Is Pepperstone An ECN Broker?

Pepperstone is a no dealing desk broker offering straight-through processing resulting in ECN broker spreads. An ECN stands for ‘Electronic Communication Network’ which is how liquidity providers and banks interconnect which makes Pepperstone technically not an ECN broker but its infrastructure allows for execution speeds and spreads to be equal to an ECN environment.

Pepperstone Raw ECN Spreads Razor Account


Our Rating

The overall rating is based on review by our experts

9.17
Spreads
10 / 10
Leverage
10 / 10
Trading Platform
10 / 10
Risk Management
7 / 10
Range of Markets
8 / 10
Customer Service
10 / 10

Pepperstone ECN Spreads

Below compares Pepperstone spreads to other leading ECN brokers. It shows average spreads (not spreads starting from) which is the most accurate way to compare brokerage. Across most currency pairs in 2020 Pepperstone has the lowest spreads as shown below.

Pepperstone Spread Comparison
0.27 0.34 0.16 0.35 0.16
0.20 0.30 0.20 0.50 0.10
0.20 0.30 0.10 0.30 0.10
0.20 0.50 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
0.94 0.54 0.28 1.05 0.32

Data taken from broker website. Accurate as at 01/10/2020

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Pepperstone’s ECN Account Was Ranked #1

While there are several other ECN Australia forex brokers, a survey of 13,000 investors and forex traders found Pepperstone to be the best one. This is compared to some of the largest forex and CFD providers including IG Markets, FXCM, and OANDA. They won due to key requirements such as execution speeds, platform reliability, customer service, prices achieved and ease of use. These are discussed further below.
Pepperstone Investment Trend Awards

1) Execution Speeds

Advanced forex trading requires on-the-spot pricing which minimal lag and fast execution speeds. To achieve this Pepperstone has partnered with the Equinix data centre (a publicly listed company). These servers are located worldwide including in New York and London near the largest forex liquidity pools. This reduces lag time by minimising distances.

Equinix ECN Forex Broker

As these servers are located overseas, there is still a requirement to get this data to Australia. To achieve this Pepperstone is interlinked through an optical fibre to these Equinix servers who IC Markets also uses. Compared to conventional internet, optical fibre maximise transfer speeds cutting latency across the network. This optical fibre is also connected to several other areas of the internet to ensure data is passed to the traders at maximum speeds.

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Pepperstone also allows the use of VPS (Virtual Private Servers) hosting. This can be a key requirement of algorithmic automated strategies.

2) Platform Reliability

Pepperstone Australian Forex PlatformsA forex broker must use a mainstream forex trading platform with proven performance over several years. It’s for this reason that Pepperstone didn’t create their platform, rather they adopted the two most popular platforms. These are MetaTrader 4 (MT4) and cTrader.

Both these platforms allow for expert advisors (automated) traders or manual trading straight from charts. As the chart on the right highlights the trading platform cTrader is not suitable for those who prefer a Mac over a PC. Many forex brokers like AxiTrader, easyMarkets, GO Markets, and Plus500 also don’t offer cTrader.

A few advanced features of cTrader include adjustable session times, detachable charting options, depth of market functionality and cloud-hosted profiles. MetaTrader 4 on the other hand key advanced is access for Pepperstone users of historical data, ideal for backtesting of algorithms/programs.

3) Prices Achieved

Pepperstone offers Pepperstone Price Improvement (PPI) technology to capitalise on improved prices if the market moves in your favour. The way it works it that in-built technology fills an order at the more favourable level when a higher (improved) price can be filled. The process is:

Step 1

The forex traders trades normally and places trade at market prices through either MT4 (MetaTrader 4) or cTraders forex platform.

Step 2

The market price moved in favour of the traders between the time the order is placed and the executed time.

Step 3

The PPI technology detects that a favourable movement in the price has occurred. When possible, the price is then filled not at the order price but the executed price. This is not a re-quote but rather an improved price only when the market moves in the favoured direction.

How To Get ECN Trading With Pepperstone?

There are two different account types for any Australian forex trader with Pepperstone:

  1. Standard
  2. Razor

The first option ‘Standard account’ offers a standard trading experience with Pepperstone quoting prices based on the market. Spreads are wider with this account to allow for an income stream for the Australian forex broker. The second option ‘Razor account’ was the basis for this ECN Pepperstone Review as this account offers a true ECN trading experience for forex traders through their very own Pepperstone account. This account offers access to Inter-Bank liquidity pools through third-party servers which are global leaders. This ensures fast, flexible, fast execution speeds in lots of 0.01. This the forex and CFD brokers traders choice with no dealing desk.

View the Pepperstone razor account vs standard account page to compare the two options offered by the broker.

The spreads for Razor traders are set by the market with a commission instead been the source of revenue for the Australian forex broker. cTrader commission is determined by the currency pairing rather than the base currency of the trader’s account. The rate for cTrader is 7 units of the first quoted currency. An example is AUDUSD which will cost AUD 7 in commissions. MT4, on the other hand, has flat commissions no matter what major currency pairing is traded.

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Understand The Risks Of Forex Trading

It’s critical to seek independent advice before forex trading. This is due to leverage amplifying profit or losses providing risk to your capital. Personal circumstances may align to your level of leverage which can be trialled through a demo account. Make sure the account is regulated by the Australian regulator (ASIC – Australian Securities and Investments Commission) and ensure you fully understand the information you’ve read, double-checking it with the individual broker’s website. This is because this page was last updated on the 14/01/2020 and broker information may change without notice.

About the author: Justin Grossbard

Justin Grossbard has been investing for the past 20 years and writing for the past 10. He co-founded Compare Forex Brokers in 2014 after working with the foreign exchange trading industry for several years. He also founded a number of FinTech and digital startups including Innovate Online and SMS Comparison. Justin holds a Masters Degree and an Honours in Commerce from Monash University. He and his wife Paula live in Melbourne, Australia with his son and Siberian cat. In his spare time, he watches Australian Rules Football and invests on global markets.