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IG vs Pepperstone Comparison

Since I'm trading Clipper on live accounts with both IG Markets and Pepperstone (regular account), I thought it would be insightful to compare the two...

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About the data

This analysis is based on 43 like-for-like trades i.e. trades that occured simultaneously with both brokers. Due to slight differences in the price feeds there were some trades that triggered with one broker but not with the other. This went both ways, but these trades were excluded from the analysis.

The Pepperstone data not include Razor accounts, since I don't yet have enough trades on my razor accounts to be meaningful. So this comparison is of similar account types with both brokers, ie:

  • No brokerage/commission paid
  • 1:200 leverage

Interest and swaps

One thing that made the analysis a little complex was in the area of interest and swaps.

For background, the swap is the interest paid (or received) on the funds required to hold the position. The swap rate is determined by the broker - based on international rates - and comprises:

  • The differential of the base interest rates between the base currency and the quote currency.
  • The differential of the account currency and the quote currency.
  • Other risk allowances that the broker chooses to make.

The interest is proportional to the position size.

Pepperstone rolls this calculation into the MT4 trade transaction, using the 'Swap' field. For some reason, IG Markets put this into a separate transaction that usually appears right after the trade transaction on your statement.

Interest/swap charges are applied each time an open trade crosses GMT 22:00.

NOTE: Due to the 2-day settlement on international FX, trades that are open on Wednesdays at GMT 22:00 
attract 3 days worth of interest.

Commissions and brokerage

As mentioned above, the accounts in this analysis do not attract brokerage or commission; these costs are covered by the spread.

Results

Cutting to the chase, there is nothing startling about the comparison in that both brokers are comparable.

Comparison of broker net profit per contract on Clipper trades

Differences in BUY/SELL profitability is due to the difference in interest on long and short trades

At the time of the trades in the study, the interest EURUSD and USDJY is a cost for both long and short trades, which supresses the profitability. Short trades on EURJPY and XAUUSD attract interest (i.e. we get paid interest), which boosts the profitability.

Pepperstone swap rates @ 20/Jul/2019

This table shows the swap rates from Pepperstone at the time of writing. Note that swap rates vary frequently and so these rates are not the same as those that were applied across the trades in the study. They are provided though to show the variation between both long and short swaps, and the diffrence between symbols/instruments.

The swap value is shown in Points per Contract whre a Point is 1/10 of a Pip.

Symbol

Swap Long

Swap Short

EURJPY

-1.37

-2.83

EURUSD

-11.51

6.42

USDJPY

6.93

-12.34

XAUUSD

-13.32

6.99

To take an example (ignoring the Wednesday issue), a LONG EURUSD trade, of size 1 contract, that is open for 24 hours will attract a swap charge equivalent to -11.51 points = -1.15 pips.

A SHORT trade of 1 XAUUSD contract will attract a swap benefit of 6.99 points = 0.7 pips each time GMT 22:00 is passed.

Conclusion

The standard account types for IG Markets and Pepperstone are comparable on like-for-like Clipper trades.

Acknowledging the price feed differences will cause variation in the trades that same system will generate with each broker, this seems to be 'swings and roundabouts' - i.e. on the small amount of data that I have there seems no advantage one way or the other.

When i get more trading data on my Pepperstane Razor account I will revisit this analysis.

Mike
 

I create automated, industrial-grade algorithmic trading systems for my own use and share my journey with other traders who are interested. I call my automated systems 'Trading Minions'. It's easy to 'trade like a machine' when a machine is doing the trading. When I'm not thinking about trading systems, I make real machines, like steam engines. I also play a little ukulele. Well, all ukuleles are little, aren't they?

  • PGH says:

    Mike
    Interesting work – to ensure some comparability between brokers – especially if looking to migrate or just as a secondary broker in terms of redundancy protection etc.

    • Mike says:

      Hi Peter,

      Thanks for your comment. It’s particularly relevant for people who wish to trade superannuation accounts.

      Cheers
      Mike

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