Pepperstone Review 2018

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Pepperstone is an Australian FX broker, regulated by the UK FCA and the Australian ASIC. They have recently opened offices in London to better serve their European clients. They are neither listed on a stock exchange nor has a bank parent.

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As a plus

Pepperstone offers very competitive FX spreads and fees, and there are many account funding options to choose from. The account opening is user-friendly, with no minimum deposit. Furthermore, it provides a well-designed, easy to use web and desktop trading platform, and the customer support is great: responsive with relevant answers.

On the flip side

Pepperstone is primarily a forex broker, has some CFDs, but no stocks, futures, or options. As such, its product portfolio is limited. It does not have its own research team, and there are no fundamental data. The mobile platform is a bit confusing.

Recommended for high volume FX traders.

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Pepperstone review
Investor protection and regulation

Pepperstone is a regulated by the FCA and the ASIC. However, they do not have a banking background, and they are not listed on any stock exchange.

Pepperstone serves under two legal entities:

• Pepperstone Limited:
  • Services UK and other EEA accounts
  • Regulated by the FCA
  • FSCS protection up to 50,000 GBP per person
• Pepperstone Group Limited:
  • Services accounts created outside the EEA
  • ASIC regulated - AFSL (Australian Financial Services License) holder

Pepperstone Limited is licensed by the FCA, the UK regulatory body. This alone provides a stringent and in-depth review of their operations and allows for comfort in the security of the business. When choosing to trade on Pepperstone from the UK or EEA, your account funds are held in segregated accounts with Barclays Bank. Pepperstone Limited is protected by the Financial Services Compensation Scheme Protection (FSCS), which provides protection up to 50,000 GBP per person or per firm in case of the firm's default or insolvency.

Opening from outside the UK and EEA, Pepperstone Group Limited is regulated by the ASIC, the Australian Securities and Investment Commission, and holds an Australian Financial Services Licence (AFSL). Whilst the ASIC does not require coverage of financial compensation, Pepperstone Group Limited is also reviewed regularly under strict standards of the Australian Securities and Investment Commision, and audited by the independent auditing company, Ernst & Young. All accounts opened with Pepperstone Group Limited are connected to segregated bank accounts with the National Australian Bank.

During the 2015 Swiss National Bank related forex crisis, Pepperstone was able to avoid losses by using foresight, and their high-speed technology. Before the crisis happened, Pepperstone warned against the possible dangers, discouraging clients from taking excessively leveraged positions on the Franc, they accomplished this through enforcing position caps and limiting the leverage on said accounts. For clients who did have an exposure to the news, Pepperstone’s systems liquidated the positions in less than a second, which allowed them to close any position before they went into negative balances.

Negative Balance Protection

The Pepperstone MT4 and cTrader platforms have a built-in automatic stop-out system, that protects against potential critical losses. This will close a trade when the equity reaches 20% or 50% of the margin requirement. However, in a fast moving market, this may occur after the account has already incurred a negative balance. In these instances, they look to waive negative balances on a case by case basis. On the MT4 trading platform, the stop out is set at 20% margin level and on cTrader trading platform the stop out is set at 50% margin level. This is set up automatically by Pepperstone in each trading platform.

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Pepperstone review
Account opening

Account opening is  fully digital, and straight-forward. 

Pepperstone does a good job with their account opening, residents of most countries may open an account, and the process is straight-forward. 

Who can open an account?

At the time of our Pepperstone review, users from most countries can open a Pepperstone account.

Accounts may not be opened from the following locations:

• United States of America
• Canada
• New Zealand
• Japan

Additional countries not allowed to open an account: Burma, Côte d’Ivoire, Democratic People's Republic of North Korea, Democratic Republic of the Congo, Eritrea, Former Federal Republic of Yugoslavia, Iran, Iraq, Lebanon, Liberia, Libya, Somalia, Sudan, Syria, and Zimbabwe.

Following account base currencies are available:

• United States Dollar (USD)
• British Pound Sterling (GBP)
• Euro (EUR)
• Swiss Franc (CHF)
• Polish Zloty (PLN)

Account Types

During the time of Pepperstone review, the Standard Account and the Razor Account were available.

The Standard Account poses no commission, however, it uses built-in 1.0 pip spreads, this means an additional cost which is set between the user and interbank rates. This is the account we tested during our Pepperstone review. Leverage can be set between 1:1 to 500:1 when creating the account, we found it to be a bit misleading that the base leverage is set to 500:1, we think this could potentially confuse some rookie investors. The Standard account has no account balance minimum, it can be opened for free, and the user can decide how much to fund later.

The Razor Account allows for spreads as low as 0.0 pips. The commissions on the trades are very low as well, for every lot traded, it costs $3.5 AUD. Furthermore, hedging and scalping are also available on this account, with ratios up to 500:1. The account can be opened with as little as $200 AUD, with many potential benefits for high-frequency forex trader.

Two further accounts must be noted here, there is an opportunity to sign up for The Active Trader Program, and there is also a possibility for an Islamic Account.

Think of the Active Trader Program as a frequent flyers club. To gain access, trade at least 200 FX lots per month, this gets you access to the following benefits:

• Dedicated Relationship Manager: have a personal manager to help achieve your trading goals.
• Extensive reporting: Tailor made reporting, to get the most out of your numbers
• EDGE Hosting services: to take advantage of Pepperstone’s low latency
• Custom trading solutions: Trade on a large selection of platforms and solutions

You will also receive a deduction from your commission per trade:

• Level 1: 200 lots @ $1
• Level 2: 500 lots @ $1.50
• Level 3: 1500 lots @ $2
• Level 4: 5000 lots @ $3

Per example, if the normal commission is 7 AUD per lot, after trading 200 lots, the commission will decrease to 6 AUD per lot.

The Islamic Account is available for people following Sharia Law. This account is in full accordance with religious practices of the Muslim religion.

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Account Opening Process

During our Pepperstone review, we found that opening an account is as easy as it comes, it is fully digital and very nicely presented, in a organised, concise manner.

Here is how:

1. Register your email and password, confirm your email, and you advance on to the Secure Client Area
2. Fill out your personal information, and set the currency and leverage limit of your account     (1:1 - 1:500).
3. Complete a short survey regarding your trading expertise. (Your experience may vary from beginner to expert.)
4. Upload a copy of your passport/ID, and a utility bill or some other proof of address. (On Pepperstone, having a notarized passport will exempt you from having to upload a proof of address.)

The process is very straightforward and takes roughly 10-15 minutes to fill out your application.

Pepperstone review the application, this may take longer, for us it took 4 business days to receive the confirmation. We believe that this should be faster.

You will find that their e-mail assistance during account opening is excellent, you can also get help through the live chat, or even send them the copies of your ID/Passport, and they will upload it for you.

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Pepperstone review
Funding and withdrawal

Pepperstone offers a wide variety of account funding options, while withdrawal status is easy to track.

Funding Options

Funding your account at Pepperstone could not be easier. Within your Secure Client Area, there are many options to choose from:

• Credit/Debit Cards
• PayPal
• POLi - Instant Bank Transfers
• China Union Pay
• Bank Transfer
• BPay - Australian fast bank transfer
• Skrill (Moneybrokers)
• Neteller
• Qiwi
• Fasapay
• Broker to Broker transfer

Please note that the available funding types will be available depending on the country of origin of your account.

Whichever funding option you choose, the transaction time and associated fees to the payment method will be displayed in your Secure Client Area.

There is no commission on most funding options, however, Standard Credit / Debit Card deposits incur a 3% fee, AUD deposits have a lower rate of 1.8%. The Qiwi funding method incurs a 3%. 

Funding times:

• Bank Transfer: 24-48 hours
• Credit/Skrill/Neteller/etc.: Instant, 24 hours a day

Withdrawal Options

Withdrawing your funds is very straight-forward as well:

1. Request a withdrawal in your Secure Client Area
2. Confirm your request in the email that is sent to you
3. The withdrawal will typically process within 48 working hours
4. In the Secure Client Area, you can follow the status of your withdrawals, and see your withdrawal history as well.

There is a $20 fee for international bank withdrawals. Wire transfer within Australia in AUD are free of charge.

We received the withdrawal confirmation within 24 hours of the request, the funds arrive within 5 working days to the originating account.

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Pepperstone review
Product portfolio

At the time of this Pepperstone review,  the two available products were Forex and CFDs.

With a limited product portfolio, Pepperstone's FX offering is very broad, but the CFD is average. There are no real stocks, funds, options, etc. available.

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Forex

With over 80 currency pairs, Pepperstone offers a wide range of forex trading possibilities. This is a great amount, above their competitors. They offer major and minor pairs, and also some exotic pairings.

Maximum levarage available on FX pairs is 1:500.

CFDs

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Stock Indexes

Offering 13 major global stock indexes to trade as CFDs. Including AUS200, US30, HK50, Japan 225 and the GER30 amongst many others.

Cryptocurrencies

Bitcoin, Ethereum, Litecoin, and Dash can be traded against the USD, without the need for a hash wallet, as all the coins are traded as CFDs.

Commodities

Precious metals (Gold, Silver, Platinum, Palladium) are available in 6 different kind of pairings against USD and EUR.

Energy commodities, such as two types of Oil (Brent and US oil) and US natural gas may be traded against main currencies.

Soft commodities, such as Coffee, Sugar, Cocoa, Cotton, and Orange Juice may be traded.

Pepperstone review
Fee structure

Pepperstone offers some of the most competitive pricing plans on forex trading.

Trading fees are transparent, but gathering together the non-trading fee information is not a peace of cake. This is especially true for the financing cost (applies interest rates) for the swap calculation.

Pepperstone is our first broker, where we could not find any information on interest rates, so we couldn't compare with other forex brokers.

To get things rolling, lets go over some basic terminology:

• Commissions is a fee charged by the broker for completing a trade. 
• Spreads are the difference between the bid and the ask price, brokers often incorporate fees into spreads (i.e. the market sells EURUSD for 1.1, the broker will sell it to you for 1.2, they keep the .1).
• Financing rate is the premium the broker will charge you for financing a leveraged position. 

Now, lets dive into the details.

Trading fees

Pepperstone offers competitive rates for both of their main account types. Whilst the Standard Account is commission free, the Razor account offers lower spreads and reasonable commissions.

While the Standard Account is commission free, it has higher spreads, thus less competitive for frequent traders. 

If you trade with higher volumes worth checking the Razor Account, that offers interbank spreads and a 3.5 AUD/lot commission. The spreads of the Razor Account can be as low as 0.0 pips.

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Non-trading fees

The good news is that while having a Pepperstone account, you do not have to count with too many non-trading fees. Pepperstone does not charge any account or inactivity fees.

As already described the financing cost information is not provided at all, you can have only the actual swap rates within the platform. This is not transparent at all and Brokerchooser does not understand what is the reason for this.

Whenever a conversion happens, Pepperstone may charge a conversion fee of up to 1%, which is quite high. Conversion is charged to carry on costs charged by banks for the conversion of one currency to another, absorbed as part of the spread when trading in a currency other than AUD, USD, NZD, GBP and EUR.

Withdrawal and funding are usually free with Pepperstone, but in some cases, you will be charged. Standard Credit / Debit Card funding will cost 3% for all currencies, except AUD which is at 1.8%. The Qiwi funding method has a 3% cost.

On the withdrawal side, Skrill has a fixed $1 fee, while international Bank Wire withdrawals will cost you a $20 fee. Bank Wire withdrawals within Australia in AUD is free of charge.

Pepperstone review
Web trading platform

Pepperstone offers well designed, user-friendly third-party trading platforms, MetaTrader 4 and cTrader. 

Pepperstone does not have a in-house developed trading platform, it uses thrid-party platforms: MetaTrader 4 and cTrader. 

Brokerchooser tested cTrader for the review, we thought it was the better of the two, due to its reliability, responsiveness, and ease-of-use.

cTrader is a third party app that Pepperstone offers to their clients. cTrader offers a fast and reliable online interface. Basic order types (market, limit, stop-loss, stop limit, trailing stop) are all available. There is a good search function, customizability is easy with drag-drop features and multiple view options. Alerts and notifications are available, and easy to set up. Fee reports may be downloaded or printed in a clear format. Overall, the web platform of cTrader has a great visual representation, is very stable and user-friendly. 

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Pepperstone review
Mobile trading platform

cTrader's mobile platform is user-friendly, and well designed,  available on iOS and Android.

Brokerchooser felt that the mobile platform needed development. Some of the functions are not intuitive, the user interface felt incomplete. Our best guess is that cTrader wished to include all of the available options from their web platform, but this made the app cluttered and hard to use in some places. Furthermore, no push notification is available for iOS, therefore the app can only alert you via e-mail. 

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Pepperstone review
Desktop trading platform

cTrader offers a desktop platform, currently only available for Windows.

The functionality, and quality matches the web based interface. Traders may download the executable file from the Secure Client Area. 

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Pepperstone review
Research

Pepperstone offers limited research options on their website.

Pepperstone offers limited research options.  Some news flow and blog-style articles are available, and you can sign up to market trend e-mails. Analytics and fundamental data are missing. 

A weekly market research post details forex trends and investing opportunities. The FX Lounge offers blog-style articles on their website include basic investment strategies and investing tools. Aimed mostly at beginner traders, these blog and article posts lack depth and critical analysis. Furthermore, these resources are not well presented on the website, they are hard to get to, which begs the question why it is not better advertised, perhaps it is still under development.

From the Secure Client Area's download section, two trading tools are available. Autochartist, a pattern recognition and risk calculating addon for Metatrader 4. Which gives you automatic pattern recognition on your chosen graphs. You may download Autochartist if you are running Metatrader 4 on a PC, no Mac or online version available to date.

You may also subscribe to Pepperstone’s daily market reports email, you can choose between daily or weekly reports, and you can specify which markets you wish to include (US,EU,Asia). 

Three basic calculators are built into the Secure Client Area. A profit, a margin, and a pip calculator. These calculators alone seem to be little to no use, and they are well hidden. 

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Pepperstone review
Education

Pepperstone should do better with their educational content. They offer written and video guides, but they lack organization of a well designed lesson plan.

What educational tools are available? 

Pepperstone offers platform tutorial videos for beginners:

• MT4 Trader tutorials
• cTrader tutorials

Pepperstone also offers general trading education, from beginners to intermediary levels:

• Learn to Forex trade: including terminology, order types, technical analysis explained, and many more basic topics covered. 
• Trading Guides: more advanced topics, such as: the first rule of forex trading, and the psychology of placing your first trade
• 'Learn it in 3 minutes' quick 3 minute videos on trading basics (how to calculate pip, leverage and margin, etc)  
• 'Forex Market Wrap' short 3-4 minute videos on forex related events, updated often 
• 'Webinars' 1 hour videos on trading strategy and other useful tips and tricks of trading
• 'Boris and Kathy' 5-10 minute weekly technical analysis on major forex trading events

Pepperstone should do a better job with their educational content. The platform tutorial videos are incomplete and do not cover enough data. The trading educational content does not offer a lesson plan, and the level of the contents are all over the place. 

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Pepperstone review
Customer service

The customer service is very responsive, good quality, and highly efficient.

Pepperstone has one of the best customer services we have tested. They are speedy and available, giving you the relevant answers, in a patient and professional manner.

Online chat is available throughout the trading days, 24 hours a day. We did not have to wait for an operator, and the transcripts of the conversations can be sent to your e-mail, which can be quite useful in case you need to revisit a solution. You are also prompted to evaluate the chat with a simple thumbs up or down followed by an optional comment field, making it easy and efficient to give feedback.

The support team was very responsive to emails as well, with the average response time of 4-5 hours. Their answers were clear and concise, with relevant information and links attached. You did not get the ‘template’ treatment, the answers were tailored directly to your question.

Phone support is also available 24 hours a day, they speak English, Spanish, French, and Arabic. The support person informed Brokerchooser that often other languages may be available, but could not provide a list nor a concrete schedule.  

Additionally, to customer support, you also have an account manager, who is helpful, timely, and responsive, without the usual ‘sell-sell-sell’ attitude. This is far better than at other brokers, where your account manager is usually a pushy salesperson. The helpful attitude at Pepperstone was a pleasant surprise.

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Pepperstone review
Bottom line

Pepperstone is a great FX broker, spreads are competitive, funding options are plentiful. Account opening is a breeze with no minimum deposits. The website is well designed, clear and easy to navigate. They have a great customer support team, with relevant and fast answers. They have not developed their own platform, but the ones they offer are well designed and robust. 

Some areas need refinement. The product portfolio is limited, Pepperstone only offers FX and some CFDs, and the research options should be improved with fundamental data. Furthermore, the mobile app and the educational videos need re-organizing, to increase their ease of use. 

We recommend this broker for FX traders. 

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Pepperstone review
FAQ

Pepperstone spreads - how do they compare to other brokers?

According to Brokerchooser's findings, Pepperstone offers very competitive spreads on both of their account types.

You can read more about Pepperstone spreads in our full review.

Funds being withdrawn from Pepperstone account - What to do?

You can initiate withdrawal from your Pepperstone account in the Secure Client Area.

Please see our full review for more information on withdrawing funds from a Pepperstone account.

Who owns Pepperstone?

Pepperstone is a private company, founded in 2010 by two Australians, Owen Kerr and Joe Davenport.

According to Brokerchooser’s research, majority ownership of Peppersone is held by Champ Private Equity, an Australian private equity, and venture capital firm.

Pepperstone is operated under two legal entities:

• Pepperstone Limited:

  • Services UK and other EEA accounts

  • Regulated by the FCA

  • FSCS protection up to 50,000 GBP per person

• Pepperstone Group Limited:

  • Services accounts created outside the EEA

  • AFSL (Australian Financial Services License) holder