IG Review: Outstanding in Almost Every Regard
IG is a UK FX, CFD, and stocks broker and one of the leading ports of call for professional traders on the market. A Direct Market Access (DMA) market model is available for the trading of shares. FX traders can use the live rates of tier 1 banks for trading via an ECN/STP model. In addition to more than 10,000 underlaying assets, the catalogue of tradable products also contains binary options. Customers can choose from several trading platforms, including MT4, and use various analysis and training options. There is no minimum deposit, while guaranteed stop-loss orders are available.
IG Pros and Cons
- DMA trading for shares
- ECN/STP for FX trading
- Several market models to choose from
- Several trading platforms
- No minimum deposit required
- British regulation/ deposit protection
- Guaranteed SL orders
- No deposit bonuses
Broker Test: Our IG Experiences
1. Trade Conditions: DMA and ECN/STP
- Share CFDs Germany: 0.05%, min. €5
- Share CFDs USA: 2 cents/ share, min. $10
- Share CFDs Eurozone: 0.10%, min. €10
- Spread DAX (main trading time): 1.0 Points
- Spread DJIA (main trading time): 1.8 Points
- Spread S&P 500 (main trading time): 0.40 Points
- EUR/USD typical spread market making: 0.97 Pips
- EUR/USD typical spread market-making MT4: 1.37 Pips
- EUR/USD typical spread ECN: 0.314 Pips
- Commissions FX ECN/STP: $1 to $6 per Standard Lot
The available selection consisting of several market models and trading platforms is one of the most positive aspects of the IG review. Yet, a detailed consideration of the effective trading conditions for each of these different options is required. This applies to foreign currency trading in particular.
FX Trading: Conventional, MT4, and Forex Direct
When trading conventional CFDs based on a market maker model, IG lists the minimum spread at 0.8 pips and the average spread at 0.97 pips based on trading in EUR/USD. The average spread in EUR/GBP is therefore 1.47 pips, while 1.52 pips are due when trading in GBP/USD.
For FX trading via the MetaTrader4 trading platform, different conditions apply. The average spread in EUR/USD is 1.37 pips, 1.87 spreads are due in EUR/GBP and 1.92 spreads are due in GBP/USD. In both cases, these are commission-free trades: The broker generates its contribution margins exclusively through the bid/ offer spreads.
Demanding traders, who are not using an FX broker such as IG for the first time, will likely opt for trading via the in-house market model called Forex Direct. This is an ECN-like model. Traders benefit from full market depth through a DMA approach and “access to the liquidity of a wide range of banks worldwide” and can thus act as market makers. Since only standard contracts and no mini contracts can be traded via this approach, this is one of the pros of Forex Direct.
The average spreads are much narrower than in the other market models. According to the broker, the average bid/ offer spread is 0.314 pips in EUR/USD, 0.844 pips in GBP/USD and 0.551 pips in EUR/GBP. In addition, however, as in all market models, commissions are not charged without market changes due to the broker.
Commissions are degressive and start at $6.0 per standard lot. Depending on the trading turnover involved, the commission may be as low as $1.0 per standard lot. However, reaching the highest possible discount rate requires a $ 1.5 billion trade turnover in the previous calendar month.
Shares CFDs and Physical Stock Trading
The share trading costs are applicable to trading physical shares as well as the trade of share CFDs through a conventional or a DMA market model. If a share from Germany is the basis of the trade, the commission per transaction is 0.05% with a €5 minimum fee. If the order is placed by telephone, a higher minimum fee of €15 applies.
For Eurozone share transactions, a commission of 0.1% applies, wherein the minimum fee is €10 (€15 for telephone order placement). For United Kingdom shares, the same numerical values apply for billing in GBP. In the IG review, the following was one of the key advantages, which will be of special interest to traders interested in the US markets: An Anglo-Saxon fee model is used for trading US shares. A commission of $0.02 per share is charged. The minimum fee is $10 or $ 15 for telephone order placement.
Trading Conditions for Index CFDs
Index CFD trading is commission-free. The spreads depend on the time of day. During the main trading hours, the FTSE 100 and the DAX 30 each have a 1.0-point spread. For the S&P 500, the bid/ offer spread amounts to 0.4 points. For the Dow Jones, it amounts to 2.8 points between 3.30pm and 10pm. These underlaying assets can be hedged with guaranteed SL orders. For this, an additional spread is due as a risk-reduction bonus, which amounts to 1.0 points for the FTSE 100, 0.25 points for the S&P 500, 2.0 points for the Dow Jones, and 1.5 points for the DAX.
The following aspect of the IG valuation is especially relevant to very active traders: The price list includes refunds. For each half-turn, between €0.5 and €1.0 will be reimbursed. However, reimbursements are only possible from 500 or more standard contracts in the previous month. In this case, the refund will amount to €250.
2. Underlaying Assets/ Trading Platform Offering: More Than 10,000 Underlaying Assets
- Physical Shares
- Share CFDs
- Foreign Currencies
- Binary Options
Via the IG trading platform, a total of more than 10,000 underlaying assets can be traded, which includes physical stocks, share CFDs, foreign currencies, indices, commodities, and binary options. Of course, individual shares make up the largest proportion of the underlaying assets.
In the commodity sector, gold, silver, light US crude oil, Brent crude oil, and natural gas are tradable on the cash market. In the commodity sector, the basic commodity catalogue is significantly expanded through so-called exchange traded products (ETPs), which can be used to invest in copper, grain, and other markets. The ETP trade is billed according to the same fee model as the trading of shares.
There are around three dozen underlaying assetsavailable for index CFD trading. In addition, interest rates, bonds, and virtual currencies such as Bitcoin are tradable. Classic options are also mapped via differential contracts and may therefore be traded with low collateral security. The option-trading offering includes short positions as well.
Binary Options at IG
Traders, who have previously traded binary options via special Cyprian brokers, should give IG a try. The broker offers an extensive catalogue of underlaying assets and contract types, and quotes the rates themselves. The majority of the southern European competition, however, functions as a white label partner of a few platforms.
Binary options are available with run times from 60 seconds up to a month or longer. Possible underlaying assets include indices, foreign exchange pairs, commodities, virtual currencies as well as important economic indicators. The available contract types include one-touch, ladder, tunnel, hi-lo, target, and high/low contracts. IG quotes prices based on maturity, underlying price, customer preference, and expected volatility.
3. Order Features of the Trading Platform: Many Order Types Including Guaranteed Stop Loss
IG's customers can trade via a total of six trading platforms. On the one hand, the main trading platform is available in three different formats (web-based, mobile, tablet PC). On the other hand, three further platforms – Level2Dealer, ProRealTime, and MetaTrader 4 – can be used. The many choices are one of the key advantages of this broker. However, at the same time, this also means that a detailed consideration of the order possibilities of each individual trading platform is required.
Via the main platforms, the following order types are available: limit, stop, trailing stop, market, and guaranteed stops. Users of the Level2Dealer platform can choose from these order types: limit, market, tranche (iceberg) orders, FOK, execute & eliminate, date, day, good for auction, good till cancel, at the other auction, at the open, at the close, and at best.
Users of the ProRealTime trading platform can place orders of the market, limit, stop, trailing stop, market if touched, OCO, and OEO type. Via MT4, orders of the market, limit, stop, stop loss, and take profit type are possible. At IG, Level2Dealer users are therefore especially likely to gain experience with hitherto unknown order types.
4. Analysis Functions of the Trading Platform: Much More Than Charts and Indicators
Chart tools have been integrated into all six trading platforms, which also include access to the AutoChartist tool in the case of the web-based trading platform. Apart from that, several chart formats, drawing tools, and various indicators are available. Trading via the chart is possible on all platforms. The charts are displayed graphically, wherein users can choose between different layouts. Setting price alarms is possible.
However, the analysis possibilities are not limited to mere technical analysis. The broker has developed a screening tool for fundamental data as well. Users can specifically search for securities using specific criteria such as market capitalization, earnings per share over the past fiscal year, dividend yield, gross margin, return on capital, price/ earnings ratios, etc. These kinds of databases clearly target long-term investors as preferred customers alongside day traders and investors with short-term time horizons.
5. Regulation, Deposit Guarantee, and Risk Limitation: British Broker with Guaranteed Stops
IG maintains a branch office in Düsseldorf for both sales and customer support purposes. However, legally speaking, all transactions are executed in London. Accordingly, the company falls within the purview of the UK Financial Market Authority (FCA).
The customer deposits are invested in segregated accounts at other banks and are hedged by the UK Deposit Guarantee Fund FSCS for up to GBP 50,000 per customer. According to the broker, “a selection of several renowned banks” is used to invest the customer deposits. For hedging purposes, IG only uses its own funds. The broker therefore does not engage in speculative transactions on the market and has not invested in other companies or government bonds.
In the IG review, the broker’s regulation in the UK was regarded as a major advantage. The company seat on the River Thames is still seen as one of the most reliable regulatory spaces in the world. In the eyes of many experts, the UK deposit guarantee scheme is safer than any deposit-guarantee scheme with a link to the Eurozone, as the specific risks of the currency union are eliminated in Great Britain.
Not just beginners, who are gaining experience with a broker for speculative CFD trading like IG for the first time, tend to worry about losses in special market situations given the “Franc Shock” of January 2015. There is no legally binding, global exclusion of margin obligations beyond the existing account balance in the UK. However, it is possible to hedge individual positions with a guaranteed stop loss as well as to strictly rule out losses for these positions beyond the required level. Traders should, however, consider both the insurance premium to be paid (mark-up on the spreads) and the necessary minimum distance from the market rate.
6. Automated Trading: MetaTrader4 and Other Options
No automated trading is possible via the main trading platforms. However, this option is offered via MetaTrader4, ProRealTime, and Level2Dealer. In the latter case, an Excel plugin is used for automated trading. This allows IG customers to develop and test their own trading systems and/ or to obtain signals from external data sources as well as to implement them automatically.
ProRealTime software users can create their own tools and strategies, encode them from scratch, import third party strategies, and export strategies to external sources.
Trading via the customer’s own front-end solution is also possible via API interfaces. The orders are executed via a Smart Order Router, which connects the users to numerous marketplaces via their own application. FIX, REST-based, and streaming API interfaces are available.
Market data and historical prices can also be obtained from the interface. The interfaces can be used in combination with Excel (VBA), NET, Java, and any other http-supporting programming language.
7. Account Opening and Minimum Deposit: No Minimum Deposit & Optional VideoIdent
In the IG test review, the broker's waiver of a minimum deposit was seen as one big advantage. A new account can be opened in full without a specific deposit amount being required as well as be cleared for trading. Three procedures are available for the necessary identification check. In addition to the PostIdent method, new customers can be identified by their principal bank or by means of video-identification procedures.
In the case of the video identification method, the customer’s identity is determined in the context of a video telephone call. This hence requires an HD webcam along with a PC, smartphone, tablet, or laptop as well as an integrated or external microphone, a loudspeaker, and the customer’s valid ID card or passport with a hologram.
All interested parties can open a demo account first and test the trading platform with virtual capital, which is available in a nominal amount of €10,000. Contacting the customer service team directly is not required for setting up the demo account.
The broker expressly points out that orders placed through demo accounts are not subject to slippage or interest/ dividend adjustments. In addition, underlaying asset price movements are not taken into account outside core trading hours. The demo account results can therefore significantly deviate from the results of the live trading account.
8. Competing with Other Brokers: Large FTSE-250 Player with a History Since 1974
IG is wholly owned by IG GROUP plc., which is based in London. This company was founded in 1974 and is now listed on the FTSE 250. The market capitalization of the company amounts to approx. €4 billion.
IG GROUP has subsidiaries in 17 countries on 5 continents and caters to 136,000 customers worldwide (as of May 2015) according to the company’s own data. Between July and September 2014, an average of more than 4 million monthly transactions were executed. According to the company, the net trading volume amounted to €543.7 million as of May 2015. As of the same month, the company had more than 1,000 employees worldwide. During the core operating time, the trading platform is thus able to achieve a latency of 99.96%.
According to the company's homepage, IG GROUP was the first spread betting company worldwide as of 1974. Thus, over the past two years alone, GBP 17 million has been invested in technology and development. The broker works on “trading innovations” with 300 in-house developers and lists sentiment indicators, mobile price alerts, trading signals, price optimization technologies, Web API, market screeners, and other features as examples of such technologies.
9. Additional Services and Offers for New Customers: Webinars and More
Beginners, who are gaining first-time experiences with an off-market CFD broker such as IG, can acquire the necessary basic knowledge either through the study of the relevant literature or through the seminars that are offered by this broker. IG's webinar range, however, goes beyond the entry level and provides support for various market events in addition to conveying basic knowledge.
The fundamentals of CFD trading, chart technology, economic data, and the use of different trading platforms such as ProRealTime or MetaTrader4 are just some of the topics that are covered, for example. In addition, a weekly chart-based outlook on important markets is available. The only webinar series specifically addressed to advanced users is called “Live Trading.”
The broker maintains a comparatively generously endowed customer referral program: Anyone who points out the broker’s offering to friends or acquaintances or gets them to open an account on the basis of a first-hand IG report receives a credit of €100. For several successful referrals, customers can even earn as much as €400. Moreover, the person that has been referred as a new customer receives a credit of €100. In order for the referral fee to be credited, the new customer must open a trade account within a period of six months following the referral and complete at least five trades.
New customers can benefit from special conditions during their first two weeks with IG. These special conditions concern both the commissions and the minimum trading sizes. When trading CFDs (with the exclusion of shares), the standard trading volumes are reduced by 50% during the first two weeks. When trading German share CFDs, a minimum commission fee of €3 applies for online orders that have been placed during the first two weeks. The minimum commission for orders placed by telephone is €10 instead of €15.
10. Customer Service and Website: Manageable Despite a Wealth of Information
DCustomers can contact this broker via telephone, live chat, and e-mail. Very active customers are given access to a so-called premium service that includes various additional services.
The online presence contains a lot of information, which can be attributed not least to the very large catalogue of underlaying assets and the six available trading platforms. Beginners who are interested in giving IG a try and who do not want to work through the extensive information pool themselves should definitely call the customer support team. After opening a live trading account, new customers can take advantage of the 1:1 introduction to the most important trading functions.
Conclusion and Final IG Evaluation
How did IG perform in our IG experience report? IG is one of the leading ports of call for trading shares, CFDs, and foreign currencies on the market. The combination of transparent and fair market models (DMA in equity trading and an ECN model in FX trading), tight spreads, and low, declining commissions has won over our experts. The offering of the British broker is suitable for beginners (no minimum deposit and guaranteed stops) as well as for advanced and professional traders, including those who prefer to leave their trade decisions to algorithms. The selection of several trading platforms, research/ analysis tools, and binary options is also very convincing. Very few of IG's competitors are able compete in regards to the technology and conditions that this broker offers.
Our Final IG Review Rating: A-