Understanding Spreads: The Core of CFD Trading Costs
Spreads are a fundamental component of CFD trading costs, representing the difference between the bid and ask price of a financial instrument. For forex traders, tighter spreads generally translate to lower transaction costs, which can significantly impact profitability, especially for high-frequency or scalping strategies. Both IC Markets and Plus500 operate on different business models that influence their spread structures.
IC Markets, known for its ECN/STP model, typically offers raw spreads supplemented by a commission per lot. This structure is often favoured by experienced traders seeking the tightest possible market spreads. Plus500, on the other hand, operates as a market maker, incorporating its fee directly into wider spreads, meaning there are no separate commissions on trades.
IC Markets vs Plus500: Key Differences in Spread Structure
IC Markets: Raw Spreads and Commissions
IC Markets provides access to institutional-grade liquidity, resulting in very competitive raw spreads, particularly on major currency pairs. For instance, the EUR/USD pair can see average spreads as low as 0.0 pips on their Raw Spread accounts, with an accompanying commission. This model is attractive to traders who prioritise minimal spread deviation and are comfortable with a separate commission structure.
Plus500: Commission-Free Trading with Wider Spreads
Plus500 distinguishes itself with a commission-free trading model. All trading costs are embedded within the spread. While these spreads might appear wider than the raw spreads offered by IC Markets, the absence of a separate commission can simplify cost calculation for some traders. Plus500's model is often preferred by those who prefer an all-inclusive spread and a straightforward fee structure.
Beyond Spreads: A Holistic Comparison
While spreads are a critical factor, a comprehensive broker comparison must also consider other aspects such as regulation, trading platforms, available instruments, and customer support.
Regulatory Oversight
Both brokers are well-regulated, providing a degree of security and trustworthiness. IC Markets is regulated by entities such as the ASIC (Australia), CySEC (Cyprus), and FSA (Seychelles). Plus500 is regulated by several top-tier authorities, including the FCA (UK), ASIC (Australia), CySEC (Cyprus), MAS (Singapore), and FMA (New Zealand), among others. It's crucial for UK traders to ensure they are trading with the entity regulated by the FCA.
Trading Platforms
IC Markets offers a choice of industry-leading platforms: MetaTrader 4 (MT4), MetaTrader 5 (MT5), and cTrader. These platforms are renowned for their advanced charting tools, customisation options, and algorithmic trading capabilities, catering to a wide range of trading styles and experience levels.
Plus500 provides its own proprietary web-based and mobile trading platforms. While perhaps not as feature-rich as MT4/MT5 for advanced technical analysis or custom indicator development, the Plus500 platform is highly intuitive, user-friendly, and ideal for traders who prefer a streamlined, no-frills trading experience.
Range of Instruments
IC Markets offers a broad spectrum of instruments, including forex, commodities, indices, cryptocurrencies, shares, and bonds. Plus500 also provides a comprehensive range of CFDs across forex, indices, commodities, shares, cryptocurrencies, and options.
Comparison Table: IC Markets vs Plus500
| Feature | IC Markets | Plus500 |
| :------------------------ | :--------------------------------------- | :--------------------------------------- |
| Spreads (EUR/USD) | Typical 0.0 - 0.1 pips + commission (Raw) or 0.6 - 1.1 pips (Standard) (typical, at time of writing — check broker site) | Typical 0.8 - 2.0 pips (typical, at time of writing — check broker site) |
| Spreads (GBP/USD) | Typical 0.2 - 0.4 pips + commission (Raw) or 0.9 - 1.4 pips (Standard) (typical, at time of writing — check broker site) | Typical 1.5 - 3.0 pips (typical, at time of writing — check broker site) |
| Spreads (XAU/USD) | Typical 10 - 20 cents + commission (Raw) or 25 - 40 cents (Standard) (typical, at time of writing — check broker site) | Typical 30 - 50 cents (typical, at time of writing — check broker site) |
| Commission | Yes, per lot on Raw Spread accounts | No, spreads include all costs |
| Min Deposit | £200 (approx. $200 USD) | £100 (approx. $100 USD) |
| Regulators | ASIC, CySEC, FSA (Global) | FCA, ASIC, CySEC, MAS, FMA (UK & Global) |
| Platforms | MetaTrader 4, MetaTrader 5, cTrader | Proprietary WebTrader & Mobile App |
*Note: Spreads are typical and subject to market conditions. Always verify current spreads and terms directly on the broker\'s website.*
Verdict by Trader Type
For Cost-Conscious, High-Volume Traders & Scalpers
IC Markets generally comes out ahead due to its raw spreads and commission-based model. If you execute a high volume of trades, the per-pip savings, even with commissions, can add up significantly, making it more cost-effective in the long run. The availability of advanced platforms like MT4 and cTrader also appeals to those requiring sophisticated tools for detailed analysis and automated strategies.
For Beginners & Simplicity Seekers
Plus500 is often more suitable for new traders or those who prefer a straightforward, commission-free experience. Its intuitive proprietary platform reduces the learning curve, allowing traders to focus on market analysis rather than navigating complex software. The all-inclusive spreads simplify cost calculations, which can be less intimidating for those new to CFD trading.
For Traders Seeking a Balance of Features and Value
Many traders look for a broker that offers competitive conditions without compromising on features. While both brokers have their strengths, it's worth noting that Vantage stands out as a strong contender in the UK market, offering a robust trading environment with competitive spreads and excellent platform choices. We are proud to feature Vantage as our trusted partner for UK traders. Consider opening an account to explore their offerings: Open a Vantage account.
Conclusion
The choice between IC Markets and Plus500 ultimately depends on your individual trading style, experience level, and priorities. If tight raw spreads and advanced platforms are your priority, IC Markets is a strong choice. If you value simplicity, a user-friendly platform, and commission-free trading, Plus500 might be more appealing. Both are reputable brokers, but understanding their distinct models is key to finding your ideal trading partner. Remember that CFD trading carries significant risk and you could lose money.
Frequently Asked Questions
Q: Which broker has tighter spreads for EUR/USD: IC Markets or Plus500?
A: IC Markets typically offers tighter raw spreads for EUR/USD (often 0.0-0.1 pips) but charges a commission per lot. Plus500 has wider, all-inclusive spreads, meaning no separate commission.
Q: Is Plus500 good for scalping with its spread model?
A: While Plus500's spreads are all-inclusive, they are generally wider than the raw spreads offered by IC Markets. For scalping, where every pip counts, the commission-based model with tighter raw spreads (like IC Markets) is often preferred, but Plus500 can be used for shorter-term strategies by some traders.
Q: Are both IC Markets and Plus500 regulated in the UK?
A: Plus500 UK Ltd is authorised and regulated by the Financial Conduct Authority (FCA) in the UK. IC Markets, while globally regulated, operates through an international entity for UK clients, meaning direct FCA regulation might not apply to your specific account, so always verify the entity and its regulation.
Q: What is the main advantage of IC Markets\' Raw Spread account?
A: The main advantage is access to extremely tight, raw market spreads, which can reduce trading costs significantly for high-volume traders. However, it comes with a separate commission charged per lot traded.