When you log into XM’s website, its homepage greets you with the message: Trade Forex with Ultra Low Spreads.
As with many other large forex brokers in the industry, XM offers a series of accounts, each having access to a different level of variable Bid/Ask spread values.
The ‘spread’ is the difference between what a buyer is willing to pay for an asset and what a seller is willing to accept. Forex and CFD brokers’ income depends on spread income, assessed at both the purchase and the closing of a position in the market.
Spreads can vary by asset group, within asset group, and by account classification with XM, due to the time of day or changing events in the marketplace, which may impact liquidity from its network of providers. To gain access to the ultra-low XM spread offerings, the trader must have a Zero account.
XM only offers variable spreads. The firm operates in a similar fashion to the interbank market, where its major liquidity providers can quote very competitive rates, which vary depending on market conditions.
It is rare for a broker to offer fixed spreads, as it would have to include a premium to cover the risk of irregular market swings. The few brokers that maintain a fixed spread offering typically place restrictions on trading around key economic announcements. As XM offers variable spreads, there are no such restrictions placed around these events.
Yes, XM does offer a professional-level account where pricing starts with a zero spread, and then a small commission is added to cover the cost of performing the trade. It is called a Zero account, as opposed to its other account offerings: Standard and Micro. The current pricing is $3.50 per every $100,000 traded. As with other account offerings, the trader also has access to a free demo account or an Islamic account, if preferred.
XM offers variable spread pricing, but it also supplements this offering with fractional pip pricing. Due to its extensive network of liquidity providers, the broker can quote a fifth digit for several of its products, where only four-digit pricing is the norm. Its Micro and Standard account holders enjoy spreads on major currency pairs as low as 1 pip, whereas Zero account holders pay a small commission with a zero spread. Inactivity fees may also apply.
XM does provide asset tables on its website that detail spread levels for the assets that it offers. For example, the popular EUR/USD has an average spread of 1.7 pips. Spreads on gold can be as low as 0.25, averaging 0.35 during the trading day. Tables are also available for equity indices, commodities, and energy instruments.