π Forex trading has become increasingly popular in recent years, with more and more people looking to make a profit in the fast-paced world of currency exchange. As with any type of trading, there are countless platforms and brokers to choose from, each promising lucrative returns and user-friendly interfaces. One of the newer players in this field is XM, a brokerage firm that has gained a lot of attention for its unique approach to trading. However, amidst all the buzz and success stories, there have also been some concerns and controversies surrounding XM's spread review. In this article, we will delve deeper into the mysteries surrounding this broker and uncover the truth behind its operations.
What is XM? (β)
π XM is a trading platform that offers access to a variety of financial markets, including forex, stocks, commodities, and indices. It was founded in Cyprus in 2009 and is regulated by several financial authorities, including the Cyprus Securities and Exchange Commission (CySEC) and the Financial Conduct Authority (FCA) in the UK. With a strong focus on customer satisfaction, XM has managed to attract over 2.5 million clients from 196 countries, making it one of the largest forex brokers in the world.
The Unique Approach to Spreads (β)
π One of the main selling points of XM is its low spreads, which is the difference between the bid and ask price of a currency pair. In simpler terms, it is the cost of trading on the platform. Most brokers charge a fixed or variable spread, but XM offers a unique approach with its "Ultra Low" and "Zero" accounts. The Ultra Low account charges a fixed spread of 1 pip (percentage in point) for major currency pairs, while the Zero account offers spreads as low as 0 pips. This is significantly lower than the industry average, making XM an attractive option for traders looking to minimize their trading costs.
Mystery #1: How can XM offer such low spreads? (β)
π Many traders have questioned how XM is able to offer such low spreads, especially with the Zero account. The answer lies in the broker's business model. Unlike other brokers who make money from spreads and commissions, XM has a hybrid model where it makes a profit from both spreads and trading volume. This means that the more trades a client makes, the more money XM earns. With this model, the broker can afford to offer low spreads to attract more traders, thus increasing its overall profit.
Mystery #2: Are the low spreads too good to be true? (β)
π While XM's low spreads may seem like a dream come true for traders, there have been concerns about the accuracy of these spreads. Some traders have reported that the actual spreads they encountered while trading were higher than what was advertised. This has led to accusations of false advertising and deceptive marketing tactics. However, it is important to note that spreads are not fixed and can vary depending on market conditions. Therefore, while XM may advertise a spread of 0 pips, it is not guaranteed that traders will always encounter this during their trades.
π Mystery #3: How does XM compare to other brokers in terms of spreads?
π To get a better understanding of XM's spreads, let's compare them to other popular brokers in the market. According to a study by Finance Magnates, XM's average spreads for major currency pairs are 0.1 pips for the Ultra Low account and 0.2 pips for the Zero account. This is significantly lower than other brokers like OANDA (1.4 pips), FXCM (1.3 pips), and IG (0.8 pips). However, it is important to note that this study was conducted in 2019 and spreads can vary over time.
Pros and Cons of XM's Spreads (β)
Pros: (β)
π 1. Competitive spreads: The low spreads offered by XM can save traders a significant amount of money in the long run.
π 2. No hidden fees: Unlike other brokers who may charge additional fees on top of spreads, XM is transparent about its costs, making it easier for traders to calculate their potential profit or loss.
π 3. Suitable for all types of traders: The Ultra Low account is suitable for beginners and traders with smaller capital, while the Zero account is ideal for experienced and high-volume traders.
Cons: (β)
π 1. Spreads are not fixed: As mentioned earlier, the spreads advertised by XM may not always be the same during actual trades, which can be problematic for traders who rely on low spreads for their trading strategies.
π 2. Limited range of assets: While XM offers access to a variety of financial markets, its range of assets is relatively limited compared to other brokers.
π 3. Not available to US clients: Unfortunately, XM does not accept clients from the United States, restricting its services to traders in other parts of the world.
π In conclusion, XM's spread review is a complex topic with many mysteries and controversies surrounding it. While the broker's low spreads may seem appealing to traders, it is important to do your own research and consider all factors before choosing a broker. As with any investment, there are risks involved, and it is crucial to understand the terms and conditions of a broker before opening an account.
