Saxo Capital Markets Strength And Weaknesses
The key strengths of Saxo Are
The key weaknesses of Saxo are:
- Lack Of Risk Management
- 100:1 Leverage
- Funding Requirements
Strength 1 – Wide Range Of Markets
Saxo capital markets Australia offering is more than just currency trading. The broker has a wide range of services from share trading to contract for difference (CFDs). Below shows the wide range of markets offered all matches by low brokerage.
Stock Brokerage Services
Shares trading is one of the most popular services offered by Saxo Capital Markets. They offer share trading in Australian, USA, UK, Singapore and even Chinese stocks. Overall, traders have access to over 19,000 shares overseas across 36 exchanges. There share trading offering won “Outstanding Value International Share Trading” in both 2017 and 2018. Other share related services are over 3,100 ETFs, ETCs and ETNs and they also offer over 1,200 listed options. Below shows the Saxo Capital Markets Australia brokerage to other leading stockbrokers.
Forex Trading Services
The key areas of this Saxo Capital Markets Australia review was on their currency trading offering. This includes the ability to trader across 182 forex spot pairs and over 140 forwards. There are four key component that lead traders to choose Saxo for currency trading.
i) ‘Tier 1’ Liquidity
Saxo uses a wide range of ‘tier 1’ banks and other sources from market-making firms to ECNs to ensure traders receive the best possible price. This helps minimise spreads that exist when a forex broker sources just one or two sources for a buy/sell rate.
ii) Price Improvement Technology
A key Saxo Capital Australia feature is their customised orders offering. This provides forex traders with great control and near-zero asymmetric slippage occurring. This leads to real benefits on a large number of currency trades through the Saxo Australia forex trading platform.
iii) Reduced Premature Stop-Outs
Saxo triggers stop orders at the opposite end of a spreads to minimise forex traders from being stopped out early. This is set a neutral price via a large inter-bank venue. Premature stop-outs are one of the most complained features of other forex brokers and a key positive found in this Saxo Capital Markets Australia review.
iv) Client-centric approach
We fully disclose our dealing practices and never trade against you in the market. Our commitment to transparency shows that our interests are fully aligned with yours.
CFD Trading Services
The final area Saxo Australia offers if contract for difference (CFDs Trading). This leverage trading can be made on shares, indices, bonds and commodities as shown below. Commissions on US stocks are USD $3.00 while Australian CFDs stock commissions start at AUD$6. Leverage varies and for the US 500 is 40:1 with a spreads of 0.4 points.
Wide Range Of Markets Saxo Capital Markets Australia Review Conclusion
It’s not unique for a forex broker to offer more than just currency trading with most also offering CFDs trading. What separates Saxo is their domestic and international stockbroking services. This makes Saxo Capital markets a one-stop-shop broker ideal for those looking for more than just a forex broker.
Strength 2 – Low Spreads And Fees
Saxo offers three trading accounts including classic, platinum and VIP. The most popular trading account is the Classic account which has a minimum deposit requirement of $3,000 Australian dollars. This account has entry prices which beat other leading forex brokers when it comes to spreads as shown below.
Breaking down the three accounts further:
1) Classic Account
As mentioned above, the minimum funding required of the classic account is $3,000. While a core feature of the account is the low spreads the other elements are:
- In-house analyst
- 24-hour customer support
- Integrated support online
2) Platinum Account
This account is designed for advanced traders which is why the requirement a $50,000 minimum deposit. This achieves active trader prices and:
- A personal relationship manager
- Access to customer service 24/5
- Analyst data and information
3) VIP Account
The VIP account is one of the most premium in the forex broker and stockbroker industry with a funding requirement of at least $1,000,000 AUD. These premium clients receive VIP spreads and fees as well as features including:
- Dedicated sales trader
- Personal relationship manager
- Exclusive events and hospitality
Summary Of Saxo Capital Markets Spreads
Across the three accounts offered Saxo has low spreads compared against leading retail brokers such as IG Markets. The more your willing to deposit the lower the spreads will be but even the classic is competitive. Saxo also focuses on simplicity with trading costs with no volume-based commissions and minimum commission fee.
Strength 3 – Saxo Forex Trading Platform
Saxo Capital Markets Australia offers two of there own propriety forex trading platforms. Each has distinct advantages over each other with one designed more for mobility across mobile and tablet while the other is designed for trading power. These have won many awards including the ADVFN platform award.
SaxotraderGO – The Choice For Traders + Investors
This platform has won Saxo Capital Markets awards based on reliability, execution speeds and functionality across devices. It’s web-based with full functionality across desktop, mobile and tablet devices with:
- Access to over 35,000 instruments with no subscription fees
- Trades and orders been managed directly from charts
- A wide produce range from forex, stocks to CFDs
- Equity research tools that analyse sentiment and fundamentals
Below shows six additional features Saxotrader Go offers Australian traders. Features like quick close, margin breakdown and cancel all orders are unique to Saxo. Historical reports can also be downloaded for tax and bookkeeping purposes.
SaxotraderPRO – Build For Professionals
This professional-grade fox trading platform is designed for expert traders who use multiple screens when trading. It works both on Mac and Windows and while it also has apps for tablet and mobile devices it’s really made for PC. There is no web-based version with features including:
- Enhanced trade tickets maximising speed and productivity
- Algorithmic orders that are integrated into trade tickets
- Charting packages with over 50 technical indicators
- Option chain allowing switching between instruments
Summary Of Saxo Capital Markets Trading Platforms
Our Saxo Capital Markets Australia review found it was strong in this category but lost points for the lack of mainstream options such as MT4 and cTrader. Both Saxo trading platforms don’t require subscription costs with the PRO platform recommended on desktops with multiple screens while the GO account is for everyday traders.
Weakness 2 – Low Leverage
CFD trading and currency trading require leverage due to the relatively small movements daily. For example, a currency pair such as the AUD/USD rarely changes by more than 0.5% a day. This means margin trading is required which allows a multiple of the original deposit to be traded. In the case of Saxo Capital Markets the leverage rate is 50:1 for forex trading and 40:1 for CFDs trading. This is low compared to the leading Australian forex brokers as shown below.
To explain leverage further, in a scenario where the minimum Saxo classic account is made of $3,000, the trader can effectively trade $150,000 worth of currency on forex markets at a 50:1 leverage. If this trader placed these funds on the AUD/USD and a movement of just 0.2% occurred they would make a profit/loss of $300 (10% of their deposit).
Benefits Of Higher Leverage
While higher leverage increases exposure to markets and increases risks of CFDs and forex trading it can be a core requirement of a trader. This is especially true when using automated trading which can require micro-moments to enter and exit the market. Other expert traders want the exposure to the market to maximise returns at during key trading periods. These traders may want to consider a forex broker like Pepperstone that have leverage up to 500:1.
Weakness 2 – Risk Management Tools
While our Saxo Capital Markets Australia review found that leverage was relatively low, this doesn’t mean that trading doesn’t have risks involved. In-fact, any leverage product such as CFD trading has risks which is why risk management tools are recommended. Below will go through the four core risk management tools and what Saxo offers.
1) Stop Loss Order – Saxo Offers
Stop loss orders allow a trader to determine the amount they are willing to make or lose on a trade. This is then converted to a buy/sell level which will be triggered automatically when achieved. This allows the trader not to have to manually calculate exit/entry points and watch the market actively. The big issue of stop loss orders is they are not guaranteed and in extreme volatility the software may not be able to trigger the exit point. This can lead losses exceeding the amount set on the stop loss order.
2) Guaranteed Stop Loss Order – Saxo Does Not Offer
A guaranteed stop loss order is exactly the same amount as above but the forex broker guarantees the exit level. This means that you can’t lose more than the amount set providing piece of mind. The issue of a guarantees stop loss is they may require an additional trading fee. Saxo does not offer this feature.
3) Negative Balance Protection – Saxo Does Not Offer
In extreme volatility currency and CFDs markets can move fast. With no guarantees stop loss orders offered by Saxo losses may exceed expectations. These losses can even exceed the deposit made to Saxo. When this occurs Saxo states that the funds will need to be repaid to avoid a negative balance. Interest will be charged at market ask rates plus 8% when delays occur in repayment. Some Australian forex brokers don’t allow traders to go into negative balance even if they cover the costs. This is called negative balance protection and should be considered if your risk tolerance is low.
Weakness 3 – Funding Requirements
Many traders look to trade small amounts and require a low minimum deposit by their forex broker. Saxo Capital Markets Australia accounts don’t offer this with the classic account starting at $3,000. The $1,000,000 VIP account is one of the highest minimum funding accounts of any Australian forex broker.
If your happy to have funds locked in an account then funding requirements won’t be an issue. But if you don’t like funds tied up any any account then you should consider other forex brokers who have a minimum deposit as low as $50.
Saxo Capital Markets Australia Review Conclusion
Saxo is recommended for anyone looking for an all-in-one trading solutions. You can buy and sell both domestic and international shares as well as trade currency and CFDs with their award-winning trading platform. They also offer low spreads and fees making them a low fee share and trading solution. You should only consider a different forex broker if you require high leverage, risk management tools or require a low minimum deposit.