Forex trading platform, Pepperstone the Melbourne headquartered FX and margin trading broker has announced a substantial reduction in the spread it charges on one of the worlds most actively traded equity indices.
The CFD broker which has operations in the UK, Europe the Middle East and Africa will cut its Dax spread by 25.0% reducing the differential between the bid-ask prices to 0.90 index points from the prior charge of 1.20 points.
What does this reduction in spreads mean for Pepperstone clients?
Quite simply this is a significant cost saving for those clients that trade the German equity benchmark. The spread between the buy and sell prices is a fixed cost that traders have to pay as they enter or exit from a position. a=A 25% reduction in the spread charged reduces the traders fixed cost by the same amount.
Pepperstone’s clients will still need to be the right way round to make money out of the Dax trading but the price will now need to move 25% less before they are in profit. And the narrower bid-ask price may make more trades viable for those clients who are scalping or pursuing other high-frequency trading techniques. Something that Pepperstone encourages through its Razor account and services such as VPS.
How do Pepperstone’s Dax spreads compare to other brokers?
Having cut its Dax spread to 0.90 index points Pepperstone is now the cheapest place to trade the index, among the brokers that we survey at the Good Money Guide. As such Pepperstone has sent a signal to its competitors.
Pepperstone has traditionally been strongest in FX, however, with brokers such as IG and CMC Markets earning as much as 60 % of their trading revenue in equity index products, Pepperstone has likely spotted an opportunity to try and win market share.
The spread reduction comes just ahead of some significant changes in the Dax which will move from 30 to 40 constituents in Mid September. At the same time, new rules around eligibility for membership of the index will be introduced.
What other indices can you trade with Pepperstone?
Pepperstone makes prices in a wide range of other equity indices. In Europe, in addition to the Dax, clients can trade the FTSE 100, the French CAC 40 the Spanish IBEX 35, The Dutch AEX 25, as well as the Swiss SMI 20 and the Norwegian 25 indices. Clients can also trade the Euro Stoxx 50 and the DAX Midcap 60 indices.
In the USA Pepperstone offers the Dow 30, the S&P 500, the Nasdaq 100 and Russell 2000 indices along with the VIX and Canada’s TSX 60.
Whilst in the Asia Pacific region traders can choose from Australia’s ASX 200, Japan’s Nikkei 225, the Hang Seng, the Hong Kong China H -share and China 50 indices, as well as the Singapore 25 index. Pepperstone also trades in the South Africa 40 index.
Darren is a veteran of the financial markets with almost 36 years of experience under his belt. He has worked in trading, sales, analytical, and research roles, he has been a regular guest & commentator on financial television channels and publications. During his career, Darren has been fortunate to act for and advise major hedge funds and investment banks as well as HNWI. Darren analyses the markets using a blend of technical and fundamental analysis