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Pepperstone Review

By Will Ellis
Last Updated on January 2, 2024

The basics:

  • Pepperstone is a trading broker based in Australia. It deals in stocks, ETFs, cryptocurrencies, and foreign currencies. It does not deal in bonds, options, or futures, but is open to negotiating them.
  • Pepperstone has its headquarters in Melbourne, Australia. It also has offices in the United States and the United Kingdom that give it access to the New York and London Stock Exchanges.
  • Due to its global reach, Pepperstone is regulated by governmental commissions in Australia, the United States, the United Kingdom, Europe, Cyprus, South Africa, and Southeast Asia.
  • Through the Australian Securities Exchange it is connected to China and Japan, allowing it to trade in Chinese, Japanese, and Hong Kong currencies and shares, as well as their exclusive cryptocurrencies.

Table of Contents:

What is Pepperstone? 🔎️

Pepperstone is an Australia-based broker. That means they can do one of two things for you when it comes to investment: They can either invest money on your behalf for a fee, or they can provide you with licenses to trading platforms, so you can trade your money yourself for a much smaller fee.

Pepperstone has no trade platform of their own, so the licenses they give out will be to things like MetaTraders (for foreign currency), eToro (for shares), or AvaTraders (for CFDs).

Does Pepperstone Charge Commissions? 💰️

Yes, but with a few caveats. To begin with, Pepperstone does not charge commissions on the buying, selling, or trading of normal shares. It does have commission fees on forex, but they are listed on their website, and they are relatively small. They are not going to plunder your earnings through these fees.

Aside from charging commission fees on the foreign currency trades you make, a majority of their commission fees are attached to trades you do on CFDs of various kinds. That means that while they do not tout their ability to secure CFD transactions, they are willing to enter into negotiations for them.

They will charge commission fees on CFDs for foreign currency, shares, and cryptocurrency. They also implement a common type of fee called a “swap rate”, instituted by the holders of foreign currency.

What is a Swap Rate?

A swap rate is a charge on your account for holding certain securities over time. This charge is decided weekly and is different between shares, foreign currency, commodities, and indices. Of note is that cryptocurrency does not have a swap rate. But that is not what makes swap rates so tricky.

Swap rates for shares are calculated using this formula: 

Daily swap charge / credit = market closing price x Trade size x (our charge* +/- LIBOR)) / 365

Something that you will notice is that if you plug certain values into certain variables in this formula, you will come up with a negative number. That is because there are some situations where swap rates will result in you getting paid, rather than having to pay for holding the securities yourself.

Why Does This Happen?

Swap rates are implemented for much the same reason many fees are implemented. When it comes to foreign currency, for example, you are barely paying anything in terms of commission fees. But you are incurring risk, and the spread, commission fees, and swap rates all help mitigate that risk.

There are three people involved in a transaction to buy an amount of foreign currency:

  • The broker
  • The broker’s client
  • The seller

And sometimes the seller will be a broker representing a client of their own. All of these people basically need to be paid to participate in the transaction at all in order for the transaction to be worth their time.

But if everyone needs to get paid, how do you go about doing that? Do you exchange money between the four? No, that would take too long and would result in money changing hands with no real collateral. What you need to do is figure out who is at an advantage and who is at a disadvantage.

That is what the swap rate formula does: It identifies who is causing risk in the transaction and forces them to pay the other people involved in the marketplace. After all, someone holding a transaction overnight is a risk to the economy. If you died with a share in your hands, it would basically disappear.

Does Pepperstone Have Hidden Fees? 💵️

The reason why the biggest trading brokers in the world are those without commission fees is that commission fees do two things:

  1. They make trading with a broker inconvenient. Frankly, people like free stuff and they do not always understand why commission fees exist or how they work. 
  2. Commission fees are often hidden in dense contracts and can result in a broker getting much more of the money you make than you mean for them to get.

Pepperstone has commission fees that are inconvenient, but they are good enough to not have commission fees that are hidden in their contracts. They are not trying to scam you.

What Kind of Accounts Does Pepperstone Offer? ➡️

Pepperstone Trading

Pepperstone offers its clients two kinds of accounts: A “standard” account which charges extra commission fees on its spreads, and then a “razor” account that just charges normal commissions.

The “razor” account is, as you might have guessed, a premium account with a subscription fee. This account avoids additional charges but is really only fit for someone who expects to be trading every day.

In the simplest terms you can think of the standard account as being designed for retail investors that do not plan to make their income from trading. The razor account, on the other hand, is designed for day traders. That means that its fees compliment a person who makes an income through trading.

Finding out Which Account is Right for You

Determining whether you should get a standard or razor account is more important than you might think. It is easy to think of the standard account as cheaper due to lacking a subscription fee, and the razor account as more expensive due to having one. But their prices are more determined by how much you trade than how much you pay or do not pay just to have the account in the first place.

For instance, if you have a standard account and trade every day in a week, then the commission fees will quickly add up to be more than the monthly cost of a razor account. 

The razor account is generally pretty good at paying for itself too. Even if you do not trade every day of the week, you can still make it worth it as long as you trade more than two days a week every month.

By the same token, if you find yourself trading less than eight times a month, then you probably do not need a razor account. The cost of the fees is not so steep that the premium option is always better.

Does the Standard Account Have Restrictions on Trading?

No, the standard account is not locked off from any functionality. Similar to the commission fees discussed above, the extra fees on the standard account and the subscription fee for the razor account are both different ways of establishing collateral between the broker and the client.

That means that you can make any trade you want on a standard account. The restriction that is imposed on you is not one of capability, but one of accountability. In order to account for the risk of letting anyone with a standard account to make any trade, they charge those accounts extra.

Is Getting an Account Hard?

Some brokers have complex, multi-step, time-gated processes to setup even the most basic accounts. The question is, does Pepperstone do this as well? What is their account creation process like?

For the most part, Pepperstone’s account creation process is fast and automated. That is not to say that it is simple—you still have to know what you want to trade and what trading platforms you want to enter into ahead of time if you want to do it right. But you are not going to be given a credit check.

Some people will actually find that to be a downside more than an upside, as it means that Pepperstone serves people that might not be as reliable as they say they are. This is not much of a concern for most traders, however. Again, the security offered by their commission fees mean the risk is minimal.

That means that Pepperstone is a great broker to serve as a starting point for many investors. It is not the cheapest around, but the ease of making an account means most people can get into it.

Deposit and Withdrawal with Pepperstone ➡️

So, you have made your trades and paid your commission fees to Pepperstone for the money you made. Now, your earnings are stored in their account. What does it cost to get your money into your pocket?

Sadly, yes. This is definitely the fee that feels the most gratuitous among those levied by Pepperstone. Commission fees, sure. Spreads, sure. Both of these are critical for ensuring a secure market.

Even swap rates can be defended. In fact, especially swap rates, since you can profit from them as much as you can suffer from them. The one fee that serves no practical purpose is the withdrawal fee.

How much does it cost you to withdraw your money? $20 for accounts outside of the European Union and Australia. This is not going to be a lot to most people. Anyone who makes their money from trading will look at this and see and extremely minor fee. It is more the principle of the matter.

It is your money. You earned it. And they are locking it behind a $20 fee. 

Given that it is only for clients outside the EU and Australia, it is likely that this is a fee borne from transaction costs more than pure convenience fees. It actually does require resources to send transmissions to places like the United States, Asia, and Africa. 

So, while it does seem bad, the fact that most of Pepperstone’s customers are going to be based in the two regions that do not have to pay the fee greatly mitigates how frustrating it is.

Who is Pepperstone For? 🤔️


With all of this in mind, we can better answer the question as to who Pepperstone is for.

The commission fees and pricing structure of the whole thing tell us for that it is for people with a reserve of cash to begin with. You are not going to be trading penny stocks with Pepperstone.

The access to a variety of securities, premium “razor” account, and transparency regarding fees are all hallmarks of a platform geared towards experience traders. Not many retail investors are going to know what to do with securities like commodities or CFDs, nor are they going to understand all the fees.

It is worth mentioning that Pepperstone comes with a knowledgebase that can get you to the point of understanding all their fees and complexities. But even that knowledgebase is more about analysis than learning. It offers the terminology in a trading context, but it does not teach it to you.

This means that on just about every level, Pepperstone is there to serve people who have experience with trading more than the people who are new to trading. This is not necessarily a bad thing, but it is an important thing to know if you are on the fence about what broker to use.

For some people, Pepperstone is just not going to give them the trading experience they want.

Conclusion 💡️

Pepperstone is a trading platform with a lot of potential. Fortunately, maximizing that potential is in your hands. If you can make profitable trades consistently, then it does not matter whether those trades are big profits or small ones. You will be able to outpace the fees in no time.

But if you want to make big investments in search of a “lottery ticket” investment, then it is probably best for you to look elsewhere. Pepperstone just has too much complexity for such a goal.

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