Learn how Forex and CFD investing works and whether Pepperstone is the right platform for you to get started on your trading journey.
Generally speaking, whether you've been trading various financial instruments for quite a while or you're only beginning your journey in the trading world, the specific platform that you're using to conduct all of your trades tends to play a heavy role in how profitable you're going to be as an investor.
In reality, the majority of investment platforms — whether they specialise in Forex, Stocks, CFDs, or even Cryptocurrency (or all of them) — usually offer most of the same features as each other, from the ability to execute trades to performing technical analysis and marking your own trading levels on a chart.
Having said that, the user interface and general accessibility of the platform is something that often differentiates a good brokerage from a poor one — especially if you're a newcomer who might get pretty overwhelmed by the range of tools and jargon being shoved in their face — and the exchange we're going to be covering today, Pepperstone, definitely stands out in this particular aspect.
So, throughout this article, we're going to be taking a closer look at Pepperstone, exploring what kind of features you can expect to see when using the platform and whether it's right for you as a beginner trying to learn your trade.
What Is Pepperstone?
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.3% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
To kick things off, let's cover a little of background information about Pepperstone. Put simply, this is one of the leading online trading platforms currently operating in the world, and with so much distrust among trading platforms in general — especially given what happened to similar exchanges like FTX — this is something worth praising.
However, unlike other trading platforms such as eToro and Plus500 that operate as multi asset investment platforms (meaning you can trade pretty much any financial asset, from gold bullions to Bitcoin), Pepperstone works primarily as a forex and CFD trading platform.
For anyone reading this who might be slightly unfamiliar with this concept, forex trading involves exchanging various currencies, and CFDs (Contracts for Difference) are another trading instrument that gives you an opportunity to trade price movements in the stock market without ever actually owning the underlying asset.
Don't worry if this still sounds slightly confusing, we'll be breaking this down in a bit more detail shortly.
So, once you create your Pepperstone account, you'll gain access to a pretty comprehensive selection of trading tools and features — fit for professional traders, too, not just less advanced features that appeal to the beginners but don’t offer the same kind of technicality for a seasoned pro.
As mentioned, Pepperstone is one of the more intuitive brokerages out there as far as trade execution and navigating the platform go, and monthly trading volume appears to be a testament to this level of popularity.
Understanding Forex and CFD Trading With Pepperstone
Given that we're going to be referring to the foreign exchange and CFD markets pretty frequently throughout this article, it's worth spending some time breaking down what these markets are and how they work for any of the novice investors reading.
Once you've got a basic understanding of how these markets work, you'll have a much easier time getting started on Pepperstone — or literally any online trading platform, for that matter:
Forex Trading: Unravelling the Currency Markets
When you think of traditional trading in the stock market, for instance, you would usually think of company shares, whereas the forex market revolves entirely around the relative value of different currencies instead — operating as a decentralised network where you're able to buy or sell pretty much any currency around the world that you want, with some of the more popular options being EUR/USD, for example.
How Forex Trading Works
So, currencies are traded in pairs when you use a forex broker, and this is basically just to show the exchange rate between two different currencies.
To go back to our previous example, in the EUR/USD pair, the euro would be the base currency, and the US dollar would be the quoted currency. This means that if, after conducting a fairly heavy amount of technical analysis, you believe that the euro will strengthen against the dollar, this would be your chance to buy the EUR/USD pair.
On the other hand, you'd naturally choose to sell the pair if you thought the opposite and that the euro would weaken against the dollar. Fortunately, though, you're able to make money as a trader whether the market is going up or down, so you've always got plenty of opportunity to generate profit from whichever currency pair you trade (theoretically).
In fact, the forex market is open pretty much around the clock — 24 hours a day, five days a week (not quite matching the 24/7 appeal of cryptocurrency markets — so you don't have to constantly wait until a predisposed time in order to start trading.
This generally makes Forex trading a pretty popular prospect internationally, given the lack of time barriers that might previously have prevented a foreign retail trader from investing in the New York Stock Exchange, for instance.
CFD Trading: A Versatile Instrument
So, while forex trading is a lot more centred around currencies, CFD trading includes a much more broad selection of financial assets. Put simply, a Contract for Difference is essentially just an agreement that's been made between two different parties — in this case, the buyer and the seller — to exchange the difference in the value of any given asset.
It's actually a fairly unique way of trading, known as a financial derivative, but it's also one of the most risky ways of investing — especially if you're just getting started in your trading career.
Leverage and Risk Management
Following on from the previous point, it's a particularly risky trading method (Forex is culpable of this, too) because CFD trading usually involves quite a high amount of leverage, which is essentially a way of controlling a far bigger position than you actually have the capital for.
Now, this is obviously something that can sound massively appealing at first glance since leverage hugely amplifies your overall potential for making a profit, but it works in the exact same way inversely. As such, leverage, and therefore CFD and forex trading in general, is definitely something that traders need to approach cautiously — regardless of the level of experience you have.
Features You Can Expect When Trading With Pepperstone
Now that you've got a general understanding of what Forex and CFD trading is all about, we can walk through some of the main features and tools Pepperstone provides with a more in-depth understanding of why they're significant:
Tailored Accounts, Including the Razor Account
Generally speaking, not everyone who's looking to trade on Pepperstone is approaching the platform with the same level of experience, so it'd be slightly jarring if a beginner investor was suddenly faced with complex trading indicators and algorithms just as they begin using the platform.
On the other hand, some of the more seasoned investors out there don't want to be limited by user-friendly versions of the tools they need to perform their technical analysis; they need all the advanced features they can take.
It's a fairly common trait across most trading platforms, but it's definitely commendable that Pepperstone offers various different account types to accommodate this fairly diverse range of people using their platform — especially considering how popular online trading as a concept has become over the last decade.
To get specific, they offer an account designed for some of the more professional clients, known as the Razor Account, and this comes with a pretty advanced selection of trading tools — like the active trader program — that gives you a chance to work on your own trading strategies (rather than simply copying someone else's, either through CopyTrading features or even an online signals group on social media).
Negative Balance Protection for Peace of Mind
Going back to how many retail investors — with fairly little understanding when it comes to risk management — use trading platforms like Pepperstone, it would be slightly irresponsible, perhaps even exploitative, for them to innocently push you to use margin or trade leveraged tokens.
In fact, you're generally given ample warning of how dangerous these kinds of trading tools (as well as trading CFDs in general) via disclaimer pop ups whenever you opt to use them — not to mention that Pepperstone also makes you fill out a brief questionnaire to determine whether your level of trading knowledge is enough to appreciate the risk you're about to undertake.
Aside from this, Pepperstone also employs a “negative balance protection” feature, which is something that the new users out there can opt for so they don't end up losing more than they initially invested.
Obviously, this is just as a kind of safety net, and it's more for the novice traders who might be a bit more emotional about the potential of substantial losses when trading than someone who has experienced it before.
Compliance With Regulatory Standards
We've mentioned quite a few of the specific features you can expect regarding trading tools, but there's plenty to commend Pepperstone on in terms of regulatory compliance, too — adhering to a range of different regulations around the world in order to legally run in these countries, whether it's the Australian Securities and Investments Commission (ASIC) or the Dubai Financial Services Authority (DFSA).
Naturally, Pepperstone wants to make its service available in as many regions across the world as possible to maximise its monthly trading volume and liquidity, which is exactly why getting in the good books of various regulatory bodies (like the aforementioned ASIC and DFSA) is so important.
Transparent Trading Costs for Smart Financial Planning
Generally speaking, transparency regarding trading fees — both for ongoing charges and fees for actually opening a trade — can be a bit of an issue among Forex, ETF, Crypto, and most other modern online investment platforms.
However, this appears to be something Pepperstone doesn't shy away from and generally gives you all the information you need regarding trading fees fairly clearly — ensuring that you're well aware of the initial investment you need to make in order to open your account.
Now, while the fact that you have to make a minimum deposit at all can be a slight issue for some people, it does, however, mean that you're ultimately able to pick the account type that'll align best with your particular investment goals, risk tolerance, and even budget constraints.
Pepperstone provides pretty detailed information on the costs associated with each account type, too, including some of the accounts we mentioned earlier, like the Razor account — covering costs like spreads, commissions, and any other potential charges that are worth knowing about.
It goes without saying that having this kind of clarity beforehand can be incredibly valuable if you're looking to keep costs low while optimising your trading strategy.
Finally, depending on the account that you choose, you'll also receive insight into what your inactivity fees are, so try to keep your account as active as possible if you want to avoid ever having to pay any kind of financial penalty just for taking a break from trading.
Pros and Cons of Pepperstone
Though we've covered some of the main features and trading tools offered by Pepperstone already throughout the article, it's worth highlighting what we believe to be the best and worst sides of the platform.
Ultimately, Pepperstone is a pretty solid service, but it's definitely worth covering both sides for a bit more context:
Let's start positively and cover what features we liked about Pepperstone the most:
Strict Regulatory Adherence ✔️
As far as online trading platforms go, Pepperstone is one of the older brokerages out there, launching in 2010.
Since then, though, Pepperstone has built a bit of a reputation as being one of the more secure options out there, and that's only further highlighted by its adherence to different regulatory standards across the world — running in two Tier-4 jurisdictions, three Tier-1 jurisdictions, and two Tier-2 jurisdictions.
If nothing else, this definitely demonstrates that Pepperstone is pretty dedicated to providing a secure and trustworthy trading environment for its users, meaning you're in safe hands.
Tools for Research ✔️
In terms of research capabilities, Pepperstone tends to provide a lot more superior insights compared to the industry average, meaning it's a solid platform if you're looking for in-depth market analysis and information.
It trails slightly behind other industry leaders like IG or Saxo Bank, but Pepperstone's dedication to enhancing its research offerings generally suggests that they're continuously trying to improve its service.
Advanced Trading Tools ✔️
Regarding the specific trading tools that Pepperstone provides, it definitely shows why Pepperstone is such a versatile platform — whether it's down to their Algo Trading, MetaTrader, or even the Copy Trading features that you're able to use with them.
For all the traders out there who are interested in using artificial intelligence based algorithms in order to perform the bulk of your trading, you'll have no problem taking advantage of tools like cTrader, which will give you the flexibility to choose between a few different trading platforms to tailor your experience based on whatever individual preferences or trading strategies you might have.
So, whether you feel like using some of the more familiar features MetaTrader comes with or the advanced features of cTrader, Pepperstone provides a dual-platform approach that ultimately means you're getting a broad and accommodating service either way.
Range of Tradable Markets ✔️
Although you're not getting quite the range that multi-asset investment platforms like eToro provide — given that they cater to pretty much every market, from CFDs to Cryptocurrency to stocks — Pepperstone is still a brilliant platform if you're a trader who's looking to diversify their portfolio from one particular asset class, whether you're looking to trade Forex or CFDs.
Given the vast selection of trading platforms out there, it's only fair that we consider some of the slightly more negative parts of Pepperstone so we can remain impartial while you’re searching for your ideal broker.
So, throughout this next section, we're going to be breaking down a few cons we noticed while testing the platform — some that apply to a lot of different trading platforms and some that are unique to Pepperstone:
Minimal Progress Tracking Features ❌️
Firstly, features such as interactive courses and educational quizzes, while seemingly not major parts of what makes a trading platform appealing, are still one of the best ways of engaging users and making them better traders — especially when you're a beginner trader who needs all the support they can get in order to not lose money while trading.
Otherwise, even if there are still some learning resources available, it's a far more basic experience that's filled with static content when there aren't any interactive options involved, so Pepperstone is lacking in this department.
Furthermore, both seasoned professionals and beginners need to take advantage of progress tracking features if they want to keep an eye on their advancements and identify areas that may require additional attention — general risk management.
However, Pepperstone doesn't offer any kind of tools like this on their platform either, and while this isn't a major issue, it does force you to use a third party platform in order to create some kind of spreadsheet for you to add this data to.
Lack of Educational Resources for Beginner Traders ❌️
Although there are plenty of resources and account types that cater to professional clients and high-volume traders, there's generally a slight shortfall when it comes to Pepperstone's educational resources in comparison to some of the other industry leaders — such as eToro or Plus500.
As such, this could definitely be a bit of a hindrance if you're a newcomer who expects to learn on the job while using this trading platform, and there are definitely better options out there if you prefer something that focuses more on teaching and improvement.
Relatively High Minimum Deposit ❌️
The last noteworthy con of Pepperstone that's worth mentioning is the platform's minimum deposit requirement, which, while not a particularly unusual thing for a trading brokerage to mandate, is relatively high here at approximately £160.
Generally speaking, you should probably not be getting involved with retail investing — regardless of the market you're planning on entering — if this is outside your budget, given how much you're presumably going to struggle with position size and growing your portfolio.
Having said that, when there are plenty of trading platforms out there that don't require any kind of minimum deposit requirement, it can definitely be a little bit frustrating that there's a barrier like this in place.
As such, it makes Pepperstone slightly less practical for any of the novice traders out there who simply want to practice with small position sizes without making any serious commitment to one investment platform, so you may be better off with another brokerage if this resonates with you.
Commissions and Fees
As there are quite a few different accounts, it's worth looking into the specific fees that they offer so you've got a bit more understanding as to which account in particular might be best for you.
We've already touched on the Razor Account and the Active Trader program offered specifically for high-volume traders, but there's also a far more affordable Standard account — offering a cheaper service but with slightly less favourable features.
Let's break some of the fees associated with these accounts down in a bit more detail:
Kicking things off, let's talk about the Razor account, which, fortunately, is actually compatible with a range of third-party platforms you can use if you prefer alternative charting tools — whether it's cTrader, MetaTrader (MT5 or MT4) or the more popular option of TradingView.
This account uses a commission-based pricing model in addition to prevailing spreads, and since they last updated in 2022, the Razor accounts would receive an average spread of around 0.17 pips for the trading pair EUR/USD.
Now, when you factor in the commission equivalent of about 0.70 pips, this takes the overall cost to 0.87 pips, which is slightly above the industry average.
In contrast, there aren't any commission fees attached to Pepperstone’s Standard account — with a 0.77 pip average spread on EUR/USD trading pairs.
So, when you consider all of the fees and 0.87 pips involved with the Razor account (although offering a better overall account), the Standard account is definitely the most cost-effective option that Pepperstone has to offer — whether you're a beginner trader (which is recommended) or someone with slightly more experience.
As for the Active Trader initiative at Pepperstone that we mentioned earlier, this account type offers a rebate on the spread, which is contingent on the tier of account you have and what your monthly trading volume is.
United Kingdom and EU
In contrast to the standard accounts, which pretty much anyone can access, anyone who's looking to qualify for the Tier One rebate, which amounts to a relatively significant 5% per lot, needs to have a trading volume of a whopping $10 million per month (on any kind of commodity), which is equivalent to 100 standard lots on their platform.
As for Tier Four rebates, these are only open to those who can surpass 500 lots per month, so as you can imagine, they are reserved for a particular clientele.
As for the professional clients in Australia, you need to go through a three month period of 100 lots (which is equivalent to 15 million AUD) to gain access to the first tier of the Pepperstone's Active Trader program. While this can definitely seem like a lot, you'll be gaining a 5% discount for every lot, which can be handy for reducing the overall effective spread.
It's possibly unlikely, but for anyone reading who may invest over 200 lots every month, you'll receive a spread reduction of around 15% as part of their Tier Three rebate.
To wrap things up, it's worth mentioning that although Pepperstone is certainly one of the better trading platforms out there if Forex and CFDs are your thing, you're ultimately setting yourself up for failure if you don't heavily educate yourself in tandem with using the platform.
Even with some of the more well known trading platforms out there, such as eToro, that offer CopyTrading features that allow you to get involved with the trading world without any kind of structural understanding of what you're doing, the vast majority of retail investor accounts lose money when trading CFDs.
Pepperstone is slightly better in this regard as they don't offer any kind of copy features like this, meaning you're left to develop your skills as a trader far more independently, but it also heightens your overall risk exposure if you're inexperienced.
In reality, you, as a retail investor with possibly very little experience in the trading world, are up against some of the most elite traders out there, so you stand very little chance of making any money if you don't put in the effort to become better at investing.
Ultimately, just make sure that you're not investing too heavily at the beginning of your trading career, but remember that it's generally necessary to make a few losses at first so you're able to learn from your mistakes and perform better in the future — just make sure you're also consuming as many educational resources as possible, too!
Pepperstone Review: FAQs
Can Beginners Engage in CFD and Forex Trading, or Is Experience Necessary?
Pretty much anyone can get started in the trading world, but the only way you’re going to see any level of success is by failing over time and educating yourself along the way — hence why beginning with a demo account where you can get a feel of how trading works without risking any actual real money. Aside from this, gaining a basic understanding of things such as market analysis, risk management, and even forming your own trading strategy is essential for newbies, too.
How Do Market Orders and Limit Orders Differ in CFD and Forex Trading?
These are two similar trading tools, but market orders are always executed at whatever the current market price was when you click the button — making your entry or exit swift. In contrast, limit orders let you set a specific price level where you want the buy or sell order to be filled, so while this generally gives you a lot more control over your entry and exit points, you won’t always get the position you want if the market conditions miss the levels that you’ve set.
What Impact Does Geopolitical News Have on CFD and Forex Markets?
Whether it’s an election cycle, conflicts around the world, or even new trade agreements being put into place, geopolitical events tend to have a pretty big impact on every kind of tradable financial asset — including CFD and Forex markets, generally causing the market to be far more volatile than usual. As such, you’ll always want to stay in the loop about global news, so you’ve got a chance to anticipate any potential market shifts before they actually happen.
How Do Economic Indicators Impact Forex Trading?
As a trader, you’ve got to take advantage of certain economic indicators — such as GDP, employment data, and even inflation rates — as they’re generally one of the best ways of gaining insight into how a country is holding up economically. In fact, it doesn’t particularly matter whether the data you find is positive or negative; either can have an impact on the value of their currency and provide you with an opportunity to short or long a certain trading pair.
Can I Use Automated Trading Systems for CFD and Forex Trading?
You should definitely still test and monitor these systems so you can be sure they’re performing to the right standard, but yes, there are plenty of automated trading systems, or algorithms, that you can employ while trading both CFD and Forex. While these systems can certainly help eliminate a lot of the emotions involved with trading, there’s still plenty of risk involved — especially with a lot of money on the line — so be cautious of this.
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