Plus500 Review
Worth It?
Plus500 is a UK-based focus/financial markets platform designed to provide users where the users are able to purchase CFD's (Contracts For Difference) and trade them with the broker...
The service boasts 318,000+ active clients, 38+ million positions opened and a swathe of other achievements.
Like most other online platforms, it offers "real time" financial trading with a variety of different markets, including the foreign exchange market (forex), stock/shares, commodities and now "crypto".
The service is operated from Israel and has regulated operations in the UK, Cyprus and Australia. It also operates in Bulgaria, where its software development is handled. It was founded in 2008 by six alumni of the Technion Institute of Technology.
The Plus500 service has a number of advantages over its competitors (namely that it doesn't have anywhere near the lag of most of the other systems), and also claim to provide 24/7 support.
Whilst they've done well financially ($328m revenue in 2016 for example), does this mean they are an effective means of growth for any trading hopeful? This review looks to examine all the parts of the system that may determine how people are able to use it.
What is Plus500?
- Regulated Business In UK, Australia & Cyprus
- Founded in 2006
- CFD's Only
The most important thing you need to understand about Plus500 is that it ONLY offers CFD's (Contracts For Difference). This is a big deal, as for a long time most people didn't really understand what CFD's are. However, CFD's are becoming much more commonplace and much more popular these days, and Plus500 can proudly claim to be one of the first (if not, THE first) major player in the CFD trading world.
CFD's are similar to Futures (they work in the same way). That is to say that they are a contract you take out with your broker.
This contract is based on the future price of a currency pair/cryptocurrency/stock/commodity (hence the term "difference"), and the hope (for you) is that you buy a contract that's actually going to provide an accurate reflection of the price (otherwise the broker will take the lot).
It works like this.
Say you want to buy a new car. This car is stunning and the company are taking pre-orders, so you go to the dealer and pay a deposit. In doing this, you sign a contract which stipulates that you'll purchase the car for $50,000 when it releases (in 6 months' time).
Unfortunately, say the manufacturer hits a snag and has to not only delay the car, but also increase its price by $30,000. This is good news for you, because you have a contract which states you only need to pay $50,000 (rather than the $80,000 it is at now).
This means that you have one of two options. Either stay with the contract (and get a bargain), or re-negotiate with the dealer. Maybe there's a clause in there too or something.
The point is that you're in an advantageous position simply by signing a particular piece of paper at a particular time. The dealer would be interested in renegotiating because otherwise they will not make any money on the vehicle.
This is how it works with CFD's / Futures - you're not buying the underlying asset, but a contract against it. You're hoping to buy a contract where the price is either MORE or LESS than the present. Obviously, the broker wants the opposite.
It's good if you win, because it means that you get your money back and a slice of the "difference" (paid for by the broker). If you "lose", you end up paying the broker.
Whilst CFD's are often used to provide derivative trading (especially in the "crypto" world), they carry a heavy burden... they are often leveraged to the hilt (it's called "margin trading"). This basically means that if your contract come out a "loss" for you, you may owe the broker more than you originally invested... and depending on the level of margin you invested on, it could be a lot more.
This said, the CFD trading scene is generally the realm of newbie, or non-affluent traders who simply cannot afford to "own" an underlying asset (don't have the capital available).
Features
The Plus500 system works inasmuch the same way as other trading platforms/brokers, with a core focus on providing access to a number of markets, and having the functionality in place to placed trades inside those markets.
We've found that in order to "trade" effectively on any of the financial markets (especially the likes of Forex/Stocks/etc, you'll want to look for several particular features. These are included below (as Plus500 has them), although there are several specific factors to consider when looking at them all.
Real-Time Trading
The ability to browse all the asset prices, etc. in real time.
Web/Desktop/Mobile Apps
As with many other platforms, the system works on all devices, allowing users to trade wherever they are.
Crypto
Like such platforms as eToro, because Plus500 utilizes CFD's, they offer a full retinue of "crypto" trading.
Conclusion
In the end, the main thing you need to appreciate with Plus500 is that it only deals with CFD's. The service itself works well, and Plus500 is as effective as most other services, and the trading platform itself is efficient, with a wide range of functionality and enjoyable to trade from.
The real benefit that Plus500 offers over competitors is that it is a completely CFD-based system so is a lot less confusing overall than certain other players in this marketplace.
As mentioned above, CFD's are love/hate. People who know what they're doing, and perhaps don't have huge amounts of capital, love them. People who do have the capital hate them... predominantly because you don't own any of the underlying assets once the trade completes (which means you cannot pass it to your offspring after you die).
We can therefore recommend Plus500 for people who already have experience in the trading world, and those that don't (i.e. beginners).
Plus500, and the other "mid tier" systems are designed to give people some specific functionality without the need to actually consider what they're doing in a broader sense.
In all, we'd give Plus500 4 / 5.
It has some decent functionality and is trusted by a large number of active users.