open
• Mini Terminal allows you to hide MetaTrader but still see a market

In addition to Smart Trader tools there are further additions such as ZuluTrade, Autochartist, Mirror Trade and Myfxbook. This plethora of features led Pepperstone to win the ‘Platform Features’ category in the last Investment Trends based on actual forex traders.

3) cTrader Platform

cTrader is a favourite of expert CFD traders with

• Direct access to inter-bank market depth to implement algorithmic-based fx trading systems.
• An interface that can be personalised with pre-set & detachable charts.
• Extensive back-testing facilities

Commission costs on cTrader are determined by the currency pair you are trading, with fees equating to 0.0035% of the base currency. E.g. if you are trading 100,000 currency units of the EUR/USD, you will pay €3.50 per side.

The cTrader platform provides enhanced modification options within the interface combined with advanced order placing options. There is also Webtrader which doesn’t need to be downloaded. Webtrader is normally used as a back-up to the above forex trading platforms primarily for those who are using a computer that they don’t own. For more details view the cTrader Guide.

Pepperstone Trading Platform Conclusion

Traders benefit through the availability of the most popular forex platforms from MetaTrader 4, MetaTrader 5 and cTrader.

Pepperstone has the fastest speeds and best forex platform tools.

By offering the best trading environment and enhanced tools, the forex broker gives traders the best chance of executing their trading strategies successfully.

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Customer Support Levels – Strength 3

Pepperstone has award-winning customer support which is a key reason why in Australia they increased their market share by 3% in the retail CFD trading market. This has been in-part credited to their customer support. In fact, Pepperstone support levels were so high they won the Investment Trends overall client satisfaction award.

Key elements that have led to Pepperstone’s customer support winning these awards include there:

1) Personalised Customer Service

Pepperstone offers a customer service team that hold years of experience within the forex trading sector. As real traders, they can help educate and answer any forex trading enquiries beginner, intermediate or expert traders may have. In many cases, a dedicated account manager may also be assigned to a trader to gain a stronger understanding of the trader’s needs.

2) 24-Hour Support

Pepperstone support is always available when the forex markets are open thanks to their five offices which are located in Melbourne, Shanghai, Dallas, Bangkok and London. This also provides local options for those forex traders located outside of Australia.

3) Customer Support Channels

A key strength found in the review of Pepperstone was the ability to use live chat to get high-level support. Live chat is available 24 hours a day as is their phone customer support (with different national numbers for each office location). E-mail support is also available. There is also training held on-site and online with a wealth of trading guide to suit expert to beginner traders. This customer support led to Pepperstone winning the most recent Investment Trends “Overall Client Satisfaction” award comparing the survey results of actual CFD traders.

Pepperstone Broker Reviews Match Their Awards

Forex brokers review sites generally have provided positive Pepperstone reviews since their launch in 2010. Truspilot rate Pepperstone as Excellent with a score of 4.3 from 780 reviews (4.5 stars) as of January 2021. This score highlights the broker is strong when it comes to customer satisfaction and the services they offer.

The key forex broker reviews issues raised were in relation to ‘exotic pairings’ (pairing outside of the major currencies). There also were complaints around withdrawing money from accounts. Positive Pepperstone broker reviews related to how fast their VPS is (<5ms), fast deposits, easy to get an account offering a stable platform. Investment trends which also does an annual survey late each year also found the Australian forex broker was the best across several areas. These include customer service, value for money, platform reliability and execution speeds.

Pepperstone Customer Service Conclusion

Broker reputation has been the key to growth over the past decade.

Pepperstone has award-winning customer service and reviews.

With offices in London, Melbourne and other key locations around the world, they offer premium customer support 24 hours, five days a week.

Pepperstone Minimum Deposit

The minimum deposit of Pepperstone is $200. The broker actively doesn’t enforce this minimum deposit requirement but in the UK recommended a trading balance of £500.

You can view more about funding and account here.

Base currencies available include:

Dollars – USD, AUD, NZD, CAD, HKD, SGD, GBP, EUR, JPY, CHF

Traders should consider the base currency they are used to and the fact that commissions are based on the currency chosen.

Account Funding And Withdrawal Details

Pepperstone has no funding or withdrawal fees, unlike some brokers.  Only some intentional institutions may charge their own fees. Payment methods can vary by region and overall include:

• Visa – Instant credit card funding through Verified By Visa
• MasterCard – MasterCard SecureCode Debit Card.
• Paypal – No charges are applied from Paypal funding.
• Fastapay – Instant deposit method with no fees.
• China Union Pay – No fees or charges with funding at any time.
• Skrill (Moneybookers), Qiwi & Neteller
• POLi & BPay – Bank transfers can be made at any time from eligible bank accounts through POLi & BPay.
• Wire Transfer (Domestic & International) – Wire transfers are available but they can take time and fees may be charged.

Pepperstone Funding Conclusion

The main brokerage charged is collected by most brokers through spreads and commissions. Pepperstone avoids hidden trading costs such as funding fees. With easy funding methods and low overall broker fees Pepperstone is the best value broker overall.

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Range Of Markets

The largest retail foreign exchange brokers sell themselves as an ‘all-in-one trading solution’. This includes IG and CMC Markets who offer a range of markets including stockbroking. Pepperstone is only a specialist trading provider offering:

1) FX Trading

There are 59 currency pair available including the most popular currency including the United States Dollar. Other currencies include the Euro, Japanese Yen, Great Britain Pound (GBP) and the Australian Dollar. Over $1.5 trillion a day worldwide* is traded. The leverage on fx trading is 500:1 with low spreads and

2) CFD Trading Including Indices

CFD trading (Contract for Difference) also known as derivative trading allows traders to speculate on the movements of financial markets. Pepperstone offers several asset classes when CFD trading including 14 indices from the Australian 200 Index, EU Stocks 50 Index and US Tech 100 Index. CFDs are complex instruments recommended for advanced traders.

3) Commodity, Energy & Precious Metal Trading

Pepperstone offer 500:1 leverage on precious metals such as Gold, Silver, Platinum and Palladium. The same leverage levels are offered across both oil and gas markets. Soft commodity markets have a 50:1 leverage and include coffee, sugar, cocoa cotton and even orange juice.

4) Cryptocurrency Trading

There are four cryptocurrency options available for trading with 5:1 leverage through Pepperstone Australia.

Bitcoin + Bitcoin Cash

Pepperstone offers Bitcoin trading which remains the most popular cryptocurrency in 2021. In 2020 over a USD $186 billion market capitalisation exists. It’s no surprise that bitcoin trading remains the preferred option from traders.

Learn more about Bitcoin on this Australia site.

Ethereum

Another popular cryptocurrency option is Ethereum which is considered one of the most exciting bitcoin technologies. Smart contracts allow Ethereum to have multiple applications which allows it to service a plethora of industries.

View the official Ethereum Project site.

Dash

Dash also know as ‘Digital Cash’ focuses on a faster cryptocurrency option allowing for anonymity. Digital cash is used as an efficiency payment system across the globe and has experienced high volatility and liquidity compared to Bitcoin.

Learn more about Digital Cash at the Dash website.

Litecoin

Litecoin is a relatively late arrival and focused on using a simple algorithm to accelerate transaction times. The simpler algorithm since 2011 is what has led to Litecoin’s popularity and make it a real alternative to the mainstream cryptocurrency options.

View more about this on the P2P site.

US share CFDs (MT5 Only)

Pepperstone traders that select the MetaTrader 5 forex trading platform can trade US share CFDs. Over 60 US shares can be selected to be traded as a CFD with low commissions from USD$0.02 per share. Traders can go long or short on each individual share.

Pepperstone Risk Management Features

There are risks involved when trading CFDs as they are a complex instrument and leverage makes it so there is a high risk of losing money rapidly. Understanding these risks is critical and learning the tools that can help manage these risks. The secure client area also allows leverage to be adjusted after opening an account.

Pepperstone has limited tools including CFD risk management features available.

Currency Trading Orders Types

Pepperstone offers three order types of currency trading orders. This includes a limit order and a stop-loss order exits a trader after a price is reached. This can be set by price or the maximum a trader is looking to gain/lose in a trade. The final currency trading order is a trailing stop which moves with the market as the price fluctuates. The trailing stop activates only when a designated level is reached.

Pepperstone doesn’t offer guaranteed stop-loss orders. This is similar are the same as a ‘stop-loss’ order but the maximum loss is guaranteed at the designated level. A stop-loss order, on the other hand, can lead to losses exceeding the designated level is high volatile markets leading to slippage. While guaranteed stop-loss orders have increased fees, they can be an effective risk management tool for those with a low-risk appetite or new to currency trading.

Pepperstone also doesn’t offer negative balance protection. While they have tools that are designed to prevent a negative balance exiting a CFD trader before their losses exceed their deposit, this is not guaranteed. When risk is a concern it may be worth considering a CFD broker offering negative balance protection likeeasyMarkets.

Regulation Of Pepperstone

Pepperstone has three core licences worldwide.

1) Australian Securities and Investments Commission

Pepperstone Group Limited (trading as Pepperstone) is regulated by ASIC with the Australian Financial Services Licence 414530. The maximum leverage for retail traders are:

• 500:1 for forex and commodities
• 200:1 for index CFDs
• 20:1 for share CFDs
• 5:1 for cryptocurrency CFDs

View the forex broker Australia comparison table.

2) Financial Conduct Authority

Pepperstone Limited (trading as Pepperstone) is regulated in the UK through the FCA with licence number 684312. As the UK is currently considered part of Europe EMSA trading rules apply to limit forex maximum leverage for retail traders to:

• 30:1 for forex major pairs and commodities / 20:1 for forex minor pairs
• 5:1 for share CFDs
• 2:1 for cryptocurrency CFDs

View the forex broker UK comparison table.

3) Dubai Financial Services Authority

Pepperstone Financial Services Limited is regulated in Dubai with DIFC Registered Number 3460. This applies to the United Arab Emirates region.

View the forex broker Dubai comparison table.

4) Financial Sector Conduct Authority

Pepperstone Group Limited since 24/05/2018 has had their licence pending with the FSCA in South Africa. The FSP number is 49497 and it’s recommended to view the FSCA website to see if any updates have been made by the regulator for this licence. It should be noted that a key element for this licence is a local presence for South African traders.

5) Capital Markets Authority

Pepperstone Markets Kenya Limited in 2020 became established and regulated with the Capital Markets Authority (CMA) of Kenya. It holds CMA Licence No.128 with company number PVT-PJU7Q8K and was rated the best forex broker in Kenya.

6) BaFIN

Pepperstone GmbH is the local German entity of Pepperstone that is BAFIN regulated. 151148 is the licence number of the German regulation.

7) CySeC

The Cyprus regulated entity is Peppertone EU Limited. Founded in 2019, the entity received their CySec licence in 2020. The Cyprus Securities and Exchange Commission License number is 388/20

Pepperstone Details For UK Forex Traders

If you a trader in the United Kingdom then the trading conditions with Pepperstone will be much the same as for traders outside the United Kingdom however there are some differences and these are worth noting.

While the available Account types (Standard account, Razor account,  Swap-free account), spreads, trading execution and trading platforms (MetaTrader 4, 5 and cTrader) with Pepperstone will be the same, the following difference should be noted.

• Regulation – Traders in the United Kingdom will be regulated by FCA
• Software options – Pelican Social Trader
• Trading Products – Spread Betting

FCA regulations must be compliant with Markets in Financial Instruments Directive (MiFID) II guidelines set by European Securities and Markets Authority (ESMA) which means some regulatory requirements need to be followed not found elsewhere.  ESMA has a set of guidelines for retails traders and guidelines for professional traders.

Pepperstone United Kingdom Regulation and Business Details

• Pepperstone Limited Company Number 08965105 and regulated by the Financial Conduct Authority with the Registration Number 684312).

Pepperstone’s registered office location is: 70 Gracechurch Street, London EC3V 0HR, United Kingdom and can be contacted on +44 (800) 0465473 for support.

Retails And Professional Traders FCA Regulation

ESMA guidelines are aimed at protecting retail traders who may not have the knowledge to successfully trade with leveraged products and resources to manage losses which can be significant. Because of this ESMA and FCA restrict the leverage retails traders can trade with. Professional traders can apply to trade with more generous leverage provided they meet conditions set by FCA.

ESMA FCA requirements also mean Pepperstone offers greater risk management protection to retails traders, these are no available to professional traders. Protections come in 2 types

1. Negative Balance Protection – This means Pepperstone client balances can never go below zero (into negative)
2. 50% Margin Stop out – If your account margins fall below 50% then the broker must begin closing your position

In addition to risk management tools, FCA requires Pepperstone to offer a financial services compensation scheme (FSCS). Pepperstone offers up to £85,000. This scheme means Pepperstone clients will receive compensation from the FSCS in the even their broker is unable to pay a claim against it.

Professional Traders qualification

Provided 2 of the following 3 criteria is satisfied:

1. Have placed at least 10 trades of significant size for each quarter over the past 12 months
2. Manage a portfolio of  €500,000 of more
3. Work or have worked in a professional position in the financial sector for at least 1 year

As you have qualified as a professional trader, this means you understand the risks associated with high leverage so as per ESMA guidelines, Pepperstone will not offer negative balance protection to professional traders.

Professional traders will also receive the following benefits

• A relationship manager
• Rebates as part of the Active Trader Program
• Larger trade size execution
• Credit facilities

Software – Pelican Social Trading

Pepperstone cannot offer MyFxBook to its clients in the United Kindom due to FCA regulations, instead, the broker offers Pelican. Like MyfxBook, Pelican is a social trading app that allows you to source crowd knowledge when trading, traders can then trade directly within the platform.

Trading Products – Spread Betting

Spread betting is a popular alternative to CFD trading and is only available to Pepperstone traders in the United Kindom. As both CFD and Spread betting are leveraged products, they can be seen as similar however the main difference comes down to 2 key points

1. When spread betting you do not buy or sell contracts (as in CFDs)
2. When spread betting you are betting on the assets price moment. You can bet on the price direction and how much the price will move

As no ownership of the underlying instrument when spread betting, tax savings can be made as there is no capital gains tax on your profits.  Spread betting is a spread only product meaning there are no commissions.

Conclusion

Pepperstone is the best forex broker overall. Their top score of 9.17/10 is based on their low spreads, fastest execution speeds and tier 1 regulation with the FCA, ASIC and DFSA. Designed for expert forex traders, they offer the MetaTrader 4, MetaTrader 5 or cTrader forex trading platform.

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