IG Review

IG Group (IG), founded in 1974 by Stuart Wheeler "as the world’s first spread betting firm," is part of IG Group Holdings Plc, a publicly traded (LSE: IGG) conglomerate that "empowers informed, decisive, adventurous people to access opportunities in financial markets."

With over 178,000 clients across five continents, an extensive product catalog, competitive fees, longstanding business operations, and an excellent industry reputation, it is not surprising that IG is a global leader in online trading and currently ranked as the world's top CFD provider. Given that most established online forex brokers shy away from the U.S. market, due in large part to regulatory requirements, the fact that IG has re-entered this region in 2019 speaks to its commitment to becoming a truly global presence.

IG (U.S.) offers U.S. clients leveraged access to over 80 currency pairs. A well-organized and navigable website with fully­ disclosed services and fees, intuitive platform offerings, an unwavering dedication to client education, and useful research tools coalesce to make IG a clear threat to the other forex brokers in this region. Investopedia's ranking algorithm factored in these characteristics in recognizing IG as the Best Forex Broker for U.S. Traders in 2020.

Who IG Is For

Globally, IG is for anyone wanting to trade CFDs. In the U.S., it's for clients who want to trade the foreign exchange markets. It's as simple as that. To deliver on this successfully, IG has decided to adopt the time-honored adage, "go big or go home" because, well, it can. Low spread costs, emphases on customer service and education, actionable research, and functional user interfaces make this broker well-suited to compete in the online broker market. The ultimate beneficiary of this increased competition should be the American customer who desires to trade retail FX (unless they're from Arizona or Ohio, where residents are not permitted to open IG accounts).

Pros Explained

• Globally, IG offers clients access to an extensive range of offerings that spans a multitude of asset classes. Clients have access to forex, indices, shares, commodities, cryptocurrencies, bonds, ETFs, options, industry sectors, and interest rates.
• IG accepts U.S. clients, though only for forex, which enlarges its already considerable global footprint.
• IG US LLC is registered with the CFTC and a member of the NFA (#0509630). Additionally, both IG Markets Ltd (#195355) and IG Index Ltd (#114059) are authorized and regulated by the FCA in the U.K. These are widely considered to be the preeminent regulatory entities in the world. Simply put, being regulated by a reputable, government-backed agency goes a long way towards establishing the credibility of a firm. Traders accept the risk that is inherent in markets but they would like the peace of mind knowing that their funds are not subject to risks outside of the ones that they are taking, such as counter-party risk. Additionally, U.K./E.U. client funds are held in segregated accounts at Tier 1 banks.
• IG's educational tools are head and shoulders superior to any of the other online brokers that Investopedia has researched, and its commitment to providing clients with timely and informative research is noteworthy.
• IG offers "negative balance protection," which has become a fairly important feature that most online brokers are offering these days, for its U.K./E.U. clients. The catalyst was most likely the SNB event of January 15, 2015 that roiled the markets, especially the highly leveraged retail FX market. Plus, IG (U.K.) also offers guaranteed stop loss orders (GSLO) (for an additional charge), which protects the trader from market gap risk.

Cons Explained

• IG does not offer "negative balance protection" for U.S. clients. This means that a client can lose more than their account balance and end up owing money to the broker.
• IG does not offer guaranteed stop loss orders (GSLO) for U.S. clients.
• IG does not offer social (copy) trading through its web-based interface. Furthermore, back-testing and automated trading capabilities are only available through third-party applications.
• IG's fees for trading share CFDs (for U.K. clients) is higher than the industry standard.

Costs

Globally, IG's costs (spreads, commissions, and fees) are very competitive, and that holds true for U.S clients, as well.

The spread is how IG makes money, specifically through customer trades that "cross" the bid/ask spread. There is a "commission" charge that comes into play when one is trading CFDs, but it is added to either side of the market spread, and there is an actual commission for every share-CFD trade. Additionally, IG (U.K.) charges a premium for guaranteed stop loss orders that kicks in only if that order is triggered, and there are other extras and third-party charges that are clearly documented on the U.K. website.

The minimum spread for the majors on IG's U.S. platforms starts at 0.8 pips, and the advertised average spread ranges between 0.9 (EUR/USD, USD/JPY) to 5.4 (GBP/CAD).

As is the norm in the FX industry, clients will be charged swap fees, using tom-next rates, on positions that they hold overnight, which may be subject to currency conversion charges if they trade in a currency other than the account's base currency. Furthermore, there is an inactivity fee of $12/month if there has been no trading activity for 24 months. There is also a charge of $15 for wire withdrawals. IG provides a transparent and detailed explanation of forex trading costs on its website.

250 units in the base currency is the minimum account deposit globally, which translates to $250 for U.S. accounts and, per CFTC regulations, the highest leverage available to U.S. clients is 50:1. Traders meeting certain volume thresholds are eligible for rebates. There are three rebate tiers, ranging from 5% for at least $100 million in monthly trading volume to 15% for $500+ million in monthly trading volume.

Trade Experience

Globally, IG offers a variety of platform choices and API interfaces, starting with its proprietary web-based offering that is customizable and easy to navigate. This streamlined trading platform is stable and easy to access from any browser, though IG recommends Google Chrome. There is a simplicity to it, especially the U.S. version, that belies its functionality. There aren't all the bells and whistles that competitor interfaces may offer, but what it lacks in quantity is more than made up for in quality. This, along with the industry standard MT4 (downloadable) platform and functional mobile and tablet applications, comprises IG's entire online offering to the U.S. customer.

U.K. clients can access what their U.S. counterparts can, and can also upgrade to the downloadable, fee-based ProRealTime advanced charting platform, which is free as long as certain modest monthly trading activity requirements are met. Additionally, technologically savvy clients can attach their own software or a Bloomberg terminal through a well­-developed API interface.

IG (U.K.) also offers clients with larger accounts the capability of trading CFD shares and forex through L2 Dealer, which provides direct market access (DMA) that bypasses IG's dealing desk. The Forex Direct service on that platform requires that clients have professional designation under ESMA rules. There's no additional charge for this service other than exchange fees.

The web-­based IG (U.S.) platform features basic risk management tools, including price alerts and stop losses. It also streams Reuters news, and clients can split charts into multiple time frames to facilitate their trading experience. Autochartist, a third-party signals provider, is integrated into the platform.

The interface offers three basic order types with the option of attaching "take profit" and/or "stop loss" orders to them. What is a bit surprising is that neither "trailing stop loss" nor "guaranteed stop loss" orders are available on the web-based platforms.

• Market - The simplest order where a trader signals that their trade request should be executed at the prevailing market rate.
• Limit - A pending order where the entry is at a predetermined point below or above the prevailing market rate depending on whether it's a buy or sell. The trader also has the option of selecting the expiration time of this order.
• Stop - A pending order where the entry is at a predetermined point above or below the prevailing market rate depending on whether it's a buy or sell. The trader also has the option of selecting the expiration time of this order.

IG provides home-­grown mobile apps for iOS and Android that can also be loaded on tablets. Basic features include customized watchlists, price alerts, and technical charting. The indicator list is adequate but omitted from the menu structure, reducing accessibility. The Trade menu lacks sophisticated conditional orders but U.K. clients can place guaranteed stop losses. All apps lack customization but they offer Face & Touch ID security and are more advanced than the industry ­standard MT4 mobile app.

The IG Community site has active forums and numerous trade picks through forum entries and blog posts. @IGSquawk on Twitter contains thousands of tweets from IG dealers sharing news and client sentiment. There's no dedicated or third-party social platform and the broker site contains no client positioning data for CFDs, forex, or spread bets. However, IG Client Sentiment at DailyFX.Com provides useful forex positioning data, updated in real­-time. It would be beneficial to clients if this information was integrated into the broker site.

Range of Offerings

Globally, IG has built a comprehensive catalog that numbers over 17,000+ markets. Futures and options are available on many instruments and clients will never have a problem finding something to trade. IG (U.K.) offers:

• Forex
• Indices
• Shares
• Commodities
• Cryptocurrencies
• Bonds
• ETFs
• Options
• Industry sectors
• Interest rates

In the U.S., its product line caters solely to spot forex trading of over 80 pairs which are sorted under these categories:

• Majors
• Minors
• Australasian
• Scandinavian
• Exotic
• Emerging Markets

IG (U.K.) also offers a variety of professional and institutional services, well above the industry average. Accounts at all levels can invest for the long term through IG Smart Portfolios, an account basket that includes savings and retirement programs as well as low­-fee ETFs.

Customer Service

IG customer service is available through a toll-free (U.K.) phone number from 8 a.m. on Saturday to 10 p.m. on Friday. Both prospective and active clients can talk to a company representative through live chat that's available when the platform is open. E­mail, social media, and a comprehensive FAQ round out above average contact options. If all else fails, a well-­documented customer complaint procedure should assist in grievance resolution. Online customer support is available in several languages, which enhances IG's appeal to a broader client base. The broker also runs satellite offices to support licensed operations in several regions.

IG (U.S.) offers customer support via telephone (24/5), email, or Twitter client help. Additionally, the website's FAQs and support pages are well organized and informative.

Education

IG's educational tools are superior to any of the other online brokers that Investopedia has researched. An extensive trader's library, spearheaded by the impressive "IG Academy," will get beginners up to speed quickly while seasoned practitioners will find advanced trading strategy articles quite useful. A healthy roster of online webinars covers "topics from platform walk-through to upcoming trade opportunities."

IG Academy's course is designed to cover material for people at different stages of the trading spectrum, and it succeeds in delivering on this ambition. Clients can also access courses and articles through the handy IG Academy mobile app. It is odd that DailyFX.com, which IG purchased in 2016, is poorly integrated with the broker site, except for the live seminar section, and it's possible that prospective clients won't realize this excellent resource exists. An efficient search function and a comprehensive glossary enhance the value that IG's educational portfolio offers the client.

Portfolio Analysis

IG's web-based U.S. platform's order interface, while simple and intuitive, can best be described as mediocre. The order ticket is limited to initiating basic market and pending orders with provisions for stop-loss and take-profit orders. Guaranteed stop loss and trailing stop loss orders are not available. "Pip value," notional trade size, margin requirements, stop-loss, and take-profit amounts are shown prior to trade execution.

The client chooses the size of the trade which is denominated in increments of 100,000 of the base currency which, in retail FX parlance, is generally defined as a standard lot. U.S. dollar is the default for IG's American order ticket while the U.K. order ticket allows a choice between euro, British pound, Japanese yen, and U.S. dollar. The U.K. site also offers the guaranteed stop loss order option but no trailing stop loss order, which is rather odd.

Basic real-time information about client activity, such as balances, transaction activity, and profit/loss breakdown, can be found in the broker's "My IG" page. IG (U.S.) is also testing out a built-in tool, called "Trade Analytics," which is for analyzing trading activity, but it's only available for live accounts. This addition is useful as it gives clients the capability to drill down into one's trading activity beyond the basic metrics. The broker does not provide a trading journal, nor does it provide tax accounting tools on the platform.

Research Amenities

IG's commitment to providing clients with timely and informative research is noteworthy. There is something for both those that like to read and those that prefer to listen or watch. The one criticism is that the links on the U.S. site direct to the U.K. site which provides information that is not accurate for the U.S. client, such as advertising "guaranteed stop losses."

As noted, IG operates the DailyFX website, which provides comprehensive news, research, and an educational portal with in-house analysts along with hundreds of market topics that include intermediate technical and fundamental analysis. Real-time news is produced in-house and covers major currency pairs. Multiple live webinars build trading skills, highlight key events, and identify news catalysts. A Trading Strategies section presents short-­term buy and sell signals, analyst picks, pivot points, and a host of technical data.

Security

IG US LLC is a registered RFED with the CFTC and a member of the NFA (#0509630). Additionally, both IG Markets Ltd (#195355) and IG Index Ltd (#114059) are authorized and regulated by the FCA in the U.K. and ASIC in Australia. Furthermore, it is listed on the U.K.’s FTSE 250 and has signed up for the "FX Global Code of Conduct, which establishes a common set of guidelines for good practice in the markets."

IG (U.K.) also takes steps to ensure that client funds are not co-mingled with corporate funds, in accordance with the U.K.'s FCA client money rules. This ensures that client assets are protected in the unlikely event that IG becomes insolvent by holding those funds in segregated accounts at regulated banks. Clients also have additional asset protection through the Financial Services Compensation Scheme (FSCS), up to £85,000.

IG (U.K.) provides clients with a guarantee that they will never lose more than they have in their accounts via the negative balance protection rules mandated under ESMA that went into effect in 2018. Guaranteed stop loss orders are also offered, which mitigate exposure to potentially catastrophic losses in extreme market conditions, like the 2015 Swiss franc currency shock.

IG (U.S.) offers neither negative balance protection nor guaranteed stop loss orders. Client funds are not insured by FDIC or SIPC.

IG's software security is aligned with the best that the industry has to offer. In addition to two-factor and bio-metric authentication, the user will be logged out of both the web-based and mobile applications for inactivity.

The broker operates a counter-party dealing desk which is useful for clients, especially ones with large accounts, who wish to trade directly with the inter-bank system through a dedicated platform.

A note about dealing desks: Over the evolutionary course of online retail brokerage, dealing desks have been stigmatized, likely stemming from the inherent conflict of interest issues, where traders (especially beginners) are convinced that their lack of performance is due to the firm's dealing desk "trading against them." While there have been documented instances when this has happened, it is more of an extreme rarity rather than part of a successful business model.

Dealing desks are staffed to ensure the proper functioning of the firm's platform(s), without which revenue generation and profitability would suffer. For example, in the event of a technological glitch with the online interface, clients should have the option of being able to manage their trades. Aside from being regulated by reputable entities, a dealing desk goes a long way towards legitimizing an online broker.

Verdict

IG offers an excellent fit for both small traders and market professionals, with competitive spreads, thousands of trading instruments, and a state-­of-­the-­art news, research, and educational portal. Clients can choose from a variety of platform options and easily upgrade as their accounts build equity. Professionals will appreciate direct market access (DMA) that bypasses the dealing desk.

Being NFA/CFTC/FCA regulated lends credibility and underscores IG's commitment to being a global broker. That said, the inconsistency in not offering negative balance protection and guaranteed stop losses in the U.S. is a bit disconcerting given that the former gives clients peace of mind while the latter offers a viable risk management tool in volatile market conditions.

Overall, IG has a proven track record of being a reputable and highly competent entity whose entrance into the U.S. online forex broker market should be seen as a boon for the American customer.