PFD Review 2024

Trust

PFD Regulations

In our reviews, we examine the licenses and regulations of each entity operated by a broker. This allows us to compare their different levels of protection. We rank licenses by various regulatory bodies on a three-tier system, where Tier-1 licensing indicates the highest level of regulation.

This is what I discovered about PFD:

• Pacific Financial Derivatives Ltd is licensed and regulated by the Financial Markets Authority (FMA) in New Zealand with license number FSP28944. We rate FMA as a Tier-1 regulator on our system.

I have summarized the most essential aspects of PFD in terms of regulation and safety in the table below:

Why is it Important to Know Where Your Broker’s Subsidiaries are Regulated?

Brokers operate multiple entities because it allows them to serve clients worldwide. However, licenses obtained by regulators in different jurisdictions do not always entail the same degree of protection. Some regulators mandate compliance with the strictest financial frameworks, whereas others are less rigid. That is why traders need to familiarize themselves with the safety mechanisms ensured by the entity they want to open an account with beforehand.

Here is what you need to be looking for in a broker in terms of safety mechanisms:

• Segregation of client funds. Keeping client funds in segregated bank accounts from the ones used for the broker’s corporate capital negates the risk of accounting errors. PFD ensures the segregation of client funds.
• Negative balance protection. This safety mechanism removes the risk of trading losses exceeding the account balance. In other words, the losses you incur from trading are capped at the amount you have put in your trading account. This is especially important in volatile markets. PFD does not provide negative balance protection.
• Compensation scheme. A compensation scheme protects traders against the broker’s liabilities in the unlikely event that the company becomes insolvent. The FMA has no compensation scheme, and PFD has not issued a separate indemnity insurance.
• Maximum leverage. Capping the maximum leverage restricts the extent of market exposure to retail traders. The higher the leverage, the higher the potential profits and potential losses. The maximum leverage available with PFD is 1:300.

Is PFD Safe to Trade With?

PFD is authorized and overseen by New Zealand’s top-tier regulatory body, the FMA, which should guarantee safety and trustworthiness. However, the broker does not provide negative balance protection, and traders should remain vigilant as their losses could exceed their account balance. Other than that, I assessed PFD to be quite safe to trade with.

Stability and Transparency

In our tests for the Trust category, we also cover factors relating to stability and transparency. Here, we focus on how long the broker has been in business, how big the company is, and how transparent it is in terms of readily available information.

After reviewing PFD’s legal documents, I found them to be comprehensive, providing traders with detailed information about the broker’s services. However, there was a minor discrepancy in PFD’s ownership structure.

In the ‘About Us’ section of the website, PFD states that the broker is 100% privately owned by a “Japanese investor” without elaborating further. This vagueness does not represent a major transparency issue, though I would have expected PFD to provide a little bit more information about its company profile and structure. Also, PFD does not have a LinkedIn profile.

What I found very useful with respect to PFD’s fee transparency is that the broker provides live spread data on its website. That way, potential clients of the broker can check and compare its trading costs across two account types before proceeding to open a real trading account.

In summary, my research indicates that PFD can be regarded as having a very good level of trust and stability due to the following factors:

• Regulated by a top-tier body
• Operated for over 20 years
• Fairly transparent website

Fees

PFD’s Trading Fees

PFD’s Spreads

I tested PFD’s spreads during the most actively traded times – the London open at 8:00 a.m. GMT and just after the U.S. open at 2:45 p.m. GMT. The test was conducted on 16 October 2023. The results are shown in the table below:

Broken down by asset class and compared to the industry average, PFD charges low spreads on FX majors, low-to-high spreads on commodities, average spreads on indices, and high spreads on cryptocurrencies.

PFD’s Swaps

A swap fee is a trader’s cost for holding an open position overnight because of changing interest rates. Swap long refers to the charge deductible or credit receivable for holding a buy position open overnight. In turn, swap short relates to the charges/credits deductible or receivable for holding a selling position open overnight.

The values listed below are for one full contract (100,000 units) of the base currency.

The recorded swaps are low to average compared to the benchmark.

PFD’s Commissions

There is a $2 round-turn (for opening and closing a trade) commission per lot (100,000 units) on the PFDPro account type. It applies to currency pairs and metals. The commission is built into the spread for energies, indices, and cryptocurrencies.

This $2 round-turn commission is lower than the industry average.

PFD’s Non-Trading Fees

Dormant accounts on which no orders have been filled for a period of at least 6 months will be charged an inactivity fee of $25 each month until activity on the account resumes or the balance drops to 0.

Deposits and withdrawals with PFD are charged depending on the chosen payment method and the corresponding processing fees.

Are PFD’s Fees Competitive?

After executing several trades, I determined that the PFDPro account offers the most favorable conditions on FX Majors, such as the EURUSD and GBPJPY. The spreads, commission rate, and swaps are among the lowest in the industry. The competitiveness of PFD’s fees across instruments from other asset classes varies.

Overall, I rate PFD fees as competitive and suitable for high-frequency trading in the short-term (because of its low spreads and commissions) and longer-term position and day trading (because of its low swaps).

Accounts Comparison

I have compiled the table below to help you better understand the different costs associated with each of PFD’s account types.

The table illustrates the spreads and commissions I have recorded on the EURUSD pair across the several account types. It shows how much you will have to pay to trade 1 full lot (100,000 units) on the EURUSD with a pip value of $10.

To calculate the cost of such a full-sized trade, I used this formula: spread x pip value+commission

My tests indicated that executing such a trade cost between $3 – $7 across PFD’s three account types, falling below the industry average of $10.

Platforms and Tools

MetaTrader 4 has a decent range of analytical tools, though its charts are rather cumbersome, making it difficult to carry out sophisticated technical analysis. In terms of usability, MT4 is outclassed by newer and sleeker platforms.

The MT4 platform also has an in-built copy trading feature, though traders should be cautious when choosing a signal to follow. Most of the growth numbers listed in the table seem unrealistic, to say the least.

MT4 is better suited for automated trading because of its EAs feature and PFD’s FIX API offering. Instead of analyzing price action manually, which is made difficult by MT4’s rugged charts, they can take advantage of PFD’s fast execution speeds and automate their trading whenever certain conditions are met.

The platform also has a mobile app version, which is even less suitable for technical analysis because it has to be run on low-resolution devices. However, the app is useful because it grants traders fast access to the market and their accounts even on the go.

PFD’s Desktop MT4 Platform

General Ease of Use

MetaTrader is easy to navigate because of its simplistic design. In fact, it could be argued that MetaTrader set the standard for how retail platforms should be organized. Account info is displayed at the bottom of the screen; charts occupy the middle portion of the window; a watch list of selected instruments and tools screen is positioned on the left side of the window; and a panel with various settings and configurations can be found at the top of the window.

I found the platform’s ‘depth of market’ feature very practical as it helps traders enter the market at the most favorable price. It also includes an alert setting option and a one-click trading configuration.

One of my biggest gripes with the platform is that it does not have an instrument search bar. Instead, you have to scroll manually through the entire list of available instruments.

Charts

I consider the chart screen a platform’s most important feature. It aids technical analysis by providing an overview of price action behavior and allows traders access to a number of analytical tools and chart configuration possibilities. In my view, a good chart should afford easy scaling up and down of price action.

I have broken down the available analytical tools and chart configurations below:

• 30 technical indicators. The platform supports trend-based, volume-based indicators, oscillators, and more. These can be applied to study price action behavior and determine the underlying market sentiment. In general, technical indicators are used to gauge where the market is likely to head next. The problem with MetaTrader 4, in my opinion, is that applying 2 or more indicators to the chart actually obscures price action rather than contextualizing it. This is due to the ruggedness of MT4.
• 21 drawing tools. Drawing tools, such as Fibonacci retracement levels and Elliott waves, are used to study repeatable price patterns. Additionally, they can be applied to determine key support and resistance levels and potential breakout or breakdown levels. Despite the rather big collection of drawing tools, the ruggedness of MT4 makes it difficult to discern price action behavior.
• 9 timeframes. MT4 allows multi-timeframe analysis of price action behavior. The greater the number of timeframes, the more intricate examinations that can be carried out across the short-term and long-term.
• 3 chart types. Price action can be represented as a line, bars, or candlesticks. This diversity makes it possible to examine potential trading opportunities from different angles.

Orders

I have broken down the available order types on the MetaTrader 4 platform below:

• Market orders. Market orders are used for immediate entry at the best possible price. If triggered, they guarantee volume filling, though there could be a discrepancy between the requested price and the price where the order actually gets filled.
• Limit orders. Unlike market orders, limit orders guarantee exact price execution. However, a limit order will not be filled if the price action does not reach the pre-determined execution price.
• Stop orders. They are used to support open positions by limiting the maximum loss that can be incurred if the market turns in the opposite direction. A stop-loss order is placed at a fixed price below or above the spot price. If the market does indeed turn and triggers the stop-loss, it will transform into a market order and get filled at the best possible price.

My Key Takeaways After Testing the MetaTrader 4 Platform

MetaTrader 4 has become a benchmark of reliability over the years because it was the first major retail platform to gain such popularity. It sets the standard for what must be included in a trading platform. However, MT4 is now quite old, and its rugged design is outclassed by newer platforms with much more versatile layouts.

As a chart artist, I have always preferred trading platforms with charts that allow me to easily scale price action up and down. But MT4 is not such a platform. It is fairly difficult to scrutinize price action on it and understand where the market is headed.

The one thing that MT4 is still suitable for is automated trading, which does not require manual price action examination.

PFD’s MT4 Mobile App

PFD’s mobile app affords traders quick and easy access to the market on the go. It is very useful for making snap adjustments to any open trades. The market is volatile and ever-changing, and staying on top of the latest developments is made easy with MT4’s mobile app version. You can also use the app to place market, limit, and stop orders, as well as to adjust the exposure of your open trades.

My Key Takeaways After Testing MT4’s Mobile App

MT4’s app suffers from the same underlying problem that is inherent to other trading apps as well. Analyzing price action behavior clearly on a low-resolution device like a smartphone is virtually impossible. That is why I recommend using the mobile app only to monitor the development of your running positions and make any changes if necessary.

Tradable Instruments

What Are CFDs?

Contracts for difference (CFDs) are derivatives used to speculate on the price of the underlying asset without physical delivery. For example, a long position on gold would generate profit as the price rises or incur a loss as it falls, all without the need to purchase actual gold bars. One of the biggest advantages of trading CFDs is that traders can get in and out of the market almost instantaneously, thereby catching even minute changes in the price of the derivative.

What Can You Trade With PFD?

I have broken down the available instruments on a PFDPro account below:

• 49 Currency Pairs
  Majors, Minors, Exotic
• 8 Commodities
  Metals and Energy
• 11 Indices
  US, Europe, Asia
• 2 Cryptocurrencies
  Bitcoin and Ethereum

Compared to the broader industry, PFD offers a high amount of indices, an average amount of FX pairs and commodities, and a low amount of cryptocurrencies.

Forex	Commodities
EURUSD | GBPJPY | USDCHF | GBPCAD | AUDNZD | USDZAR	Gold | Crude Oil | Silver | Copper | Natural Gas | Brent Oil

Indices	Cryptocurrencies
US30 | US100 | DAX30 | CAC40 | AUS200 | JP225 | UK100 | HK50	Bitcoin and Ethereum

My Key Takeaways After Exploring PFD’s Tradable Instruments

PFD’s instruments offering is quite limited. The most glaring issue is that there are no share CFDs. Still, I concluded that PFD provides access to more than enough FX pairs, indices, and commodities, catering to the needs of traders interested in those markets. It is also important to point out that the bulk of PFD’s instruments is comprised of FX pairs which also have the lowest trading fees. Hence, I determined that PFD’s offering is best suited for currency traders who are free to exercise all types of trading strategies.

Customer Support

The easiest way to get in touch with PFD is via the live chat, which is available from the bottom-right corner of the website. You can also call them at (+64) 9 6320129 100 121. You can find additional information about PFD’s contact details here.

Customer Support Test

When we test a broker’s customer support team, we evaluate the agents’ knowledge of their own website, how long it takes them to respond to questions, and how detailed their answers are.

I conducted my test on 16 October at 14:12 p.m. CET via live chat by inquiring about PFD’s execution speed. An agent connected several seconds after submitting my inquiry, and they responded promptly. The answer was well-structured and easy to understand.

Deposit and Withdrawal

PFD Deposit Methods

PFD Withdrawal Methods

Traders can use wire transfers, credit and debit cards, or e-wallets to deposit into their PFD trading accounts. Third-party banking fees may be applied when using selected payment methods. There are fewer options for withdrawals.

Account Types and Terms

Why is Choosing the Right Account Type Important?

Your account should reflect your goals, needs, and ambitions on the market. You should consider several factors, such as whether the account type has a minimum deposit requirement, its spreads and commissions, the execution method, and more.

What Account Types Does PFD Offer?

I have broken down PFD’s account types below:

The PFDProPlus account offers the most favorable trading conditions in terms of costs.

With a minimum deposit requirement of just $100, PFD’s account types all support automated trading through Expert Advisors (EAs), further optimized by PFD’s FIX API capabilities. These features make the accounts well-suited for high-frequency trading strategies like scalping, especially given that PFD achieves average execution speeds of under 50 milliseconds in favorable market conditions.

High-yield/risk traders, particularly those less experienced, should note that PFD lacks negative balance protection and has relatively high margin calls and stop-out levels. This suggests that the broker offers limited safety measures, making it crucial for traders to exercise stringent risk management.

PFD’s Execution Model

PFD utilizes market execution. The broker operates without a dealing desk, and order requests are transmitted to the interbank level, where PFD’s liquidity providers fill them. As long as there is enough liquidity in the market, all order requests will be filled, though at varying speeds.

In my experience, market execution is better suited for day trading and position trading strategies where volume is important. But it is less so for intraday trading strategies, such as scalping, where precise order filling is more important.

What is CFD Leverage?

The leverage determines a trader’s overall market exposure. When trading Contracts for Difference (CFDs), positions can be opened for a fraction of their value because of the leverage. Essentially, the broker lends the trader money so that the latter can open bigger-sized positions. The leverage multiplies the profits a trader generates from winning positions but also the losses incurred from failed trades.

PFD’s Account Opening Process

I have summarized the account creation process with PFD below. The process is straightforward, though it may take some time to fill in all the forms. You can go at your own pace, though realistically, you can be done with everything within an hour. Just follow these easy steps:

• Step 1. Click ‘Sign Up’ at the top-right corner of the main page.
• Step 2. Choose whether you wish to sign up online or use the paper mode for account registration.
• Step 3. Fill in a username, email address, and password.
• Step 4. Confirm your email address by clicking the confirmational link sent to your email.
• Step 5. Confirm you have read and understood PFD’s Terms and Conditions.
• Step 6. Fill in your personal information, such as your name, address, DOB, professional status, and others.
• Step 7. Provide your banking information.
• Step 8. Detail your trading experience and knowledge.
• Step 9. Verify your account by uploading proof of ID and address.
• Step 10. Fund your account to start trading.

Why is a Demo Account Important?

PFD offers demo accounts that introduce traders to the broker’s services and allow them to tweak their strategies in a risk-free environment. The market is continually evolving and never static, so it is important to hone your skills in a safe environment. You can set up a demo account for yourself alongside your live CFD account.

PFD’s Supported Countries

PFD does not accept clients from the following countries: the US, China (Mainland), Cuba, Iran, Laos, Mozambique, Myanmar (Burma), North Korea, Sudan, Syria, and other UN & OFAC-sanctioned countries.

Research

The economic calendar is the most rudimentary market research tool. It lets traders know of upcoming market events, such as economic releases, financial news, and speeches that can potentially stir significant market reactions. This translates into new trading opportunities, which is why news traders are so interested in such expected volatility spikes.

Education

PFD offers two educational components. The one labeled ‘Forex Introduction’ answers some basic trading questions, such as ‘What is a currency pair?’ and ‘What is a pip.’ These concepts are explained in an easy-to-grasp manner, and images support most entries.

The website also has a glossary that contains the definitions of the most rudimentary trading concepts, such as spread, leverage, and more. Overall, PFD’s content is not enough to constitute a meaningful introduction to trading.

The Bottom Line

Founded in 1999 and headquartered in New Zealand, PFD is a long-standing forex and CFD broker regulated by the country’s top-tier Financial Markets Authority (FMA). Known for its quick execution speeds—down to 30 milliseconds in optimal conditions—PFD stands out for its execution performance. The broker offers diverse account options tailored to various traders, from beginners to pros, and charges competitive spreads and commissions. It also supports FIX API for enhanced trading capabilities.

On the downside, PFD’s offerings are limited in scope: it provides only MetaTrader 4 as its trading platform and lacks extensive research or educational resources, offering just an economic calendar as a support tool. Still, beginners may find value in its low-cost structure and user-friendly platform, while professionals can benefit from speedy execution and cost-effective high-frequency trading.

FAQ