When evaluating forex and CFD brokers, commission charges are a primary consideration, especially for active traders. While some brokers offer commission-free trading with wider spreads, others charge a commission per lot traded alongside tighter raw spreads. This comparison of IC Markets vs XM commission aims to shed light on their respective models, alongside other key features.
Understanding Broker Commission Models
Before diving into the specifics of IC Markets and XM, it's important to understand the two main commission models:
Spread-Only Model
Many brokers, particularly those catering to beginner traders or offering simpler account structures, operate on a spread-only model. Here, the broker makes its money from the difference between the bid and ask price (the spread). There are no explicit commission charges per trade. While this can seem attractive, it often means the spreads are wider, effectively baking in the broker's fee.
Commission-Plus-Spread Model
This model is prevalent among ECN/STP brokers or those offering raw spread accounts. Traders pay a small, fixed commission per lot traded, in addition to very tight, often raw, spreads. This model is generally preferred by experienced traders and scalpers who require the tightest possible entry and exit prices. The total cost of a trade is the commission plus the spread.
IC Markets: Low Commission ECN Trading
IC Markets is renowned globally for its ECN (Electronic Communication Network) trading environment, offering some of the tightest raw spreads in the industry. For most of its popular account types, IC Markets employs a commission-plus-spread model.
IC Markets Commission Structure
* Raw Spread Account: This is IC Markets' flagship account, designed for traders who prioritise low trading costs. It typically features raw spreads starting from 0.0 pips on major currency pairs. The commission charged is usually around $3.50 per standard lot per side ($7.00 round turn) for Forex and Metals. This competitive commission rate, combined with raw spreads, often results in a very low all-in cost of trading.
* cTrader Account: Similar to the Raw Spread Account, the cTrader account also offers very tight spreads with a commission. The commission structure on cTrader can be slightly different but remains highly competitive, often around $3.00 per lot per side ($6.00 round turn).
* Standard Account: For traders who prefer a simpler, spread-only model, IC Markets also offers a Standard Account. This account has no commission charges, but the spreads are wider, typically starting from around 0.6 pips on EUR/USD. This can be a good option for those trading smaller volumes or who prefer not to calculate commissions.
IC Markets benefits from deep liquidity, ensuring minimal slippage even during volatile market conditions, which further contributes to its appeal for cost-conscious traders.
XM: Flexible Accounts with Varied Commission
XM is a well-established broker known for its extensive range of account types, catering to various trading styles and capital sizes. XM generally offers a spread-only model across its most popular accounts, though it does have an Ultra Low Account with tighter spreads.
XM Commission Structure
* Standard Account: This is XM's most popular account, offering commission-free trading with spreads typically starting from 1.0 pip on EUR/USD. This account is suitable for a wide range of traders due to its simplicity and absence of explicit commission.
* Micro Account: Similar to the Standard Account but designed for smaller trade sizes, the Micro Account also offers commission-free trading with comparable spreads.
* XM Ultra Low Account: This account is designed to offer tighter spreads than the Standard or Micro accounts, often starting from 0.6 pips on EUR/USD, and remains commission-free. It's an excellent option for traders seeking lower costs without the added complexity of calculating commissions.
* Shares Account: XM also offers a Shares Account for trading individual stocks, which typically involves a commission per trade, rather than through spreads. The exact commission depends on the specific stock and exchange.
XM focuses on providing tight, variable spreads without commission on its forex and metals offerings, making its pricing structure straightforward for many traders.
IC Markets vs XM Commission: The Verdict
When comparing IC Markets vs XM commission, the choice largely depends on your trading style and preference for how trading costs are presented.
* For Raw Spreads and Lowest All-In Costs: IC Markets, particularly its Raw Spread and cTrader accounts, typically offers the lowest effective trading costs due to its combination of raw spreads and competitive commissions. This makes it highly attractive for scalpers, high-volume traders, and those employing EAs (Expert Advisors) that benefit from minimal slippage and tight pricing.
* For Simplicity and No Explicit Commission: XM, with its Standard, Micro, and Ultra Low accounts, excels in providing a straightforward, commission-free trading experience. While the spreads might be slightly wider than IC Markets' raw spreads plus commission, the absence of an explicit commission per lot can be appealing for beginner traders or those who prefer to see their trading cost entirely within the spread.
Both brokers are reputable and regulated, offering a secure trading environment. Your decision should factor in your trading frequency, strategy, and how you prefer to manage and perceive your trading costs.
Comparison Table: IC Markets vs XM
| Feature | IC Markets (Raw Spread) | XM (Ultra Low Account) |
| :------------------ | :------------------------------- | :------------------------------ |
| Spreads (EUR/USD) | From 0.0 pips (typical) | From 0.6 pips (typical) |
| Spreads (GBP/USD) | From 0.3 pips (typical) | From 1.0 pips (typical) |
| Spreads (XAU/USD) | From 0.0 pips (typical) | From 2.5 pips (typical) |
| Commission | $3.50/lot/side ($7.00 round turn)| None |
| Min Deposit | $200 (typical) | $5 (typical) |
| Regulators | ASIC, CySEC, SCB, FSA Seychelles | CySEC, ASIC, IFSC, DFSA, FSC |
| Platforms | MetaTrader 4, MetaTrader 5, cTrader | MetaTrader 4, MetaTrader 5 |
*Figures are typical and at time of writing — always check the broker's official website for the most current information.*
Verdict by Trader Type
For Scalpers and High-Frequency Traders
IC Markets is generally the superior choice. Its raw spreads and competitive commission structure provide the tightest possible entry and exit points, which are crucial for strategies relying on small price movements and high trade volumes.
For Beginner Traders and Casual Traders
XM with its Ultra Low or Standard accounts offers a simpler pricing model with no explicit commissions. This can be less intimidating and easier to manage for those new to trading or who trade less frequently, without needing to factor in separate commission calculations.
For Traders Using EAs and Automated Strategies
IC Markets often comes out ahead due to its deep liquidity, raw spreads, and low commissions. EAs often perform best in environments with minimal latency and tight pricing, which IC Markets provides.
For Traders Prioritising a Wide Range of Products
Both brokers offer a substantial range of instruments. However, XM sometimes has a slight edge in the sheer number of available CFDs, including a more diverse stock CFD offering, depending on the region.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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