May 10 2022 4
It is believed that spread and commission are always the main concerns when traders want to choose a forex broker. That’s why many forex traders have asked us about XM spread and commission, since XM is one of the best forex brokers in 2018. However, traders should know that spread is not the ultimate factor to decide whether a broker is good or bad.
There are 2 types of traders, which are long term investors and scalpers. Long term investors don't care about spreads much because they open just a small number of orders each year but those are extremely high volume orders. They can win up to hundreds pip per order. So for them, the spread rate ranging from 1 to 2 pips is acceptable. They only care about the broker’s credibility, quotes quality, and swap. On the other hand, when it comes to scalpers, they do care about spreads. It is because they open a lot of orders daily. So they have to pay a lots for spreads. They only win some pips per trade. So 1 or 2 pips spread really matters to them. They prefer those low spread brokers. However, spread should not be the only thing to pay attention. A lot of things contribute to the total trading cost of a broker, so I would like to recommend a broker that has reasonable trading cost and is one of the top largest forex brokers. That is XM.
Read full XM review now.
How much are XM spread and commission?
If you only look at XM spread and commission, you might think their spreads are high. It is actually the opposite, XM spreads are in top lowest spread brokers. Let me explain to you now. According to real data tracking, XM spreads for 6 main currency pairs such as: EUR/USD, USD/JPY, and GBP/USD… are around 1.7 pip. Their spread rate is just the same as their main competitors in the forex market like FXCM, FXTM, Forex.com, or FxPro... However, when we talk about spread and commission, it means that we are referring to the trading cost. What does the trading cost of a broker include?
XM spread and commission are similar to other best forex brokers. For swap, they charged the same amount as bank interests. So, they are not much different. For slippages, there isn't any complaints about XM slippages that I know about. Their quotes are really good, if not the best in the market. You can see that XM spread, commission, swap, and slippage are the same as other broker. So the things that make the differences are bonuses and rebate.
Check out XM spreads for the most traded currency pairs compared to other brokers:
|Exness||0.5 pip||0.7 pip||0.7 pip||1 pip||0.9 pip||0.6 pip||0.6 pip|
|XM||0.8 pip||1.1 pip||1.1 pip||1.5 pip||1.2 pip||1.1 pip||0.8 pip|
|HotForex||1.2 pip||1.5 pip||1.8 pip||1.9 pip||1.9 pip||1.9 pip||1.7 pip|
|FXTM||0.8 pip||0.5 pip||0.9 pip||1.1 pip||0.6 pip|
|FBS||1.1 pip||0.8 pip||0.9 pip||4 pip||3 pip||7 pip||2 pip|
|Forex.com||1.2 pip||1.2 pip||1.4 pip||3.2 pip||2.3 pip||2 pip||1.2 pip|
|FxPro||1.1 pip||0.7 pip||1.3 pip||0.7 pip||1.3 pip||1 pip||109 pip|
|Pepperstone||1.1 pip||1.1 pip||1.4 pip||1.3 pip||1.2 pip||1.4 pip||1.2 pip|
|Saxo Bank||0.7 pip||0.5 pip||0.8 pip||0.7 pip|
XM bonus programs
XM is the only broker who offers the best bonuses and rebate compared to other top brokers. When you first register an account in XM, you can instantly claim a 30-dollar welcome bonus from XM. This is not a high value bonus but the real benefit of it is that you can withdraw the profit made from this bonus much easier than other brokers'. You just need to trade 0.1 lot to withdraw the profit. Get XM 30$ welcome bonus here.
You also can get the 100% Deposit bonus of XM. There are not many brokers that can offer this type of bonus. Why? Because at XM, you can withdraw all of the bonus profit. It means that this is a real bonus. Clients can withdraw bonus profit, so it costs brokers a lot of money. Get XM deposit bonus here.
XM rebate program will rebate you from $3 to $10 per lot traded. It means that they will rebate 0.3 - 1 pip per USD lot. Moreover, the longer you trade with XM, the higher the amount of rebate you will get. So let’s calculate the whole thing again. At the beginning, XM charges us 1.7 pip spread for EURUSD. But they will cashback us on Bonus and rebate programs. So, the final spreads are around 1 pip. The good thing is their quote quality is in very good. So, that why the winning rate of XM clients are higher than other brokers. Check XM rebate program here.
Lowest XM spreads
Check out this list of the lowest spreads on each currency pair of XM broker
For more currency pairs, click here.
About XM commission
Just like all other brokers, XM charges traders commission for trading ECN because their ECN spread is nearly zero. So, the main income of ECN brokers is commission. XM charges $6 of commission for ECN trading. This seems to be a normal commission rate. But actually, it’s lower than many other ECN brokers. Conclusion: XM original spreads are normal and just as much as other top forex brokers. Yet, they offer welcome bonuses, deposit bonuses, and rebate programs. So, the final calculated spreads are much lower than that of other brokers. They are just around 1 pips. And there you have it. A broker among the top best forex brokers in the world that has very low transaction cost. Open XM account here.
XM quick review
Launched in 2009, XM belongs to Trading Point Holdings Ltd, the official regulatory body of XM is CYTEC - the official license provider, in conjunction with the European Union to ensure the broker operates transparently and anti money laundering. Currently, XM is serving more than 1 million customers, from 196 different countries, supporting 20 languages, with 16 comprehensive trading software and 25 secure payment methods.
XM offers a wide range of products for customers to choose from. In addition to Forex, XM also has CFDs and stock indices, commodities, stocks, metals, energy from the same trading account, including XM Micro account and XM standard account. All are transparent and transparent from spreads to commissions with no hidden fees and orders are executed quickly in less than 1 second.
What is spread?
Spread is the difference between the Ask price and the Bid price. It is the transaction fee that you must pay for the brokers or banks. The unit of spread is pip. The higher the spread, the higher the trading cost. That’s why most traders want to trade with the low spread brokers. There are 3 types of forex brokers: Market Maker, STP, and ECN. For first 2 types, their main income is spreads. That’s why their spreads are much higher than that of ECN brokers. When they get quotes from liquidity providers, they will add the transaction fee (spread) to those quotes. For ECN brokers, they will provide the exact quotes that liquidity providers provided. Therefore, they have to charge commission as it is their main income.
What is pip?
Pip stands for percentage in point (percentage point) which is understood as a unit to measure the price movement of a certain financial instrument. In the forex market, financial instruments can be currency pairs, metals, indices, stocks...
For currency pairs, pips measure the movement in the value of two currencies or, more precisely, the change in the exchange rate of that currency pair.
In the spot market, the rates of currency pairs are usually quoted to 4 decimal places, assuming the rate of the EUR/USD pair increases from 1.2345 to 1.2346, we say that the rate of the pair increases to $0.0001. la. But in the forex market, the rate includes up to 5 decimal places, assuming the EUR/USD pair increases from 1.23456 to 1.23457, then we say the rate of EUR/USD increases to $0.00001. With written text, it is quite long, but in speaking, it is still long. Therefore, the concept of pips was born to minimize this very small price movement.
XM fixed spread and XM variable spread
If fixed spread is usually provided by Dealing Desk or Market Maker House, then floating spread will be provided by STP and ECN platforms or No Dealing Desk.
Fixed spreads remain the same no matter what market conditions occur. Spreads are not affected. It is always kept the same.
Variable spreads will not be controlled by the forex brokers but they are always changing and is usually provided by ECN, STP or Non-dealing desk. This is because the exchange will receive the exchange rate of the current currency pair from the liquidity providers themselves, and notify this price to traders without any intervention. Thus, the brokers will not control spread, the whole price difference or fluctuation will depend on the general fluctuations of the market.
How to calculate spread?
At XM, when you open a position to buy EUR/USD, there will be two prices appearing on your MT4 platform screen: Ask = 1.12345 and Bid = 1.12359. Therefore, the spread now is Ask - Bid = 0.00014 = 1.4 pip. So what does this “1.4 pip” mean? It means that you have to pay 1.4 pip for XM to open an order to buy EUR/USD. Now if you want to buy 1 lot of EUR/USD, the spread you have to pay is 100,000 x 1.4 x 0.00014 = 19.6 USD. That’s how you calculate the spread.