IG is a platform that enables you to trade one thing, foreign currencies. Forex is a niche and highly risky asset class, which makes IG itself a fairly niche service. But it is a well-designed, well-built niche service. If you are looking for a dedicated toolkit for trading currencies, IG is well worth considering. Before diving into the world of foreign currency trading, work with a financial advisor who can help you decide how much of your portfolio should be devoted to this and how best to pursue this type of investing.
IG is part of IG Group, which has worked in the forex markets since 1974. This is worth calling out at the top of this article, because forex can be a difficult marketplace. As a highly speculative investment and an asset class that by definition crosses international boundaries, foreign currency is a field that can attract many disreputable operations.
Services & Feature: What Does IG Offer?
IG is a feature-limited trading platform. It only offers currencies, no other asset class. This means that unless you trade exclusively in forex, you will need another broker to manage your other assets such as funds and equities. This makes IG generally best suited for committed traders, who don’t mind paying for a specialized toolkit. (This is a U.S.-based limitation. For investors in other countries, IG offers a broader array of asset classes.)
Unlike many specialized products, IG does not offer a desktop version of its trading client. Investors use a web portal to make their trade. As noted further below, the trading space is very well designed and highly intuitive to use.
From a trading perspective IG offers all of the basics that an investor could want. Looking up currency pairs is a snap, as is pulling up the detailed information about any given position. Within each currency pair window, it’s easy to buy and sell assets and set up more complex orders. Although the system does not support some of the truly sophisticated positions that you will find in more robust trading platforms, IG does offer basic conditional trading instructions. For example, you can set stop loss order and take profit orders, or establish a price you would like to trade at subject to an expiration date.
It is worth noting that IG does not guarantee stop loss prices for its U.S. clients. While it will trigger the sale at your price it will not reimburse you for any “slippage,” which is any change in price between when the order is given and when the transaction takes place.
Perhaps most interesting is the If/Then order, which allows users to establish paired stop and limit orders. This allows you to build a sort of mini-algorithm for your own trading, albeit one with just two commands. In the fast-moving world of foreign currencies, that has enormous value.
From a technical data standpoint, IG is absolutely flush. Within the screen for any currency pair you can choose from dozens of different technical indicators and can build your trading screen to match personal preferences. (For example you can have technical and pricing data shown alongside each other, on a single chart, etc.)
Perhaps emphasizing its role as a platform for dedicated traders, the fundamental research options on IG are almost nonexistent. A panel on the right hand side of the screen gives you notifications about any specific positions you have selected, and a social media feed displays market-related tweets. That’s it.
Fees: How Much Does IG Cost?
There are usually four types of fees to look out for when choosing a trading platform. You should look out for these when evaluating any investment or trading service:
- Trading fees. Any fixed charge attached to each trade that you make. This can come in the form of a flat fee or what’s known as the “spread.” This is when your broker charges you based on the difference, if any, between the buying and the selling price of an asset.
- Trading commissions. This is when a broker will charge you a percentage based on the volume or value of each trade.
- Inactivity fees. Any fees that the broker charges you for not trading, such as for keeping money in a brokerage account.
- Non-trading/Other fees. Any form of fee for trading on this platform not covered above. For example, a brokerage might charge you for making deposits into your brokerage account, taking money out of it or signing up for additional services.
IG primarily makes its money on the spread. In forex trading, costs and gains and losses are expressed as “pips.” (While accounts differ, “pip” generally means price interest point.)
Pips are a shorthand used by traders in several different financial sectors. A single pip refers to the smallest amount by which prices of an asset can change, regardless of that asset’s class or market. In foreign currency markets, prices are almost always expressed out to four decimal places. This means that a single pip will mean 0.0001 (1/100 of 1%) in whatever unit of currency is being traded. This can also be referred to as one basis point.
Note however that a pip does not always have to mean 0.0001. A pip is defined as the smallest unit of change for a given asset regardless of how that unit is measured. If, for some reason, a particular asset were measured in tenths of a cent, then a pip would mean 0.1 cents.
For every trade you make, IG charges you based on the spread for that particular asset pair. It sets a minimum spread based on the particular assets involved. Common assets will have a minimum spread of 0.8 pips, while more unusual currency pairs will have higher minimum spreads (in some cases up to three or four pips per trade).
Positions held overnight will be charged a margin fee to cover the costs involved with holding this position open. This is set as the tom-next rate plus a variable administrative fee. If you have not traded in 24 months, IG begins charging a monthly inactivity fee of $12. Depending on which currencies you are trading, conversion fees may apply and IG typically charges 0.5% for this.
Effectiveness: How Well Does IG Work?
IG offers one of the most well designed trading spaces this reviewer has ever used. Now, much of this has to do with the simplicity of the product itself. IG does not offer many products or services, which makes it easier to design an uncluttered workspace. But you can only credit that so far. Ultimately, this is just an extraordinarily well designed trading platform. Navigating IG’s workspace is intuitive. Their web platform lets you build a customized trading space in the same way as most desktop platforms, laying out windows and information screens to meet your specific trading patterns.
Currency pairs are sorted by occasionally odd categories, which chiefly reflect the limits of the currency marketplace. In addition to a general listing of all pairs and a search function, IG sorts currencies by Australasian, Scandinavian, Exotic and Emerging Markets.
Too, it is hard to miss just how many currencies you can’t trade on this marketplace.
IG advertises more than 80 currency pairs, and this much is true. What’s more, it’s also true that a handful of currencies dominate almost all global trading in this space. Eight currencies make up more than 80% of all trading in the forex market (the USD, EUR, GBP, JPY, CHF, AUD, CAD and NZD) and most of the rest of the market is occupied by major economies that are still emerging into this space (such as the Chinese CNH).
However, IG is billed as a specialized tool. If investors wanted a product which covered the majority of the market they could trade currencies on one of the handful of full-featured platforms that have begun offering forex. Investors on IG may quickly notice that it does not offer currencies from most of the world. Major economies such as Brazil and India are simply absent from this platform, as are emerging markets such as Kenya.
Most traders may not notice this. However, for a platform that offers dedicated forex trading, IG should offer more than the standard set of assets.
IG is a good choice for traders who want an exclusive forex tool. While, for a dedicated forex trader, the fact that IG offers mostly common currency pairs may prove limiting, it is an otherwise excellent and well-designed trading platform. Just remember, while the field isn’t necessarily swarmed by the kinds of scams that proliferate in cryptocurrency trading, there are many foreign currency traders operating in unregulated jurisdictions. Others have popped up in recent years to try and cash in on the rise of internet trading. The upshot is that traders need to work a little harder to make sure they find trading platforms run by reliable, reputable brokers. IG Group has a good reputation in this regard.
Tips for Investing
- A financial advisor can help you create a financial plan for your investment needs and goals. Finding one doesn’t have to be hard. SmartAsset’s matching tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- A free, easy to use investment calculator can give you a quick and reasonable assessment of how your investments will be doing over the next 10, 20 or more years.
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