Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.6% 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.

Beginner

Inside Pepperstone: Understand the costs to trade

Ever thought about how little optimisations can help your overall performance?

Think about costs for example. Not just transaction fees but also ongoing costs such as swaps and occasionally slippage. Sure, they’re a part of the process, but the astute trader can minimise them to limit the drag costs placed on the account .

At Pepperstone, we want to be transparent about our fees so you can be in the best position to trade. Here’s a short video explaining how this works.

Cost breakdown

Transactions typically include 2 types of cost: the spread and the commission. We’ll also cover holding costs.

Spread

There are two prices that play an important role when opening and closing a trade; the ‘bid’ that’s the highest price a buyer is prepared to pay and the ‘offer’ which is the lowest the seller is willing to offer. To execute at the quoted price, a buyer must execute at the offer price or if they’re a seller, at the bid price. Either can leave an order in the market at another level of their choosing.

Commission

Commissions determined by Pepperstone’s account type- razor or standard and the instrument you're trading. We discuss account types below, but for Share and ETF CFDs there is a fixed commission regardless of the account type, but for Forex market the commission is marked into the bid-offer spread on the standard account or as a seperate charge for the razor account.

On the other hand we have holding costs like swaps for Forex and overnight funding for all other markets. Now these may only affect you if you hold the position past the set time of 5pm New York time each day. Scalpers and experienced day traders keep a close eye on these times and can often avoid them successfully.

Other costs

Another potential cost associated with holding is slippage. Although far less common, this usually occurs when a trader has a stop loss on a trade and the price trades through the stop due to a sudden movement. Once the stop loss has been triggered it becomes a market order to close the trade at the best prevailing price at that time in the market. If the market moves sharply lower (or higher depending if you hold a long or short position) then the price you requested on the stop loss order and the actual fill price may be different.

Pepperstone account types

If you’re feeling comfortable with costs, you should consider which Pepperstone account might suit your style.

Standard accounts include commission on top of the raw spread, so this can be helpful for traders to see the all-up transactional costs.

Razor accounts are often preferred by scalpers, day traders as well as both discretionary and algorithmic traders. They enjoy the ability to access our raw spread from the liquidity provider with a commission taken from the account balance.

All Pepperstone fees and charges are displayed on our website and you can always reach out to our Client Services team for assistance. You can also find more information about or spreads, commissions and swaps here.

Learn more about trading CFDS

Here at Pepperstone, our customers love the product range along with the low cost to trade and the fact so many markets are open around the clock. Interested? Watch the more videos to learn or speak to our team about whether CFDs are right for you.