Pepperstone Execution Speeds
Pepperstone has the EDGE environment producing unparalleled execution acceleration through:
1) Equinix servers leading up to 12x in executions
2) Optical fibre connections leading to 10x latency reduction
3) One-Click MetaTrader 4 window to make fast placements
What Is The Pepperstone ECN Experience
Pepperstone has a standard account which is similar to most Australian forex brokers. What separates the broker is the additional Pepperstone ECN Razor account which has:
- Fast execution speeds through the ECN account
- Lower trading costs with spreads from 0.0 pips
- No dealing desk making trades directly with liquidity pools
- Risk management tools to assist forex trading
View the key points below from this review updated on the 14/01/2019.
Fast Execution Speeds With The Equinix Server Advantage
Pepperstone is one of the only Australian forex brokers to participate in the Financial eXchange of Equinix. This is the leading execution venue network with buy/sell firms and bank forex trading servers. These are located within data centres strategically located to key trading locations. Equinix servers ensure Pepperstone has direct access to exchange data to partners and customers in a low-latency network environment.
The Equinix NY4 Facility is central to the forex trading environment. It has over 400 buy/sell firms, 150 financial service providers, over 60 trading platforms and exchanges and just under 700 network bandwidth options. It’s also utilised by AxiTrader and IC Markets.
This technology is used on all Pepperstone accounts: Standard, Razor, Active Trader and Swap Free.
One-click Pepperstone ECN Forex Trading
For those that choose MetaTrader 4 (over cTrader) Pepperstone created a tool allowing a trade to be made with just one click. This fast trading account option was created when speed is critical for a volatile market. This was a key advantage found on our Pepperstone forex review along with the low spreads and price improvement technology.
Pepperstone ECN have produced a new tool that enables One Click Trading via MetaTrader 4. “One-Click Trading” was designed with the speed sensitive trader in mind. In today’s volatile financial markets, every second can count, and “One-Click Trading” can give you an EDGE in navigating them.
Cross-Connection Optical Fibre Connection
A key issue is the sheer distance Australian forex brokers have with liquidity pools in New York and London. Luckily, improved internet connections through the NBN has helped but still, Pepperstone has required additional speeds to minimise latency. To ensure this, the Australian forex broker is interlinked to Equinix New York facility directly through an optical fibre connection. This direct connection maximises transaction speeds and improved reliability critical for Australian forex traders.
Pepperstone ECN also offers Virtual Private Server (VPN) options to assist in automated algorithmic strategics. This is open all day, every day allowing expert advisors to access live and sample forex trading data.
Why Does Execution Speeds Matter?
This Pepperstone forex review focuses on the speed of execution but it’s a fair question to ask if this actually matters when forex trading. The simple answer is that delays in trading caused by speed information takes to travel or server speeds leads to slippage. This ‘slippage’ phenomenon means that the price quotes isn’t the actual price the forex broker receives. This still raises the ‘so what’ question as it can possibly lead to bigger losses than anticipated but also bigger profits. The answer to this is that slippage impacts stop loss orders which are designed to allow a forex broker to exit the market after certain losses are incurred. Losing more than planned impacts a forex traders confidence in the broker and trading in general.
What makes slippage more extreme is leverage. A key positive in our Pepperstone review is that the Australian forex broker offers one of the highest levels of 500:1. This means that for every $1 traded, Pepperstone ECN will match this by up to $500 in leverage. This amplifies market movements which are necessary as generally the market has small movements but also greatly increases the risks of forex trading. When trading at such high leverage levels and having extreme market turbulence can lead losses to far exceed stop loss orders when slippage occurs. This is why execution speeds are so critical.
Lower Spreads Through The Pepperstone ECN Account
An an ECN forex broker, the Pepperstone Razor account makes brokerage from commissions rather than spreads. Spreads are based on the market and to minimise them Pepperstone has in-depth liquidity pool access. This includes direct access to other financial institutions and the largest forex and cfd providers.
As shown above the commission which other forex and cfd brokers call brokerage is $3.50 per 100k. While other fx brokers have this commission as USD, the AUD price makes it considerably cheaper in 2019. This can be even lower if the forex trader is a high volume investor. Below shows the rebate for each lot which ranges from $1 to $3 per FX lot. This is paid back into the Pepperstone ECN account daily helping broker to re-invest into currency markets.
Risk Management Tools Available With The ECN Account
As outlined above, stop loss orders can help a broker pre-define the amount they are willing to lose but slippage means this isn’t guaranteed. Outside of selecting the fastest broker there are ways to manage risk.
1) Minimum Balance Protection
Some forex broker have automated risk management systems to exit a broker before they go into negative balance. Our Pepperstone review compared to IG Markets found they have this automatic stop-out system on both their MetaTrader 4 and cTrader platforms. This doesn’t guarantee though the forex trader that they won’t go into negative balance as this also depends on pricing and market liquidity. There are though some forex brokers that do guarantee traders won’t go into negative balance which for those that are risk adverse should be considered.
2) Guaranteed Stop Loss Orders
Some forex brokers such as Plus500 offer a different type of stop loss called a ‘guaranteed stop loss order’. These orders allow Australian forex traders to set the amount they are willing to lose on a single trade and know that no matter how turbulent the markets are, they wont lose more than this amount. The negative of this feature is often the spreads or commissions will be increased making them more logical for occasional more high risk trades than every trade.
3) Deal Cancellation
This is a relatively new feature only offered by easyMarkets, one of our recommended Australian forex brokers. It allows traders to exit a trade within 60 minutes of placing it when the market doesn’t move in their factor. This feature only is available for certain trades and must be enabled on the trade so it’s critical the traders knows this feature well.
Risk management tools can help protect funds but forex traders should seek independent advice and understand the risk to your capital. They should also ensure they choose an fx broker regulated by the Australian regulator (ASIC). Personal circumstances can also impact the risk appetite when trading which should also be factored when trading currency. information on this site should be reviewed prior to joining an fx broker for accuracy. It’s recommended to consider a demo account prior to opening a live trading account to understand risk. This can also provide an understanding of trading conditions and forex markets.
Conclusion On Pepperstone
Pepperstone has a strong risk management offering combine with fast execution speeds and low trading fees. The forex broker has also won several awards including customer service and offering the best trading experience. Based on this Pepperstone is recommended for intermediate to advanced forex traders. Find out more about the advantages of Pepperstone when compared to GO Markets here.