Are you deciding between the Pepperstone razor vs standard account?
This article will help you decide which of the two account types you should trade on.
I will start with a general overview of the razor and standard account types offered by Pepperstone.
Then compare the razor vs standard account to see which one is more competitive.
Pepperstone account types
Pepperstone offers two account types that you can trade on.
This is typical from most Forex brokers but the main difference between Pepperstone razor vs standard account is the spreads and transaction fees.
When you click on the account types page on Pepperstone's website, you will see something like this.
Pepperstone standard account review
Pepperstone’s standard account features institutional grade spreads without any commission.
However, there is a mark-up on the spread.
On the standard account type you can trade from an average spread of 1.0 – 1.3 pips. The EURUSD is used as the benchmark because it is the most popular currency pair traded.
It is usually the most competitive spread available on every forex broker's platform too.
The standard account type is available on all the trading platforms offered by Pepperstone. So you can create this account type on the MT4, MT5 and cTrader platforms.
Which one you choose is a matter of preference however single share CFD’s are only available on the MT5 platform.
Pepperstone razor account review
Looking at Pepperstone's razor account type features institutional grade spreads with the benefit of no mark-up.
This means that you will be trading on raw spreads, however a fixed commission of £4.59 will be applied per 100k traded. In other words, £4.59 per round turn lot.
This separate fixed commission will also vary depending on your accounts base currency and the trading platform you choose to trade on.
On the MT4 and MT5 trading platforms, the fixed commission is applied as follows;
- For USD denominated accounts, it will be $7 per round turn lot.
- For EUR denominated accounts, it will be €5.23 per round turn lot.
- For CHF denominated accounts, its CHF 6.60 per round turn lot.
cTrader calculates commission slightly differently compared to the MT4 and MT5 platforms.
The cTrader platform pegs all currencies traded to the USD and applies the fixed commission on a per 100K traded basis. So the fixed commission will vary slightly depending on the purchased currency and what the rate of exchange is versus the USD at the time.
Pepperstone razor vs standard account comparison
When comparing the Pepperstone razor vs standard account, you might initially be more attracted to the standard account.
This is understandable because the standard account allows you to trade on institutional grade spreads with zero commission.
Compared to the razor account, that has spreads from 0.0 pips but a $7 fixed commission per round turn lot. This means that the transaction fee to open and close a deal will be $7 per lot.
The transaction fee is applied in full whenever you open a trade.
This might sound expensive but it is a pro rata amount. Meaning that if you trade one micro lot, the fixed commission to open and close a deal will only be 7 cents. For mini lots, it will only be 70 cents to open and close a deal.
The fixed commission is proportional to the lot size and you can trade from one micro lot (volume of 0.01) on Pepperstone’s razor or standard account types.
Trading 1 lot on the Pepperstone razor vs standard account
In reality, there is no such thing as commission free trading in Forex.
Forex brokers are remunerated from marking up the raw spread or by applying a separate fixed commission to your deal.
When you trade 1 lot on the razor account vs the standard account;
You are paying a separate fixed commission of $7 per round turn lot, plus the spread.
Or, you are crossing a higher spread whenever you buy or sell a currency pair. All transaction fees are built in to the spread.
To show you which account type is more competitive, both account types have to be standardized so a like for like comparison can be made.
This is done by calculating the transaction fees for the razor vs standard account in terms of pips and Dollars respectively. You can learn more about calculating the value of a pip here.
When you trade one lot, the value of one pip is equal to $10. Therefor, $7 is equivalent to 0.7 pips and every 0.1 of a pip is equivalent to $1.
Now we can compare the transaction fees between the Pepperstone razor vs standard account better.
Using the EURUSD spread for this example;
On Pepperstone’s razor account, you can trade from a variable average spread of 0.0 – 0.3 pips, plus a $7 per lot fixed commission. This is equivalent to trading from $7 - $10 per round turn lot.
On Pepperstone’s standard account, you can trade from a simple variable average spread from 1.0 – 1.3 pips. This is equivalent to trading from $10 - $13 per round turn lot.
Both account types are very competitive by industry standards.
Pepperstone razor vs standard account verdict
So which one should you choose?
If you are looking for the most competitive account type, the razor account is the one to choose.
It is also the most popular account type for this very reason.
Having said that, some traders prefer the standard account for its simplicity.
Other traders may also be trading with algorithms that only take the spread in to account when executing trades.
Account types like Pepperstone’s razor account might have an adverse effect on the algorithm’s performance because it might not be programed to take in to account a separate fixed commission when trading.
You can open multiple trade accounts under your user profile.
So you can create a razor or standard account type with any combination of trading platform to suit your requirements.
Both account types benefit from superior execution speeds and all instruments are available for trading on either one.
The only thing that is left is what trading platform to use, but this is a matter of personal preference.
- Licensed and regulated broker (ASIC and FCA).
- Lightning fast execution, better trade fills and less slippage.
- Excellent customer service and free withdrawals.