Pepperstone vs FXCM

Why Write about Pepperstone vs FXCM ?

In writing this article, I am amazed at the number of articles written about brokers that don't qualify as being created with the traders best interest in mind. I am astounded, to tell you the truth, but not altogether surprised. Forex is full of false promises, ripping the retail trader off with either lack of or incorrect information. It does not serve the trading business at all to promise all sorts of false results and highlight them with flashy trading platforms full of crap that doesn't even help one make a profit. In fact, in the long run, such false promises hamper the business. Case in point: U.S. forex traders have only 2 U.S. based brokers to choose from now, all because of an overreaction to broker abuse.

The Advantage of a Local Broker

First, In general, it may be better to use a local broker. I don't know your particular situation, but I presently reside in Canada. Although I have the option to trade with some foreign brokers, one of my best choices is a local broker Oanda with whom I am protected from loss of funds because I am a Canadian resident. I am protected up to 1 million dollars in the case of bankruptcy and believe me this can happen more often than you think.

I had two friends lose their funds with two different brokers despite the promise of segregation. Segregation of funds does not protect your funds against bankruptcy despite what you've been told. Only one was paid back in part. I am tired of the bullcrap lawyer talk. There is not a guarantee by the broker in the case of insolvency, apart from what a government may state, despite what brokers might state. The exceptions lie in what protection is offered by an individual government. For example, Canadian forex accounts are protected in the case of broker insolvency by the Canadian Investor Protection Fund  for up to 1 million dollars. 

I am presently trading with a larger Australian broker but plan to move the bulk of my fund to Oanda. I still like trading with some of these foreign brokers because they tend to have excellent liquidity. I feel safe with the more prominent Australian brokers like Pepperstone and AXi and will keep a small number of funds with them. However, the bulk of my funds will remain with the Canadian broker.

A larger broker tends to offset, as much as possible, the likelihood of going broke. I will cover what I know about Pepperstone vs FXCM but unfortunately I can only recommend one of these brokers. As I looked more into FXCM, I learned they did not act in the best interest of their clients. I'll cover their good qualities, but I can't recommend them as a broker, not after what I'll disclose below. So why do I even include them in the comparison? They still have many good broker qualities as you'll see below. They may have learned from their big mistake, but there are better choices out there in terms of brokers for you to consider.

The Advantage of the Bigger Brokers

As mentioned above, the advantage of the prominent broker is that they hold a large number of funds. This prominence doesn't guarantee anything, but it does mean they will have more substantial sums of money for continued growth and protection of funds. The more prominent brokers like FXCM and Pepperstone tend to be well established and more experienced in managing their funds. They have stood the test of time and will probably continue to grow as they have in the past.

More prominent brokers tend to offer more regarding education, greater liquidity, faster execution because of direct market access,  low spreads, more opportunities for trade copying, and more instruments available to trade. For example,  Pepperstone and FXCM both offer the trading of cryptocurrencies and precious metals. It's this kind of variety and competitiveness that attracts many traders to these bigger brokers. More traders in general again mean greater sustainability and stability.

Pepperstone vs FXCM

FXCM is a leader among brokers. Its deposit and withdrawal services are considered very quick. Its execution of trades tends to be dependable and in favor of the retail trader. It spreads are comparable to most other market leaders although a little higher on average than other leading brokers we compared to like Pepperstone.

This broker has been around a long time and has seen its share of mishaps. It serves a large client base but recently has been found committing “questionable execution activities” in the United States. This abuse has led to FXCM being banned from operating in the U.S. I was going to recommend FXCM as an option to Pepperstone until these recent charges. You can still trade with FXCM if you’re a non-U.S. resident but please be aware of FXCM’s transgressions. I won’t be offering an affiliate link for FXCM as a result of this scandal.

FXCM Scandal

The National Futures Association prevented FXCM from further membership claiming that FXCM was involved in deceptive  practices that were “designed to benefit FXCM, to the detriment of its customers.”  FXCM sent its customers’ orders to an FXCM-owned subsidiary called Effex. Effex sent rebates for these orders back to FXCM, and FXCM hid the payments from the NFA.  Also, Effex executed the orders in a way that benefitted FXCM at the expense of their customers.

Read here: https://commodity.com/brokers/fxcm-review/

I cannot, as a result of this lack of consideration for the retail trader, recommend FXCM as a broker. They may have changed but I can’t be sure if they act in the best interest of the customer.

pepperstone vs FXCM

Pepperstone (Link Above)

In the comparison of Pepperstone vs FXCM, Pepperstone wins out, It's an excellent broker. I have used them for many years and have found their execution very fast. The spreads are relatively low, and deposits and withdrawals are relatively quick. They have excellent educational resources and access to 3 different trading platforms: MT4, MT5, and CTrader. They have an excellent list of trading instruments including cryptocurrencies. They allow hedging and higher leverage if needed.

They are located in Australia and therefore well regulated. Combine this with the fact that Pepperstone has a large clientele as one of Australia's biggest brokers and you have a reasonable safety net against insolvency. I will continue to use Pepperstone in the future. Pepperstone is no longer accepting Canadians, but I'll provide a work around in a future article.

Pepperstone has an excellent education portal that is available for all. It covers both the technicals and fundamentals and posts from Kathy Lien, a well-known forex trader and commentator. She focuses mainly on the fundamentals which drive the forex market.

Below is my affiliate link for Pepperstone. I will receive reimbursement for sales. Please consider using my link below. Thank You. 

  • Richard Hoffmann says:

    Hello,

    The world of trading and investment can be such an overwhelming concept and place to go without a proper guide to assist with the learning process. It appears to me that these sorts of programs are essential in navigating this environment effectively. 

    Are these programs only available in Canada or can I gain access to them in Europe? If they are not available, are you familiar with any products that are recommended for the European market?

    Thanks

    Rich

  • travis says:

    I have been wanting to get into trading for awhile now but I don’t have the time or knowledge to do day trading. I really like that pepperstone has educational products for me to learn with. I think that using a bigger more established company is the way to go. The bigger companies usually have a better track record. Do you know if pepperstone allows USA residents. 

    • admin says:

      Unfortunately, Pepperstone does not allow trading for people in the U.S. They do allow it for the people living in the territories like Puerto Rico. The U.S. has been somewhat restricted lately with forex brokers they can choose from. I hope this changes in the future.

  • Eli says:

    Never heard of these forex brokers before. Maybe, they don’t do advertisements online.

    There are lots of forex brokers out there but only few give assistance to beginners. I tried forex trading before but I need to learn a lot of things. I wished someone will give assistance to guide and help until I understand and be able to execute on my own. From there, I stopped. I plan to study and learn later, for now, I’ll focus with some other ways to earn online.

    Anyway, it’s good that you exposed the scandal that FXCM had. There are indeed a lot of brokers out there that are not reliable. Making a good review like this certainly helps the newbies. Hoping Pepperstone can totally help beginners like me.

  • Emmanuel Buysse says:

    This is a great post and good info.

    I’ve been with some brokers, such as Plus 500, you heard about them?

    Anyway, I heard about the FXCM scandal and of course I won’t try to be with them, instead, as you mentioned,Pepperstone seems to much better,of course to make money it starts by yourself, but a good broker can make the difference.

    Thanks for sharing it with us, since this will help lots of people!

    • admin says:

      I hope you’re outside the U.S. and Canada. Pepperstone doesn’t offer service to either. It used to provide service to Canadians, but overregulation seems to have scared them off. If you live elsewhere, then they’ll accept your registration.

  • Mike says:

    I had no idea about the differences between local and bigger brokers so thanks for clarifying this!

    It makes sense that the bigger brokers will have a larger sum of funds to continue growth. It’s great they provide education as well because I think it’s always important to learn when investing in anything. 

    Pepperstone does sound very good. How long have you investing in the forex market?

    I can’t see your affiliate link for Pepperstone by the way…

    Thanks again,

    Mike

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