There are a few brokers offering trading with contract for difference: CFDs. In the financial market CFDs are getting more and more common types of trading due to the high leverage and low margin requirements.
The numbers one and two in the broker top are IG.com and Plus500.com CFD Service. Both listed on the AIM section of the London Stock Exchange, both offering a wide range of tradable assets. What are the differences between IG.com and Plus500 CFD Service?
Similarities between IG.com and Plus500.com CFD Service (Your capital is at risk)
Every trader needs a good set of tools to manage risk and to predict the future rates of a particular asset. Both cfd brokers offer tools. What are the similarities between IG.com and Plus500 CFD Service?
Risk Management tools
Making money in the financial market starts with managing the risk. What tools can there be used? This is a brief overview of the risk management tools offering by CFD brokers IG.com and Plus500.com CFD Service.
Guaranteed stop-loss or Guarenteed stop: an absolute limit on the risk you are willing to take. When the market suddenly moves ‘the wrong way’, the stop-loss function closes the position, without any slippage. It is a guaranteed stop. With IG.com this will cost you extra money, the spread will increase. With Plus500.com the guaranteed stop is not available for all assets and needs a certain disctance from the current trading price.
Stop-loss: this is the common stop-loss option. The stop-loss can be added when the position is open or before opening a position. This is the best way in managing risk. However, there is a chance of slippage. When the rate suddenly gaps the wrong way, the new rate is the one on which the position is closed. With the Guaranteed stop-loss this won’t happen.
Trailing stop: trailing stops offer a way of mainaining profit when the position is in the green. A trailing stop only means that when the rate drops a certain amount of pips, the position is closed. This is to prevent the profit from vaporizing.
Alerts: both CFD brokers offer rate alerts. You can set an alarm for a specific rate of a specific asset. When the alarm sounds, you decide what you want to do with it!
Leverage: with IG.com, you decide how high the leverage should be in your trading. This might seem positive, but I think it isn’t.
In order to make more profit, you need to trade more in a single trade with IG.com. With Plus500.com you can trade with less money due to the higher (pre-determined) leverage. When you trade with more money in a single trade, you can lose more money in a single trade.
Differences between IG.com and Plus500 CFD Service
Opening hours for trading: Trading Indices CFDs with IG.com can be done 24h a day. With Plus500.com this is from 8:00h to 22:00h. I think you can decide what is best for you.
Forex CFDs are available from Sunday 23:00h to Friday 22:00h.
Trading charts: the Plus500.com Trading Platform is offering professional charts with over 15 indicators like Bollinger Bands, ADX, Alligator, RSI and so on. But the IG.com trading platform also supports this. There is however one difference, in favor of IG.com: draw lines. Where you are a technical analysis trader, you really want to draw trendlines.
Other trading options: where Plus500.com aims at the professional trader, IG.com is more for the professional traders. Offering a lot tools only suitable for pro’s, IG.com also offers more trading types. Binary options, common options, bitcoins,
Trading Costs: the main difference is the amount of you costs you have to pay per trade. IG.com charges you for €10 for every European stock order with a value of up to €100,000. Plus an additional 0,05% when the amount exceeds this €100k!
Plus500 CFD Service, however, does charge you any additional fees for trading with their platform. Every tradable asset has a bid and an ask price in which one or more cents is the difference.
Overnight fees: both brokers charge a trader a fee (interest) when a position is kept overnight. IG.com charges you a fee of no less then 2,5% of the traded amount. This is REALLY HIGH when we compare this to Plus500: 0,01%.
Can you get in debt: with Plus500 you can not lose more money than your initial deposit. In other words: you can not lose more money then your account holds. With IG.com you can! On the ig.com website yo can read that your account balance can be below zero in trading CFDs.
The best brokers are regulated by an authority. Operating a brokerage firm according to a certain set of rules, especially when the customer’s money is involved, means ‘security’ for the customer.
- Plus500 Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909)
- Plus500 CY LTD is authorised and regulated by the Cyprus Securities and Exchange Commission.
- Plus500 AU LTD is regulated by Australian Securities and investments Commission – Australia only.
What about IG?
IG is authorised and regulated by the Financial Conduct Authority only. Which is very strange for such a big company. Plus500 has more regulation and to me that just seems better. Still: just like with any other broker, your capital is at risk.
Conclusion: IG.com or Plus500 CFD Service
Similarities and difference, both are found between the services offered by these two brokers. Now you know about that, which one would you choose?
When you are a pro trader, you might want to head over to the IG.com website. You need the tools they offer, the extensive charts, try out binary options.. Despite the huge trading costs they charge you with.
When you are new to the trading market, and especially to CFDs, I think Plus500.com CFD Service is the best choice:
- You can not go in debt!
- The costs are lower,
- The charts are easier to understand thanks to the lack of all these professional tools,
- The opening hours are wide enough.
Second, once you have signed up with a broker of your choice, you might outgrow this broker and move over to another one in a year or 2. When you open an account with Plus500.com you will receive a welcome bonus, terms and conditions apply. Give it a try with them, learn the system, develop a strategy, pay little for every trade (no additional fees, just spread).
Plus500.com is the winner of this review.
No matter which broker you choose, always keep in mind that you are playing with your money. Yes, you can get rich. Yes, you can lose it all. Only trade with money you can afford to lose!