Best CFD Broker

by forextrader

Best CFD Broker: Trade with the best

If you want to trade regularly with contracts for difference (CFDs), you need a good CFD broker. But what distinguishes a top provider? We have investigated the question of who is the best CFD broker and have tested all brokers currently active in the market with a focus on contracts for difference. In the following you will find out which test criteria we used to objectively test the providers. Of course, the requirements for your own broker are completely individual. Each trader has different criteria that are important to him.

What are CFDs?

Before we go into more detail about the test criteria, we want to answer an important question first: What are CFDs?

Although CFDs fall into the area of derivatives, they are not classic futures products, as is the case with options or futures, for example. Unlike these derivatives, CFDs are not traded on the futures market. Rather, a kind of contract is concluded between broker and customer. CFDs are contracts for difference in terms of their features, because in the end it is a matter of how the price of an underlying asset will develop. For example, the customer buys a certain underlying asset from a broker and, in connection with this, concludes the contract for the later difference between the price or rate at the time of purchase and the later rates.

For example, if you buy a CFD whose underlying asset is gold, you buy the precious metal at a price of 1,200 €. If the gold price subsequently rises to 1,300 €, the broker must pay the customer the difference of 100 euros.

How does trading CFDs work?

The aforementioned underlying assets to which a contract for difference relates are an important basis for trading CFDs. Another basis for how this form of trading works is leverage, which is also the main difference to direct trading of underlying assets such as stocks. While a trader must pay the full value of the stocks when trading shares, this is different when trading CFDs. If CFDs are traded, the trader only has to invest a fraction of the necessary capital as so-called margin.

Thus the leverage ensures that the greater part of the investment is paid indirectly by the broker. However, “payment” is the wrong term in this context, because the trader ultimately concludes a contract with the broker, so that only the respective difference is always settled. For example, if the trader wants to conclude a CFD contract on the German Stock Index, he would have to invest approximately 12,000 Euros. If he trades with a leverage of 100:1, he would only have to invest 120 Euros as equity. This is also one of the great advantages of CFD trading, because traders can profit from price developments with comparatively little money. But beware: The use of leverage also means a higher risk of loss.

In the case of contracts for differences, only the price or price development of the underlying instrument is of importance, which is represented in a 1:1 ratio. If, for example, the price of gold as the underlying asset for a contract for differences increases by 1 percent, the trader would achieve a return of 200 percent with a leverage of 200:1, for example.

The amount of leverage in XM depends on the financial instrument

For our XM test, we also took a closer look at the levers offered. In CFD trading, for example, the leverage determines how much capital you need to have in your trading account in order to trade a particular financial instrument. We will again illustrate this with a small example: the DAX is quoted at 12,000 points and we decide to buy the index as a CFD. However, due to the leverage we do not need 12,000 € on our trading account. In fact, with a leverage of 1 : 20, a capital of 600 € (600 x 20 = 12,000) is already sufficient. As you can see, the leverage plays a very important role in CFD trading. At XM, the maximum possible leverage depends on the financial instrument traded:

  • Forex: Up to 1 : 30
  • Indices: Up to 1 : 20
  • Shares: Up to 1 : 5
  • Commodities and precious metals: Up to 1 : 10

Can I open an account with XM with higher leverage?

Even in our test, there was still the possibility of opening an account with higher leverage with XM. This is done by opening the account not as a European account with XM Cyprus, but with XM Australia. This is because there were no leverage restrictions in Australia until now. Since leverage in Europe is limited by the European Securities and Markets Authority (ESMA), some traders have taken the opportunity to open an account “down under” in Australia. However, the Australian Financial Services Authority has put a stop to this model. In the future, it will no longer be possible for European traders to open an account with XM Australia.

However, our general experience is that CFD trading does not require too much leverage. The leverage of 1:30 that is possible in Europe is sufficient for most traders.

Overall, XM has made a very good impression on us in terms of trading conditions.

[list list_items=”XM offers different types of spreads: fixed, variable and variable with commissions or commissions,Spreads sometimes start as low as 0 pips,In our experience, the leverage of 1 : 30 is completely sufficient for CFD trading” icon=”fa-icon-ok” icon_color=”#2ecc71″]

Accounts & Accounts: The three trading accounts of XM

Now we will go into the accounts and accounts of XM in more detail. During our test we found out that you can open three different trading accounts with the broker for CFD trading:

  • Standard Account
  • Mirco account
  • XM Zero Account

Open an XM trading account in just a few minutes

Our experience is that with XM, it only takes a few minutes to open a trading account. To do this, you need to click on the green button “Open account” on the home page. Among other things, the following information is required for registration:

  • Name and surname
  • country of residence
  • Preferred language
  • Phone number and e-mail address
  • Address
  • Financial situation and trading experience

It is also necessary to confirm both his identity and his address. The easiest way to do this is to use your identity card. In addition, it is necessary to make the respective minimum deposit to the trading account. Overall, opening an account with XM is very simple and straightforward.

Choose Forex account

Differences between the three trading accounts

At this point we will discuss the differences between the three XM trading accounts. For example, we have found that the spreads are the same on the Standard Account and the Micro Account. Also, the minimum deposit of 5 US dollars is identical on both accounts. However, the two accounts differ in terms of the “lot” size: this is the contract size. For example: normally you trade currency pairs with “Standard Lot”. This means that each change of one pip results in a profit or loss of 10 US dollars. On the other hand, one trades on the Micro Account with a so-called Micro Lot. This means that each pip change only leads to a profit or loss of 0.10 US dollars. The Micro Account is therefore especially interesting for beginners. This way you can carefully get used to the price fluctuations and the associated effects on your trading account.

On the other hand, with the XM Zero account you get lower spreads, which start as low as 0 pips. However, as mentioned above, you have to pay a commission to the broker for each trade. The minimum deposit on this account is 100 US dollars.

All in all, we enjoyed all three trading accounts at XM very much. As a trader you can choose the account that suits you best.

[list list_items=”There are three different trading accounts available at XM,These differ mainly in terms of the lot size and the spread offered,The minimum deposit is only 5 or 100 US dollars (XM Zero Account)” icon=”fa-icon-ok” icon_color=”#2ecc71″]

CFD trading platforms: MetaTrader 4 and MetaTrader 5 are very well suited for CFD trading

Next, we took a closer look at XM’s various trading platforms. We have often experienced that some traders underestimate the importance of a good trading software. For example, many traders spend several hours a day in front of the trading screens to analyze the chart using the trading platform. For this reason, it is important to have the best possible platform that supports you in your daily trading routine. Our test showed that XM uses the following trading platforms:

  • MetaTrader 4 (MT4)
  • MetaTrader 5 (MT5)
  • Webtrader
  • trading apps

In our experience, the Webtrader is also the MetaTrader. However, this version can be started directly via the internet browser. Therefore it is not necessary to download and install the software.

Overview about the Metatrader

In the following we will talk about the MetaTrader in more detail. It is still the most frequently used trading platform worldwide. Therefore, this trading software is available from many CFD brokers, such as ETFinance and 101Investing. For the trader, this has the pleasant side effect that it is usually very easy to change brokers. Because the probability is quite high that you can continue trading with your new provider with the MetaTrader. Therefore, in this case it is not necessary to familiarize yourself with a new trading software.

Forex Trading

In our experience, MetaTrader is also popular because it is suitable for both beginners and experienced traders. Thus, the user interface of the trading platform is clearly laid out and you can usually find the required functions where you would expect them. Overall, the MetaTrader is also perfectly suited for technical analysis. For example, the trading software is equipped with many drawing tools, so that charts can be analyzed thoroughly. Examples are trend lines, resistance and support lines and Fibonacci levels.

Furthermore, MetaTrader has more than 30 technical indicators. These can be used by traders to get good signals for entries and exits. Often the following indicators are the most commonly used in this context:

  • Moving averages
  • RSI indicator
  • Stochastics
  • MACD

Easy expandability of the Metatrader

A further strength of MetaTrader is that the trading software can be expanded very easily. The extensions are called “Expert Advisors (EAs)”. An EA can be used, for example, to let CFD trading run automatically. As you can imagine, this is especially interesting for those traders who can only deal with the stock exchange on a part-time basis. In this case you can let your own strategy be traded simply by the MetaTrader.

Differences between the MT4 and MT5

The Expert Advisors just mentioned are also the main reason why the trading software is still offered in two different versions: MT4 and MT5. The developers have developed MT5 from scratch so that the platform can be used by professional traders such as fund managers. However, this meant that the EAs of the MT4 first had to be adapted to the new version. For this reason many traders decided to stay with version 4 for the time being. In recent years, however, in our experience almost all EA’s have been adapted. Therefore there is no reason to use the MT4 anymore. Although the two programs, from a purely external point of view, hardly differ from each other. Nevertheless, MetaTrader 5 has undergone numerous improvements in detail. For example, the number of technical indicators has been increased again. In addition, MT5 provides you with more time units for CFD trading. We therefore recommend to use MetaTrader 5 for XM.

The MetaTrader is also available as an app for mobile devices. In this way it is possible to access the XM trading account from on the road using your smartphone or tablet. The app can be found on Google Play and in the Apple App Store. Fortunately, our test showed that the app is easy to use.

Overall, XM was therefore able to convince us in terms of its trading platforms.

[list list_items=”XM offers one of the MetaTrader trading platforms (version 4 and version 5),In our experience, MetaTrader is very well suited for technical analysis,One of the MetaTrader apps is also available for mobile trading” icon=”fa-icon-ok” icon_color=”#2ecc71″]

Trading Forex

Usability of the website: Very clear and informative design

We have made the experience that when comparing or testing brokers, it is also useful to take a closer look at the brokers’ websites. Because often you can already tell from the design of the website whether the broker is a customer-friendly and reputable company. Thus, we noticed at first glance that the XM website is very clear and informative. The navigation menu is divided into the following items:

  • Homepage
  • Trade
  • Platforms
  • Research & Education
  • Special offers
  • About us
  • Partner

In addition, at the top of the page you will find the items “Member Login”, “Live Chat”, “Customer Service”, “Open Live Account” and the language selection. Very important is especially the point “Trading”. This is because the trading offer, the trading accounts and the costs and fees are described in great detail below. XM is therefore extremely customer-friendly and serious in this respect. Unfortunately, we have had the experience that some providers try to “hide” the trading conditions from the users of the website. For this reason, we are very pleased that XM is exemplary in this respect.

It is also positive that the website is offered in several languages. In our experience this is also not very understandable for all brokers. For our test, we also tried XM’s internet offering on mobile devices such as tablets and smartphones. This showed that the mobile version of the website also works well. For this reason, we rate the usability of the XM website as very good overall.

[list list_items=”Usability of the XM website is very good,All important information can be found easily and quickly (for example – regarding costs and fees as well as the various accounts),The website can also be used on mobile devices without any problems” icon=”fa-icon-ok” icon_color=”#2ecc71″]

Customer support: XM employees are helpful and competent

In the following we will talk about our XM experience in terms of customer support. It has been shown that the broker’s staff can be reached in the following ways:

  • by telephone
  • by email
  • via live chat

As you can see, XM customer support can be reached in several ways. On the positive side, one of the brokers also offers the possibility to reach the employees by phone. In our experience, many providers often do without this service nowadays in order to save costs. XM is therefore once again very customer-friendly. However, if you wish, you can also reach the customer support via e-mail and live chat. In this way, too, you can usually get an answer to your request very quickly. In general, the broker’s employees proved to be very helpful and competent in our test.

All in all, the broker was able to convince us in this point as well.

[list list_items=”Customer support is easily accessible (by telephone – e-mail and live chat),Helpful and competent employees,Questions and problems are usually solved quickly” icon=”fa-icon-ok” icon_color=”#2ecc71″]

Payment methods: Free deposits and withdrawals at XM

We have already mentioned above that it is common practice for many brokers to charge fees for deposits and withdrawals. Often these fees depend on the chosen payment method. Our XM test has shown that the following payment options are available at the broker:

  • Bank transfer
  • Credit card payments (MasterCard and Visa)
  • Payment service provider (immediate transfer)
  • Online Wallets (Neteller and Skrill)

For the trader there are two pieces of good news at this point: Firstly, XM offers a wide range of payment methods. Secondly, both deposits and withdrawals are generally free of charge at XM. The broker is therefore extremely customer-friendly in this respect as well. We would like as many other providers as possible to follow this positive example.

It should be noted, however, that bank transfers usually take the longest. Therefore, you should use credit cards or online wallets if the speed of the transaction is the most important thing. The general rule is that at least 5 US dollars must be deposited.

All in all, XM has also earned a very good rating in this point due to its extremely customer-friendly pricing policy.

[list list_items=”At XM you can choose from numerous payment methods,Deposits and withdrawals are generally free of charge,The fastest transactions are made with credit cards and online wallets” icon=”fa-icon-ok” icon_color=”#2ecc71″]

Additional offers: Use extensive educational offerings and XM demo account

Now we will go into our XM experience with a view to the broker’s additional offers. Thus, XM provides its customers with an extensive range of training courses. Furthermore, a useful economic calendar can be accessed. There is also the possibility to open a free demo account with XM to train CFD trading. On this account you can trade with virtual capital and get to know the stock market trading without any risk. This also gives you the opportunity to familiarize yourself with the trading platforms of XM.

XM CFD experience with the educational offerings

Especially for beginners it is important that they are supported as much as possible by their broker when learning how to trade. Our test has shown that XM offers its customers the following training courses:

  • Forex webinars
  • Platform Videos
  • Forex Seminars

In our opinion you should start with the platform videos. Because in it one of the MetaTrader is introduced in detail. Moreover, these videos also deal with the possibilities of technical analysis. We also liked the webinars. Experience shows that you learn trading very well by watching other traders analyze the market and trade their strategies. The webinars at XM are usually held by experienced traders. Overall, we can therefore assess the training offered by the broker very positively.

Use XM Economic Calendar

In addition, an XM provides an economic calendar as an additional offer. In this calendar, important events are entered, which in all probability will have an influence on the prices on the markets. Examples are the meetings of the central banks or the publication of the gross domestic product (GDP). As a trader, you are therefore well advised to look at the economic calendar at least once a day. In this way, unpleasant surprises can often be avoided.

XM offers its customers a comprehensive range of training courses
This consists of live webinars, platform videos and seminars
The broker also offers a free demo account to get to know CFD trading

[list list_items=”XM offers its customers a comprehensive range of training courses,This consists of live webinars, platform videos and seminars,The broker also offers a free demo account to get to know CFD trading” icon=”fa-icon-ok” icon_color=”#2ecc71″]

Regulation & deposit protection: XM is regulated in particular by the CySEC

Before deciding on a particular broker, it is advisable to also look into regulation and deposit protection. The decisive factor here is the country in which the broker has its head office or where its branches are located. As already mentioned, XM is a Cypriot broker. For this reason, the Cypriot financial supervisory authority CySEC (Cyprus Securities and Exchange Commission) is responsible for monitoring. In general, Cyprus is a member state of the European Union. For this reason, the European regulations also apply to XM. For the trader, this has the advantage, for example, that client funds must be kept separate from other company assets. In addition, deposit protection in Cyprus is provided by the ICF security fund. Thus, customer deposits up to an amount of 20,000 € are protected.

Overall, XM therefore also gives a very good picture in terms of regulation and deposit protection.

[list list_items=”XM is regulated in particular by the CySEC,European law also applies to the broker,The deposit insurance protects the assets of the customers up to an amount of 20.000 €.” icon=”fa-icon-ok” icon_color=”#2ecc71″]

Awards: XM has already received many awards

Finally, we also looked at how XM is rated by the trade press. This has shown that the broker has already received several awards. In 2019, for example, XM received the award for “Best Forex Service Provider” at the City of London Wealth Management Awards. In the same year, the broker also received the title “Best Forex Service Provider” from Shares Magazine. But that’s not all: In 2017, for example, XM received the “Best Trading Customer Service” award from Capital Finance International Magazine.

We can also confirm that XM is a very customer-friendly broker with very good conditions. Therefore, it is not surprising that the broker is repeatedly awarded for its services.

  • XM has already received many awards
  • Examples are “Best Forex Service Provider”, “Best Forex Customer Service” and “Best Trading Customer Service”.
  • The favorable trading conditions are also mentioned positively again and again

Conclusion about CFD Broker XM: Very customer-friendly broker with low spreads

Our XM test showed that the company is a very customer-friendly broker. This can be seen for example in the friendly and helpful support staff. In addition, XM generally does not charge any fees on deposits or withdrawals. In fact, the broker offers its clients very low spreads for CFD trading. All in all, XM is a very good and highly recommended broker.

If you would like to try out the broker yourself, you can also use the free demo account. This account can be opened within a few minutes and offers real-time quotes to get to know CFD trading. However, you do not trade with real money on the demo account, but with virtual capital. This gives you the opportunity to practice trading and try out new strategies. Overall, we recommend that you also take advantage of XM’s training services. The new knowledge can then be tested and applied on the demo account.

Strengths and weaknesses:

Very low spreads, choice between three different account types
No costs for deposits or withdrawals
Extensive trading offer (especially currency pairs and indices)
MetaTrader 4 and MetaTrader 5 are available as trading platforms
Helpful training offer (live webinars, platform videos and seminars)
Very customer-friendly broker with good support (also by telephone)
Fast and uncomplicated account opening
Demo account with real-time quotes to train CFD trading

[list list_items=”Very low spreads, choice between three different account types,No costs for deposits or withdrawals,Extensive trading offer (especially currency pairs and indices),MetaTrader 4 and MetaTrader 5 are available as trading platforms,Helpful training offer (live webinars – platform videos and seminars),Very customer-friendly broker with good support (also by telephone),Fast and uncomplicated account opening,Demo account with real-time quotes to train CFD trading” icon=”linecon-icon-like” icon_color=”#2ecc71″ ]

[list list_items=”No crypto currencies tradable so far” icon=”fa-icon-remove” icon_color=”#e74c3c” ]