Plus500 is a popular fintech firm and global broker with a focus on derivative markets. The company offers over 2,500 contracts for difference (CFDs). Unlike most of its competitors, the provider does not allow users to diversify portfolios with spot Forex, metals, or stocks. This company has a high trust rating, but Is Plus500 good for beginners?
Is Plus500 Safe for Beginners?
Since its establishment in 2008, Plus500 has evolved into one of the largest CFD brokers. It boasts licenses from several top-tier jurisdictions and publicly traded stock. The shares of Plus500 are bought and sold on the London Stock Exchange (LSE: PLUS), and they are also included in the FTSE 250 Index. Read more in our review.
This broker is a group of companies holding seven licenses in total. It includes seven subsidiaries on different continents. Each is authorized by a trustworthy organization in its jurisdiction. Here is the full list:
- The FCA (the Financial Conduct Authority) in the UK
- The CySEC (Cyprus Securities and Exchange Commission)
- The ASIC (Australian Securities and Investments Commission),
- The FMA (Financial Markets Authority) in New Zealand
- The FSCA (Financial Sector Conduct Authority) in South Africa.
- MAS (Monetary Authority of Singapore)
- the FSA (Seychelles Financial Services Authority)
As you can see, the question “Is Plus500 safe for beginners?” should not bother you. This multinational provider ensures a safe and secure environment for neophytes and seasoned experts. You can be sure that your data and investments will be safe. What’s more, this is not the only reason to choose this broker.
Overview of Advantages
If you are planning to focus on CFD markets, Plus500 is a competitive candidate. Its software is highly rated, and mobile access is just as smooth as trading on the desktop-based web terminal. At the same time, like any broker, the company has a few areas for improvement. First, consider the strengths:
1. Easy to Get Started
You will find the account registration procedure to be fast and convenient. Open a demo account from the homepage in just a few clicks, using your email, Google account or Facebook profile for quick login.
After trading in the risk-free mode, you can switch to the live market. To open a real account, the company will ask for your standard personal details and documents to verify your identity. Like any regulated broker, Plus500 complies with AML (anti-money laundering) and anti-terrorism regulations. Still, even real account registration takes just a few minutes.
2. Easy-to-Use Software
Most beginners find the company’s desktop platform user-friendly. It is less sophisticated than such popular environments as MetaTrader5, which makes it more suitable for a newbie. However, do not confuse user-friendliness with profitability — you will still need a solid strategy (find out more in our ‘Tips’ section).
The desktop platform is easy to navigate. It uses two-factor authentication to protect your data and investment. The fee structure is transparent, so a beginner can easily understand how much each trade costs.
The mobile app offers the same advantages and convenient search, which is complicated on some competing platforms. You can learn the fundamentals on the go, from any screen or location, 24/7.
3. Competitive Conditions
In terms of spreads, Plus500 offers conditions that are close to the industry average. This is true for most of the Forex CFDs on Major pairs. Free withdrawal is also a major advantage (for example, eToro charges $5 for every outgoing payment). The inactivity fee is only charged if the user does not log in for 3 months in a row.
Although the minimum deposit requirement is not the lowest, the company provides low-cost transactions. Users can choose between different payment methods: credit and debit cards, bank transfer, Skrill, and PayPal. In case of any questions, you can always reach out to the team via Live Chat.
4. Demo Account
Like other reputable brokers, Plus500 provides unlimited demo accounts. You can practice trading on its desktop platform or mobile app as long as necessary. Build your skills gradually, and switch to the real mode when you have confidence in your financial foresight.
The company also provides a selection of educational videos and articles. From the official website, you can download the Plus500 ebook in PDF format. It is a comprehensive guide to the instruments, features, and terminology used by the broker.
5. Excellent Support
24/7 support is another major advantage. Users can contact the team at any time of day or night by email, live chat, or phone. The quality of customer service is undeniable. There is also a comprehensive FAQ section on the Plus500 website with information on everything from account verification to withdrawals.
Things to Consider
Choosing a trustworthy broker is not easy. Making sure that it will meet your trading needs is even more complicated. Aside from the license, traders with little or no experience should consider the range of accessible markets, the quality of educational materials, the software, support, and other aspects.
Trading is risky on its own, and choosing a company at random is the worst mistake. So, will Plus500 be the best for you? Here are the most important aspects for any rookie trader:
- Strong regulation (tier-1 jurisdictions are preferable)
- Smooth trading experience and simple navigation on desktop and mobile platforms
- A wide array of educational tools and resources, such as articles, glossaries, and video tutorials
- Competitive fees, including tight spreads and cheap/free withdrawals
- Excellent customer service 24/7
- Simple account registration procedures
- Modest minimum deposit requirement
As you can see, Plus500 meets most, but not all, of these requirements. Like any other broker, it does have its areas for improvement. Beginners are often disappointed to discover:
Average Minimum Deposit
Cautious users may not find the deposit amount ($100) acceptable. It is true that some competitors have a lower entry threshold — for instance, you may get started on eToro with $50. However, this is not the only criterion for comparison. Unlike eToro, Plus500 will not charge you for withdrawals.
High Fees for Some CFDs
The absence of discounts for active traders and VIP clients may not be important for newbies, but relatively high trading fees on CFDs should not be ignored. They fall into the mid-tier range, so you should pay close attention to the cost of trading different asset classes. Some instruments are cheaper to trade than others. For example, the Apple benchmark fee on Plus500 is $15.5. Meanwhile, other brokers may require half as much.
No Copy Trading
Plus500 does not offer any social features. Traders do not have an opportunity to copy the strategies of their more experienced peers for a fee. Thus, do not expect to trade by replicating anyone’s approach. There are no strategy managers to follow. Every user needs to develop their own roadmap to success.
If you decide to give Plus500 a try, here are a few tips to help you trade successfully. These are the universal axioms of trading, and they can be applied to any broker. If you want to achieve consistent results, you should:
1. Limit Your Risks
Like any other popular broker, Plus500 provides the risk limitation triggers — Take Profit and Stop Loss. Both must be used for every trade. With Take Profit, you program the software to execute your trade automatically when the predetermined price is reached. This way, you do not have to stay glued to your screen throughout the day.
At the same time, set the Stop Loss value, which is the largest amount you can afford to lose. It is advisable to have Take Profit placed twice as high as your Stop Loss. For example, if you can afford to lose up to $10 on a trade, while Take Profit is placed at $20, this means that you need to be right only 50% of the time. This is a basic example of a balanced strategy.
Do not put too much capital at stake per trade. Most experts advise limiting position size to 1-2% of your overall investment. Remember that with bigger volumes come higher risks.
2. Start Small
For rookie traders, it is often tempting to venture out into the real market as soon as possible. This is the exact opposite of what you should do. After completing the demo stage, start with a modest deposit. Stick to your strategy and keep track of all decisions. At the end of each week, review your performance to see what works and what backfires.
3. Review Performance
Some traders still find handwritten journals useful. Aside from the key position parameters, you can track on the platform, such as the entry and exit price, volume, and risk tolerance, you need to note down the motivation behind your decisions.
If you have not deviated from the strategy, but it does not seem to bring positive results, try changing it. You only have yourself to blame if you make irrational decisions contradicting your roadmap. Avoid chasing losses at all costs, and make sure every trade is backed by research. Financial markets are not a place for acting on a hunch.
4. Diversify Your Assets
As a beginner, you may prefer to focus on one or two instruments you understand best. However, you will need to trade multiple types of CFDs sooner or later. Different assets in your portfolio reduce the overall risks. When one instrument underperforms, the loss is less damaging, as you can make a profit from trading other assets.
Although Plus500 is focused exclusively on CFDs, every underlying market is unique and has its own drivers and dynamics. CFDs on Brent gain or lose value depending on the price of crude oil, while CFDs on stocks or indices are linked to the financial performance of the largest corporations. These are two very different fields of expertise. Do not presume that your portfolio expansion will be effortless.
5. Always Look for Confluence
When using technical analysis, never rely on a single factor. You need confluence — a situation when two or more indicators are pointing in the same direction. For example, in a strong trend, price changes are backed by rising volume. As long as the price moves with the trend, the volume increases, and it decreases when it starts moving back during the correction periods.
6. Use Other Educational Resources
The Plus500 site should not be your only source of trading insights. Enhance your knowledge with articles, tutorials, and webinars created by experts. However, do not trust every guide you see.
Check the background of the author for proof of their competence. On YouTube, you can find dozens of channels devoted to forex and CFD trading, such as Warrior Trading. Many of them are run by accomplished financial experts. To test any new strategy, use it in the demo mode first.
7. Be Careful with Leverage
Leverage lets you open positions exceeding your balance. Plus500 offers different ratios — up to 1:300 for forex CFDs and 1:20 on stocks CFDs. Leverage is a double-edged sword. On the one hand, it can boost your profits if your trade is successful. At the same time, higher volumes mean magnified losses. Beginners are strongly advised against using leverage. Stick to what you have before using any funds from the broker.
8. Trade Mindfully
Your every move in the financial markets must be rooted in solid analysis (fundamental, technical, or both). Trading is not gambling, and there is no place for randomness. Be aware of your motivation for every trade.
Refrain from trading when you are sad, excited, or tired. Strong emotions and physical states affect our decision-making. You will be more likely to deviate from your strategy, chase losses, and make other reckless moves. Emotional self-control is one of the key traits of a successful investor.
As you can see, Plus500 has unique strengths, but its systems are not ideal for beginners. Despite the impressive range of markets, the absence of copy trading is a major weakness. Although the company’s own software is well-designed, some beginners may find the MetaTrader environment more comfortable. Finally, the fees for some categories of CFDs are higher than average.