XM Review

Trust

XM Regulations

In our reviews, we examine the licenses and regulations of each entity operated by a broker, allowing 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 the four entities operating under the XM trade name:

• Trading Point of Financial Instruments Ltd is licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC). We rate CySEC as a Tier-1 regulator. 
• Trading Point of Financial Instruments Pty Limited is licensed and regulated by the Australian Securities & Investments Commission (ASIC). We rate ASIC as a Tier-1 regulator. 
• Trading Point MENA Limited is regulated by the Dubai Financial Services Authority (DFSA). We rate DFSA as a Tier-2 regulator.
• XM Global Limited is licensed and regulated by the Financial Services Commission of Belize (FSC). We rate FSC as a Tier-3 regulator.

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 must familiarize themselves with the safety mechanisms ensured by the entity they want to open an account.

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. All XM entities ensure 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. All entities ensure negative balance protection.
• Compensation scheme. A compensation scheme protects traders against the broker’s liabilities if the company becomes insolvent. Clients of Trading Point of Financial Instruments Ltd are protected by up to EUR 20,000 under the Investor Compensation Scheme (ICF).
• 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 with XM is 1:1000, which is available with XM Global Ltd.

Stability and Transparency

In our Trust category, we evaluate factors tied to stability and transparency, including the broker’s longevity, company size, and information transparency.

I reviewed XM’s Client Agreement and found no issues with it. It contains all relevant information regarding traders’ protections and is written clearly and unambiguously.

The broker has issued a ‘best execution policy,’ a legal mandate that requires brokers to deliver the most optimal price quotes under the prevailing market conditions. It also has a strict Client Categorization policy, which determines the best services for a trader based on their experience level.

Is XM Safe to Trade With?

I concluded that XM is safe to trade with due to the following factors: 

• Authorized by two Tier-1 regulators (CySEC and ASIC)
• Has a ‘best execution policy’
• Has transparent legal documents

Fees

XM Trading Fees

XM Spreads

I tested XM’s spreads on 5 July 2024 during the London and the New York open. The results are shown in the table below:

Broken down by asset class and compared to the industry average, XM offers low spreads on share CFDs, average spreads on commodities and indices, and average-to-high spreads on currency pairs.

XM 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 base currency contract (100,000 units).

My tests indicate that XM’s swaps are low to average compared to the benchmark. I concluded that they are suitable for implementing longer-term trading strategies, such as swing trading. 

XM’s Non-Trading Fees

Deposits and withdrawals with XM are free of charge, however, third-party banking fees may apply.

The broker charges a $10 inactivity fee on dormant accounts.

Accounts Comparison

I have compiled the table below to help you better understand the difference between the trading fees of XM’s three retail account types and the industry average. It illustrates the spreads and commissions I have recorded for the EUR/USD pair and compares them against the typical costs for ECN and STP accounts in the industry at large.

The table demonstrates how much you would have to pay to trade 1 full lot (100,000 units) in EUR/USD with a pip value of $10 for each account.

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

My findings indicate that the XM Zero Accounts type’s pricing mechanism meets the industry average. It is suitable for day trading and swing trading. Furthermore, it has a low minimum deposit requirement of only $5, making it quite affordable. 

Platforms and Tools

The Desktop Version of XM’s MT5 Platform

In this review, I tested the MetaTrader 5 platform, which features multiple essential tools, such as one-click trading, an alarm setting option, and a market depth tool. These allow traders to examine various market developments from different angles and to exploit the underlying trading opportunities in multiple ways.

MT5 is arguably best suited for automated trading via its Expert Advisors (EAs) feature. The platform also has an intuitive strategy tester, allowing experienced algo traders to tweak the parameters of their strategies so that they can be used under different market conditions.

Additionally, MetaTrader 5 has an intuitive mobile app, which helps traders stay connected to the global capital markets even on the go.

General Ease of Use

MT5’s layout is pretty straightforward. 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.

Charts

I consider the charts screen a platform’s most important feature. It facilitates technical analysis by providing an overview of price action behavior. Chart artists use many analytical tools and chart configuration possibilities to examine it from multiple angles. In my experience, the really important aspect of a chart is how easy it is to scale price action up and down.

As shown above, the problem with MetaTrader is that the charts can be crowded quite easily, even when we add no more than 2 indicators. This obscures price action behavior and makes it more difficult to conduct probing technical analysis.

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

• 38 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.
• 24 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 MT5 makes it difficult to discern price action behavior.
• 21 timeframes. One of the standout features of MetaTrader 5 is its vast array of timeframes. MT5 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 5 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 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 5 Platform

In my opinion, MT5 is a good option for fast and simple order execution. On the other hand, its dated and rugged design falls short compared to newer, sleeker platforms. As a trader who prioritizes flexible chart scaling, I find MT5’s charting capability too rigid and less effective.

XM’s MT5 Mobile App

The mobile app version of MT5 affords quick and easy access to the market on the go. It is very useful for opening, terminating, and adjusting open positions.

The market is continually evolving, marked by periodic surges and declines in volatility. For this reason, staying on top of the latest market developments is crucial, a task made simpler through the mobile app version of MT5.

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 MT5’s Mobile App

MT5’s mobile app suffers from the same underlying problem inherent to other mobile apps. Analyzing price action behavior on low-resolution devices is extremely difficult. That is why I recommend using the mobile app only to monitor the development of your open positions and make changes if needed.

Tradable Instruments

Compared to the industry average, XM offers an average number of currency pairs and a high number of commodities, share CFDs, and indices.

What are CFDs?

Contracts for difference (CFDs) are derivatives used to speculate on the underlying asset’s price 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 XM?

My Key Takeaways After Exploring XM’s Instruments Offering

XM shines in its extensive share CFDs offering that includes stocks of companies from all over the world. The broker also offers thematic indices, which can be used to diversify one’s market exposure. However, however, XM does not provide cryptocurrencies and ETFs.

Customer Support

Customer Support Channels

Customer Support Test

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

I discovered that XM agents respond to queries fairly quickly (usually, up to a minute after submitting a question). Their answers are well-structured and straight to the point. The agents are polite and generally knowledgeable.

Deposit and Withdrawal

XM Deposit Methods

XM Withdrawal Methods

Account Types and Terms

XM Account Opening Process

To open an account with XM, follow these easy steps: 

• Step 1: Click ‘Open an Account’ at the top-right corner of the main page. 
• Step 2: Fill in your personal details. 
• Step 3: Choose your preferred trading platform and the type of account. 
• Step 4: Fill in your address and date of birth. 
• Step 5: Select the base currency of your account and leverage (if applicable). 
• Step 6: State your employment status, level of education, and other data that can help determine your risk tolerance. 
• Step 7: Confirm that you are not a politically exposed person. 
• Step 8: Create a password and open a real account.
• Step 9: Provide proof of ID and address to verify your account.  

XM’s Account Types Features

XM’s Ultra Low Micro Account is geared toward cent trading and testing the performance of newly created trading algorithms. The Ultra Low Standard account accommodates casual trading, while the XM Zero Accounts offer the best conditions against the same minimum deposit.

Demo Accounts

XM offers a demo account that introduces traders to the broker’s services and allows 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 along with a live CFD account.

Islamic Account

XM offers Islamic accounts for swap-free trading. The Islamic accounts adhere to Shariah law.

What is CFD leverage?

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 leverage. Essentially, the broker lends the trader money so that the latter can open bigger positions. Leverage multiplies the profits a trader generates from winning positions but also the losses incurred from failed trades.

Maximum Leverage By Asset Class

In the table below, I have listed the maximum retail leverage available with XM for instruments from different asset classes:

XM Accepted Countries

XM accepts traders who are residents of countries from the European Economic Area (EEA).

Research

Here is a breakdown of XM’s research content developed in-house:

• Economic Calendar: The economic calendar is an essential tool in a trader’s arsenal. It informs traders of upcoming market events and releases that have the potential to stir price action, thereby creating viable trading opportunities.
• Forex News: XM covers recent developments in financial markets with its intuitive news screener, which provides information about trading opportunities and setups that are currently unfolding.
• Trading Ideas: The broker’s market analyses cover current trading setups based on technical analysis. Each article is pretty comprehensive and supplemented with a detailed chart. Traders can read about major support and resistance levels, potential entry and exit levels, and more.

Education

The educational section is structured and comprehensive. Novice traders can learn about reading price action behavior, utilizing a wide array of technical indicators, and building effective trading strategies.

The Bottom Line

XM is a Cyprus-based derivatives broker with offices in Australia, UAE, and Belize. It offers more than 1,300 tradable instruments at various trading costs. The broker is authorized by four regulators worldwide and adheres to all essential safety requirements.

XM provides MetaTrader 4 and MetaTrader 5, along with free VPS hosting for low-latency trading. Its extensive educational and research materials offer traders with different experience levels a comprehensive overview of current market developments.

While XM’s raw spreads account offers favorable prices, its other two account types have above-average trading costs. Another con of XM is the absence of cryptocurrencies and lower-risk securities like ETFs and bonds.

FAQ