2019 Best Online Brokers Awards
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.
IG Group was founded in 1974 and is currently ranked as the world’s top CFD provider. The company is publicly traded and a UK FTSE 250 member, with a market capitalization in excess of GBP 3.1 billion. Their extensive product catalog and competitive fees aren’t surprising, given longstanding business operations and an excellent industry reputation. IG recently entered the U.S. market, and will be competing with two other major players that are already solidly entrenched in the U.S.
A well organized and easy-to-navigate website contains fully disclosed services and fees, unlike competitors who often hide the bad stuff in fine print. They’re compliant with new European Securities Market Authority (ESMA) regulations that reduce forex and CFD leverage as well as requiring negative balance protection and a client loss disclosure. Their mandated risk warning now admits that 81% of CFD trading clients lose money, higher than the 76% industry average reported in August 2018. The ESMA mandate is likely to have an impact on EU broker business models in coming months, increasing odds that IG Group will alter account specifications and / or spread calculations. In the meantime, the broker is working hard to upgrade qualified retail clients to a professional designation that allows higher leverage and direct market access (DMA) to the forex interbank system.
Industry standard MetaTrader 4 (Win and Mac)
Guaranteed stop losses
1000s of markets
May incur exchange and subscription fees
Dormant account fees
Retail clients can’t trade forex on interbank
No copy/social trading platform
The broker is regulated by the Financial Conduct Authority (FCA) in the UK and the Australian Securities and Investment Commission (ASIC) in Australia. UK traders have broker default protection up to GBP 50,000 through Financial Services Compensation Scheme (FSCS) but no additional insurance coverage is provided. Site encryption is average.
Client funds are segregated from company funds, reducing the potential for misuse, but the fine print says they can hold funds outside local jurisdictions, increasing risk in case of a bank default. They operate a counterparty dealing desk, raising conflict of interest issues, but higher end clients can trade directly with the interbank system through a dedicated platform. They provide guaranteed stop losses for an additional fee while negative balance protection is now mandated under ESMA rules.
IG offers an excellent variety of platform choices and API interfaces, starting with the industry standard MetaTrader 4. No MetaTrader 5 is available but clients can upgrade to the ProRealTime advanced charting platform for free as long as they meet modest monthly trading activity requirements. The web based IG Trading platform features basic risk management tools, including price alerts and stop losses. It also streams Reuters news and ProRealTime charts, including the ability to split charts into multiple time frames.
Higher-end clients can attach their own software or a Bloomberg terminal through a well developed API interface. They can also trade CFD shares and forex through L2 Dealer, which provides direct market access (DMA) that bypasses IG’s dealing desk. 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.
IG provides homegrown mobile apps for iOS and Android that can also be loaded on tablets. Basic features include customized watch lists, price alerts and technical charting. The indicator list is comprehensive but omitted from the menu structure, reducing accessibility. The Trade menu lacks sophisticated conditional orders but clients can place trailing and guaranteed stop losses. A useful signals “menu” features third-party buy and sell signals. All apps lack customization but they offer Face ID and Touch ID security and are more advanced than the industry standard MT 4 mobile.
Research Tools and Insights
IG operates the DailyFX.com website, providing comprehensive news, research and educational portal with in-house analysts and hundreds of market topics that include intermediate technical and fundamental analysis. Realtime 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.
The DailyFX Forex University is impressive, with course based materials covering a comprehensive variety of forex and technical topics. The IG site has its own educational resources through IG Academy, covering CFDs and spread betting in addition to forex trading. The material is broader in nature but equally useful, with segmentation between beginner, intermediate and advanced topics. Clients can also access courses and articles through the handy IG Academy mobile app. It’s odd that broker site integration with DailyFX.com is poor except for the live seminar section and it’s possible that prospective clients won’t realize this excellent resource exists.
The IG Community site has active forums and numerous trade picks through forum entries and blog posts. @IGSquawk on Twitter contains over 18 thousand tweets from IG dealers sharing news and client sentiment. There’s no dedicated or third-party social platform, unlike many competitors, 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 realtime. It would be beneficial to clients if this information was integrated into the broker site.
Guaranteed stop losses are available for most markets, lowering catastrophic risk, but the order requires a modest fee in addition to spreads and/or commissions. The broker also offers a variety of professional and institutional services, well above the industry average. Professionals will appreciate direct market access (DMA) that bypasses the dealing desk while 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.
IG has built a comprehensive catalog of shares, currency pairs, indices and commodities. Fees for CFDs and spread bets are identical in most cases, but there are exceptions. Futures and options are available on many instruments and clients will never have a problem finding something to trade. Coverage includes exotic and minor currency pairs while many commodities can be traded through spot markets or futures contracts. Differences between CFDs and spread betting, including tax implications, are clearly documented.
£250 is the minimum account deposit. They offer an aggressive rebate program for large forex volume as well as volume discounts for UK share traders. Margin and overnight lending rates are competitive. Accounts get charged steep monthly fees after two years of inactivity. The broker offers no fixed spreads or trading account tiers through the main site, other than retail vs.professional designation, but IG Smart Portfolios and a dedicated institutional site round out an impressive account listing.
They now offer six cryptocurrencies, traded as spread bets or CFDs, but Bitcoin’s high 40-point spread could deter potential clients.
Commissions and Fees
Commissions, spreads and fees are very competitive, with the EUR/USD average spread at .75 pips. They charge higher spreads on shares and indices during off-market hours and placing trades in those dead periods can be expensive. For example, the fee for a U.S. 500 spread bet rises from .4 points during US market hours to .9 points after the CME and NYSE close. This is partially offset by a minor .4 point guaranteed stop loss premium that doesn’t fluctuate during the market day.
IG customer service is available through a toll-free (UK) phone number from 8 a.m. Saturday to 10 p.m. Friday. Both prospective and active clients can talk to a company representative through live chat that’s available 24 hours per day. Three random contacts with this service were promptly answered. 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.
What You Need to Know
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 an impressive variety of platform choices and easily upgrade as their accounts build equity. Despite major positives, client profitability rates need to be watched because recent data places the broker slightly below industry average.
Those interested in forex trading can find an excellent solution with IG. See how they compare against other online brokers we reviewed.
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