Understanding Inactivity Fees in Forex Trading
Inactivity fees are charges levied by brokers on accounts that remain dormant for a specified period, typically several months. These fees are designed to cover the administrative costs associated with maintaining an account, even when it's not generating trading volume. While some brokers are transparent about these charges, others may have them hidden in their terms and conditions. For UK traders, understanding these fees is paramount, as they can significantly impact long-term profitability.
IC Markets Inactivity Policy
IC Markets is widely known for its raw spreads and competitive pricing, often appealing to high-volume and algorithmic traders. A significant advantage for many traders considering IC Markets is their clear stance on inactivity fees:
* No Inactivity Fees: At the time of writing, IC Markets does not charge any inactivity fees. This means your account balance will not be diminished by dormancy charges, regardless of how long it remains unused.
This policy makes IC Markets particularly attractive to those who might trade infrequently or maintain accounts with funds without immediate plans for active trading.
XM Inactivity Policy
XM, on the other hand, operates with a different fee structure, which includes an inactivity fee under certain conditions. XM is known for its diverse range of trading instruments and robust educational resources.
* Inactivity Fee: XM charges a monthly inactivity fee of $15 (or currency equivalent) if there has been no trading activity for 90 consecutive days. This fee is only applied if the account has a positive balance. If the balance falls to zero due to the fee, no further charges will be made.
* Bonus Forfeiture: Additionally, any bonuses or promotional credits in an inactive account will be removed upon the account being deemed inactive.
This policy means that traders with dormant XM accounts should be aware of the potential for their balance to decrease over time due due to inactivity charges.
IC Markets vs XM: Beyond Inactivity Fees
While inactivity fees are a critical point of comparison, a comprehensive view requires evaluating other key aspects of each broker. Both IC Markets and XM offer a robust trading environment, but they cater to slightly different trading styles and preferences.
Spreads and Commissions
* IC Markets: Known for its ECN-like environment, IC Markets offers very tight raw spreads, particularly on its Raw Spread accounts. These accounts typically have a commission charge per standard lot (e.g., $3.50 per side per lot for forex). Their Standard account offers slightly wider, commission-free spreads.
* XM: XM offers commission-free trading on most of its account types (Micro, Standard, Ultra Low), with spreads starting from 0.6 pips. Their Shares account offers commission-based trading. The overall trading cost structure is generally simpler, which can appeal to newer traders.
Minimum Deposit
* IC Markets: Typically requires a minimum deposit of $200.
* XM: Often allows for a very low minimum deposit, sometimes as low as $5, making it accessible to traders with smaller capital.
Regulatory Oversight
Both brokers hold multiple regulatory licenses, ensuring a degree of security and compliance.
* IC Markets: Regulated by ASIC (Australia), CySEC (Cyprus), SCB (Bahamas), and FSA (Seychelles). For UK clients, they typically operate under their SCB or FSA entities.
* XM: Regulated by CySEC (Cyprus), ASIC (Australia), FSC (Belize), and DFSA (Dubai). UK clients might be onboarded under different entities, depending on their specific region.
Trading Platforms
Both brokers offer industry-standard platforms, providing flexibility for traders.
* IC Markets: Primarily offers MetaTrader 4 (MT4), MetaTrader 5 (MT5), and cTrader.
* XM: Offers MT4 and MT5, available across various devices.
Comparison Table: IC Markets vs XM
To provide a clearer picture, here's a side-by-side comparison of key features:
| Feature | IC Markets | XM |
| :------------------- | :-------------------------------------------------------------- | :-------------------------------------------------------------- |
| Inactivity Fee | None | $15 monthly after 90 days of inactivity (if positive balance) |
| Spreads EUR/USD | Typical 0.0-0.1 pips + commission (Raw Spread) | Typical 0.6-1.7 pips (Standard/Micro) |
| Spreads GBP/USD | Typical 0.2-0.3 pips + commission (Raw Spread) | Typical 1.0-2.0 pips (Standard/Micro) |
| Spreads XAU/USD | Typical 0.1-0.2 pips + commission (Raw Spread) | Typical 2.0-3.0 pips (Standard/Micro) |
| Commission (Forex) | $3.50 per side per lot (Raw Spread) | None (most accounts) |
| Min Deposit | Typical $200 | Typical $5 |
| Regulators | ASIC, CySEC, SCB, FSA | CySEC, ASIC, FSC, DFSA |
| Platforms | MT4, MT5, cTrader | MT4, MT5 |
*Figures are typical, at time of writing — check broker site for exact and up-to-date information.*
Verdict by Trader Type
Choosing between IC Markets and XM largely depends on your individual trading style, capital, and priorities.
For the Cost-Conscious & Infrequent Trader
IC Markets stands out. The absence of inactivity fees means you don't have to worry about your balance dwindling if you take extended breaks from trading. Their raw spreads also appeal to those looking for the lowest possible trading costs, assuming they factor in the commission.
For the Active & High-Volume Trader
Again, IC Markets generally holds an edge due to its ECN-like environment, offering tighter spreads that can significantly reduce costs for frequent traders. The commission structure is often more favourable for high-volume trading compared to wider, commission-free spreads.
For the Beginner & Lower Capital Trader
XM might be more appealing. Their very low minimum deposit makes them accessible to those just starting out. The simpler commission-free structure on most accounts can also be less daunting for new traders. However, new traders should be mindful of the inactivity fee if they do not plan to trade regularly.
For Traders Prioritising Education & Simplicity
XM offers extensive educational resources and a more straightforward fee model on its standard accounts, which can be beneficial for those who are still learning the ropes of forex trading. Their commitment to client support and diverse instruments also adds value.
Our Featured Partner: Vantage
Looking for an alternative that combines competitive pricing with robust platforms? Consider Vantage. As a regulated broker, Vantage offers a comprehensive trading environment with tight spreads and a variety of instruments.
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.