Pepperstone vs IG Comparison

Forex Trading Spreads and Fees Pepperstone vs IG Markets

(average spreads data has been taken from each broker’s respective website)

Looking at the spreads for each forex broker, we can see Pepperstone Standard account has the widest spreads and Pepperstone Razor has the narrowest spreads. Spreads of IG (formerly IG Markets) spreads are somewhere in between the Pepperstone’s accounts.

Pepperstone offers 80+ currency pairs including all the majors such as EUR/USD, USD/JPY and GBP/USD. Along with a wide selection of minors and exotics such as AUD?USD, EUR/GBP and EUR/JPY.

IG offers 90 Forex pairs.

Why are spreads so different for each account?

The differences in spreads are because of the different trading execution technologies in use by each brokers trading account.

Forex Trading Account Types

Pepperstone Razor Account

This account has the lowest spreads among Pepperstone and IG accounts as it uses electronic communication network (ECN) style execution. The spreads you see here are set by the market without manipulation from dealing desks. When using MT4 and MT5, ECN style execution means you pay a commission fee of $7 (round-trip) for each standard lot you trade rather than pay through a wider spread.

If you are using cTrader, you pay a commission fee equal to 0.0035% of the base currency you are trading. For instance, if you are trading 100,000 units of the EUR/USD you will pay €7 round turn. Even with a commission, trading costs will still be lower than all other account types.

Pepperstone Standard Account

The standard account is similar to the Pepperstone razor account but there is no commission charge. Instead, your cost is absorbed into the spread. A standard 1pip (point in percentage) is added to your spread. This is why all spreads on the Pepperstone Standard account is 1pip higher than the Razor account.

You can compare the two Pepperstone accounts on the Razor vs standard table page.

IG Forex Direct

This account uses ‘Direct Market Access’ (DMA) technology. DMA is relatively similar to ECN but with some minor differences. Like with Peppersone’s Razor account there is a commission fee for each trade you execute. The thing to understand with the Forex Direct account is that it is only available ‘professional’ traders. To qualify as a professional trader, you must have consistently been trading leveraged derivatives over the past year and have net assets of $2.5 million or gross income of over AUD$250,000 for each of the past 2 financial years.

Our review will not focus on this account as it is unlikely to apply to most of our clients due to high barriers of entry.

IG Standard Account

Lastly, we have the IG Standard account. With this account, IG acts as a market maker or a dealing desk. In this case, IG takes the other side of your trade meaning they profit when you make a loss and lose when you make a profit. As you can see, the spreads they offer are relatively competitive. The spreads they offer are higher than ECN/DMA account spreads but they don’t have commission charges.

Pepperstone and IG Islamic Swap Free Accounts

Both brokers offer a Swap Free trading account. These accounts are designed for Muslim traders who are not permitted to accept swaps. In place of swaps or rollover/holding interest Pepperstone charge an admin fee if you hold your position for 2 days or more. IG offers you futures but you must close your trade by the Friday.

Key differences to note with each broker:

Minimum Initial Deposit – IG don’t require any funds to open an account. This allows you to take advantage of IG free demo accounts.  To start trading your account will need to meet margin requirements.

Automatic Trading – IG standard doesn’t allow expert advisors, scalping, hedging on their proprietary platforms. If you want automatic trading then you must trade using MT4 platform. IG only allow MT4 on PC not via the website. Pepperstone allows trading automation on all their platforms.

Leverage

Pepperstone leverage – Outside the UK and Europe

If you are trading with Pepperstone with Australian Securities and Investment (ASIC) regulation then you can have a maximum 500:1 leverage.

Pepperstone leverage within the UK and Europe

If you are in UK Europe then you will be trading with Pepperstone with the Financial Conduct Authority (FCA) regulation. This means you will have maximum 30:1 regulation and negative balance protection.

If you are a high volume trader, Pepperstone may accept you as a professional client. This means you can have a leverage of 500:1 but you will not have negative balance protection.

IG leverage – Within the UK and Europe

If you are trading from the UK or Europe then you will have a leverage of 30:1 and negative balance protection.  Those who qualify with IG as a professional-client can access leverage of 222:1 but will not have negative balance protection.

IG leverage – Outside the UK and Europe

Client trading from Australia and most other countries will be able to use a leverage of 500:1

While you don’t need high leverage to be a successful and profitable trader, use of higher leverage can lead to considerably greater returns when well. It is important to use leverage responsibly. Leverage means going into debt to obtain greater assets to trade. So it is important to fully understand the risks associated with taking on a high level of debt. Therefore always use leverage responsibly.

Conclusion – Pepperstone vs IG

We recommend Pepperstone Razor Account. ECN technology is great as it allows retail traders like yourself to link with liquidity providers and achieve the best possible spreads set by the market. ECN spreads are typically much tighter than you will find with the other accounts and methods of trade execution. Another benefit is this technology is all done electronically which means you can use EAs (expert advisors) for automated trading and trade during “after hours”.

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As a Pepperstone Razor account trader, you can achieve further savings by joining Pepperstone’s ‘Active’ trader program. This is a rebate program which can save you up to 43% in trading commissions. Depending on how many lots you trade each month, you will receive a monthly rebate.

The Active trader program not only has rebates but also other benefits such as:

• Priority client support through a dedicated account manager
• Complementary VPS hosting
• Advanced insights and reports

Trading Platforms – IG vs Pepperstone

Pepperstone Trading Platform

Pepperstone offers MetaTrader 4 (MT4), MetaTrader 5 (MT5) Web Trader and cTrader trading platforms.

MetaTrader 4

MetaTrader 4 – is the platform that most brokers and both beginners and experienced traders prefer. Its popularity is a reflection of the reliability and quality that MT4 delivers for traders. MT4 offers excellent charting packages, an excellent range of technical indicators, the ability for back-testing and Expert Advisors. MT4 is best for trading in decentralised markets such as forex and when you want a simple interface.

MetaTrader 5

MetaTrader 5 – This MetaQuotes follow up to MT4 is built to handle trading through an exchange. This makes MT5 ideal for trading assets such as shares in addition to assets that don’t require an exchange. One of the key benefits of MT5 is that with a single sign-in account you can trade all different types of derivatives (ie. shares, cryptocurrency, commodities). MT5 offers many of the same features as MT4 but more variety of options.

• MT5 offers 6 different types of pending orders and two different types of stop orders. MT4 can only handle 4 types of pending orders at one time.
• 21 chart timeframes such as 11-minute charts and 7 hourly charts in addition to the daily, weekly and yearly time-frames.
• Inbuilt economic calendar
• 38 inbuilt technical indicators such as 22 analytical objects.
• MQL5 programming language which is superior to MQL4 (on MT4) which is useful for Expert Advisors.
• Faster trading – MQL5 takes advantage of 64bit processing. MQL4 can only handle 32bit processing.

In the past, we always to recommend MQL4 as MQL5 did not offer the ability to hedge. Recent upgrades have seen MQL5 introduce a hedging system. In the past only a netting system was available. With a netting system, only one common position for a symbol can be used at a time. When trading in America you must use this system. With a hedging system, you can have multiple open positions of the same symbol.

Smart Trader Tools

Regardless if you use MT4 or MT5, Pepperstone gives you access to their add tools which provide even more functionality. Smart trader tools is a suite of tools or apps that help you get more out of your trading. Tools include

1. Market Manager – This snapshot of account activity allows for better account management without accessing the trading terminal
2. Trade Terminal – This allows for more efficient order execution and analysis
3. Mini Market – This is the same as the trading terminal but only shows one market
4. Sentiment Trader – This allows you to see what other traders are doing on the market
5. Correlation Matrix – This tools will help you understand your market exposure and risk. It does this by showing connections between assets in different markets.

IG Trading Platforms

This broker offers a wide selection of trading platforms, this includes:

1. IG proprietary trading platforms – for mobile, web and tablet
2. The web-based platform ‘ProRealTime’ – a paid-for web-only platform
3. L2 Dealer for professional traders with forex direct account
4. MetaTrader 4 – the most popular trading platform in the world

Below are the key features of each platform:

The IG proprietary platform is known for being good for traders without high experience thanks to its simple and user-friendly interface.

IG Platform takeaways

• IGs Platform is not available for Android tablets
• You can only trade from charts when using the web browser. It is not available for mobile and tablets
• Automation trading is not available

Observations about ProRealTime

• There is a $40 monthly fee to access ProRealTime. It is free if you meet minimum trade volumes a month.
• ProRealTime can only be used in a Web Browser.

MetaTrader 4

• MetaTrader 4 can access some charting features available on the IG Platform.

Conclusion –  Pepperstone vs IG

This is a difficult one to decide on a winner. Both brokers offer MetaTrader 4, which is the platform we like the most. IG offers more platforms choices and these are popular with beginner traders due to their clean interface. Pepperstone on the other hand offer MetaTrader 5 which does everything MT4 does and while not yet as popular as MT4, MetaTrader is trying to encourage users to move over to this platform. MT5 essentially offers everything MT4 offers and more so MT5 may be the platform to choose if you are looking for trading into the far future.

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Range of CFDs Markets – Pepperstone vs IG

Pepperstone CFDs

Pepperstone has a decent range of derivatives when it comes to trading contracts for difference (CFDs). CFDs available include:

1. Indices – 14 equity index CFDs from Asia, Europe and the USA.
2. Commodities – These include precious metals, energies and soft commodities like Cocoa and Cotton.
3. Cryptocurrencies – These include Bitcoin, Ethereum, Dash and Litecoin.

IG CFDs

IG are one of the best online brokers if you are seeking an all-in-one broker for CFD trading. With IGyou can choose from the following

1. Shares CFD – You can choose from over 600 Australian and 8,000 international shares.
2. Indices – over 31 global indices are available. 22 of these indices are available for trade 24 /7.
3. Commodities – 26 major hard and soft commodity markets
4. Cryptocurrencies – including Bitcoin, Ether, Litecoin, Ripple and Bitcoin Cash
5. Options – are available for major indices, forex etc.
6. Interest Rates – you can trade interest rate movement in a range of global markets
7. Bonds – You can hedge your bets against government bonds.
8. ETP, ETF and IPOs – Exchange-traded products and funds and initial public offering are available.

In addition to CFDs IG also offers share trading.

• Trading on the Australian stock exchange has a commission of $8 per share.
• You can choose from 10,000 global stocks and these will cost US$10 per trade.

Conclusion – Pepperstone vs IG

IG offers a far more extensive range of asset classes and therefore should be your choice if you are looking for an all in one broker.

Cryptocurrencies

Cryptocurrency trading is one of the fastest-growing CFD trading options available. It is popular because this type of trading option is relatively new and therefore speculative as its future is so uncertain.

Cryptocurrencies available:

Cryptocurrency Leverage / Margin

Leverage with Pepperstone is 5:1 regardless of the chosen crypto and volume on crypto contracts.

IG uses a tiered system for margin. This means the available leverage will vary depending on how many contracts you purchase.  This margin can vary from 10% (10:1 leverage) for tier 1  position size to 75% (1.3:1 leverage) for tier 4 position size. A larger position size means more contracts are traded.

Spread Betting

If you are in the UK or Ireland an alternative to trading CFD is spread betting. Spread betting is popular because there are significant tax savings compared to CFDs.

Spread betting at its most basic level works the same way as CFD trading. When you spread bet, you are betting on price movements of the underlying instrument. When you trade CFDs, you are owning a contract of the CFD. Both systems use prices from the market that mirror the underlying instrument.  As you do not take a contract with spread betting, you generally will not be taxed on your profit. This is different from trading CFDs where you losses need to be offset against profits.

IG offers spread betting, Pepperstone does not.

Risk Management and Execution Speed – Pepperstone vs IG

Pepperstone Razor

Pepperstone provides some of the fastest trade execution speeds in the broker industry.  Super-fast trading speeds are achieved by placing using an Equinix data centre close to the inter-bank servers and using 10 optical fibre connection between the exchanges. By placings their facilities close to the forex servers, Pepperstone can save execution time because of the shorter distance that data needs to travel. By using 10 optical fibre connections, optical speeds can be achieved by minimising potential congestion and bottlenecks due to data overload.

Pepperstone Risk Management

Pepperstone only offers standard risk management tools that all brokers offer. These include stops (such as stop-loss), limits, call margins and protections. Pepperstone doesn’t offer much in the way or specialist risk management tools.

Pepperstone Speed and Risk Summary

It is important to understand the connection leverage, speed and risk. Pepperstone can provide higher leverage when we compare with IG because their execution is faster. Faster execution means less risk of slippage. Remember, slippage can greatly affect your profits and losses depending on which way price moves during the execution lag time. When price movements are unfavourable you risk losing your money. Pepperstone is confident enough in their execution technology that they can offer higher leverage with fewer specialist risk management tools.

IG

Not much is known about the technology behind IG Markets execution when it comes to their standard account however IG are very open about the importance of trading speeds and controlling your trading risks. IG provides details of their slippage performance as per the table below.

The important detail from this table is you want to see lower ‘stop’ slippage and ‘higher’ limit slippage.  IG use what they call ‘asymmetric’ execution logic to make achieve desirable execution success. IG also publish their rejection rates for your orders.

Rejection occurs usually due to price changes and liquidity. Price changes may occur due to poor speed execution while liquidity may reflect the fact that IG is a market maker so only hold so much liquidity.  To manage rejection IG advise using the following features

• Points through current: For a small fee, IG will allow you to trade through the current IG price. This can work in your favour as IG will still trade at the new price if they are favourable for you. This helps you manage rejection due to price change
• Partial Fills: This helps you manage rejection when trading in volumes larger than available liquidity.

IG Risk Management

If you desire a higher level risk protections IG offers guaranteed stop loss. For a small fee, you can guarantee order execution at your set sell price. However, like Pepperstone, IG does not offer guaranteed negative balance protection. Both brokers utilise a margin call system which means you must have a minimum amount of funds in your balance at all times.

IG Market have the option of a limit risk account. This account simply means you must purchase a guaranteed stop-loss order when playing an order. We only this recommend this account to those new to trading as use of guaranteed stop-loss orders will eat into your profits over time.

IG Speed and Risk Management

IG help you achieve successful trading by providing a range of tools that help you manage any speed limitations and risks their infrastructure may have. These tools may reflect the fact that they are a market maker which means they must have available liquidity at the time and in the volume you desire.

Conclusion – Pepperstone vs IG

Both Pepperstone and IG use different approaches to trading. Pepperstone focuses on speed while IG focuses on trade control. It depends on the type of trader you are. If you are familiar with trading then you may prefer using ECN style execution Pepperstone offer. ECN style trading means lower spreads greater exposure to liquidity pools which means greater opportunity to trade in volumes you may desire.

IG offers excellent risk management tools but these can be costly over time and tools that may help you overcome liquidity and speed issues however there is a chance you may miss out trade opportunities.

Funding Methods (Deposits and Withdrawals) – Pepperstone vs IG

Except for bank wire withdrawals, Pepperstone does not charge users when making deposits or withdrawals. Pepperstone provides a large range of options for funding including Skrill, Neteller, Paypal in addition to Visa and MasterCard for debit cards and credit cards.

IG will charge you 1% for Visa and 0.5% for MasterCard. You will also incur a 1% charge when using PayPal, bPay and Bank Transfer are free. It is important to note that when using debit, credit or PayPal for deposits, there is a minimum $500

Conclusions – Pepperstone vs IG

Pepperstone is an easy choice when it comes to funding. Not only are there more options but there are no charges.

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