XM Spreads

No matter what account type or trade size a client has, XM offers tight spreads. As with the interbank forex market, XM offers variable spreads. Fixed spreads are usually more expensive than variable spreads, so an insurance premium will be required if you trade fixed spreads. Forex brokers who offer fixed spreads often apply trading restrictions around news announcements - which can render your insurance useless. XM doesn't apply such restrictions. Spreads can be a very complex or confusing topic, so here’s a brief article explaining everything you need to know about XM spreads.

Spread Offered

Typically, a spread in the XM trading platform begins at 0 pips. This will vary depending on the type of account selected by the user.

Definition

A spread is part of your transaction cost. It is the difference between the Ask price and Bid price. It is paid to your brokers or banks. The unit of spread is pip. The larger the spread, the higher your cost. Most traders prefer to trade with low spread brokers because of this.

Types

Spreads are applied in different ways or types in XM. Here are those:

1. Variable and Fixed Spread: This is a highly competitive spread but in certain instances, users escape from paying commissions on trades depending on the operating XM account
2. Spread on Instruments: This type of spread comes with no requotes and is considered competitive. Spreads on currency pairs instruments for example, begins normally at around 0-1 pips.
3. Spread on Accounts: Spreads offered by XM on accounts depends on the type of account you have from these: Standard account, Micro Account, XM Zero Account, Ultra Low Account, Professional Account, Islamic Account and Shares Account.

Spread Per Account Type

Since XM trading fees vary accordingly because it follows the account selected by the trader, here is a guide on spreads applied on the different XM account types.

• Micro Account: It has a leverage from 1:1 to 1:888, spreads from as low as 1 pip and zero commissions. The minimum deposit is $5.00
• Standard Account: $5 minimum deposit and a leverage from 1:1 to 1:888. The spreads on this account begins from as low as 1 pip and zero commissions.
• XM Ultra-Low Account: In this account, the minimum amount of deposit is $50. The leverage for this account ranges from 1:1 to 1:888. Spreads from 0.6 pips has zero commissions.
• Shares Account: With a minimum deposit of US$10,000, this comes with no leverage and commissions charges following the underlying changes from US Dollar 1 up to US Dollar 9.

Spread Betting

No. XM does not provide spread betting for traders.

Advantages

Here is a list of all the pros of XM's spreads:

• $0 commissions with several accounting options.
• Non-chargeable of both withdrawal and deposit fees.
• It has one of the lowest minimum initial deposit amount.
• XM offers competitive and tight spreads.

High Spreads

Here's the deal: All brokers experience high spreads.

When a high spread occurs, it means a huge difference between the bid and the ask price emerges. Typically, evolving market forex pairs usually have a higher spread compared to major currency pairs. A higher than average spread normally specifies one of two things, either a high volatility in the market has happened or low liquidity caused by after-market hours trading.

XM Spreads Overview

• XM has tight spreads as low as 0.6 in all popular forex pairs.
• It is available on more than 1,000 financial instruments.
• Zero hidden fees.
• XM charges only the lowest plausible spreads for all types and kinds of trading.
• Their spreads have the best execution policy.
• And of course, the 0.1 fractional pip pricing was finally developed.

Calculation

XM shows two prices for EUR/USD when you open a buy position:

Ask = 1.12355 and Bid = 1.12369

The spread is therefore:

Ask - Bid = 0.00014 = 1.4 pip

In simple terms, this means that you have to pay 1.4 pip to XM when you want to buy EUR/USD. So, in order to buy 1 lot of EUR/USD, the spread would be 100,000 x 1.4 x 0.00014 = 19.6 USD.

That's how you calculate it.