XM and eToro Compared (UPDATED 2023)
XM is a renowned online forex and contract for difference (CFD) broker that has been in business since 2009. It has secured licenses from the Australian Securities and Investments Commission (ASIC), Cyprus Securities and Exchange Commission (CySEC), and the International Financial Services Commission (IFSC) in Belize. Investors prefer the broker for offering competitive spreads, popular trading platforms, and ultra-fast execution.
eToro, founded in 2007, is an innovative social trading broker that enables traders to execute their trades or copy trades of other traders. It is regulated by the British Financial Conduct Authority (FCA), and CySec makes it a safe and transparent broker for online trading. The integration of the industry-leading security protocols on its website gives traders the confidence to trade in a secure and transparent environment.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you can afford to take the high risk of losing your money.
XM Vs eToro: A Brief Comparison
| FEATURES | XM | eToro |
| Regulations | ||
| ASIC (Australia) | ✔ | ✔ |
| BaFin (Germany) | ✔ | ✔ |
| CySEC (Cyprus) | ✔ | ✔ |
| FCA (UK) | ✔ | ✔ |
| IFSC (Belize) | ✔ | ✔ |
| MiFID | ✔ | ✔ |
| Financial Instruments | ||
| Agricultural Assets | ✔ | ✔ |
| Bitcoin | ✔ | ✔ |
| CFD | ✔ | ✔ |
| Commodities | ✔ | ✔ |
| Energy | ✔ | ✔ |
| ETFs | ✔ | ✔ |
| Forex | ✔ | ✔ |
| Indices | ✔ | ✔ |
| IPO | ✔ | ✔ |
| Precious Metals | ✔ | ✔ |
| Shares | ✔ | ✔ |
| Major Currency Pairs | ||
| AUD/USD | ✔ | ✔ |
| EUR/USD | ✔ | ✔ |
| GBP/USD | ✔ | ✔ |
| NZD/USD | ✔ | ✔ |
| USD/CAD | ✔ | ✔ |
| USD/CHF | ✔ | ✔ |
| USD/JPY | ✔ | ✔ |
| Trading Platforms | ||
| Automated Trading | ✔ | ✔ |
| MetaTrader 4 (MT4) | ✔ | ❌ |
| MetaTrader 5 (MT5) | ✔ | ❌ |
| Mobile Trading | ✔ | ✔ |
| Social Trading | ✔ | ✔ |
| Web-Based Platform | ✔ | ✔ |
| Trading Accounts | ||
| Demo Account | ✔ | ✔ |
| Micro | ✔ | ✔ |
| Standard | ✔ | ✔ |
| Swap-Free/Islamic Account | ✔ | ✔ |
| Zero Spread | ✔ | ❌ |
| VIP Account | ❌ | ✔ |
| Deposit and Withdrawal | ||
| Minimum Deposit | $5 | $200 |
| Payment Methods | ||
| Credit/Debit Card | ✔ | ✔ |
| Wire Transfer | ✔ | ✔ |
| PayPal | ✔ | ✔ |
| Neteller | ✔ | ✔ |
| Skrill | ✔ | ✔ |
| Spreads/Commissions/Fees | ||
| Fixed Spreads | ❌ | ✔ |
| Variable Spreads | ✔ | ❌ |
| Commission Fees | ❌ | ❌ |
| Deposit Fee | ❌ | ❌ |
| Withdrawal Fee | ❌ | ✔ |
| Overnight/Swap Fees | ✔ | ✔ |
| Inactivity Fees | ✔ | ✔ |
| Risk Management Features | ||
| Stop Loss Order | ✔ | ✔ |
| Zero Balance Protection | ✔ | ✔ |
| Limit Order | ✔ | ✔ |
| Trailing Stops | ✔ | ✔ |
| One-Click Trading | ✔ | ✔ |
| Price Alerts | ✔ | ✔ |
| Signal Trading | ✔ | ✔ |
| Hedging | ✔ | ❌ |
| Scalping | ✔ | ❌ |
| Expert Advisors | ✔ | ❌ |
| Market Maker | ❌ | ✔ |
| Maximum Leverage | 1:500 | 1:30 |
| Segregates Clients Funds | ✔ | ✔ |
| Trading Tools | ||
| Research | Professional Reports, Newsfeeds, Trading ideas, Traders sentiment, Market commentary, AutoChartist, Trading Central, Economic calendar | Professional Reports, Trading ideas, Traders sentiment, Market commentary, Economic calendar |
| Education | Webinars, Podcasts, Tutorial videos | Webinars, Blogs, Tutorial videos |
| Customer Support | ||
| Live Chat | ✔ | ✔ |
| ✔ | ✔ | |
| Phone | ✔ | ✔ |
Pros and Cons – XM Vs eToro
XM
| Pros | Cons |
| Educational resources | Limited instruments |
| Instant account opening | No investor protection for non-EU clients |
| Low trading costs on the Zero Spread account | Limited trading platforms |
| MT4 and MT5 platforms available | |
| Negative balance protection | |
| No withdrawal fees | |
| Highly regulated |
eToro
| Pros | Cons |
| Bitcoin Trading | Financial information not publicly available |
| Copy-trading | High spreads |
| Zero balance protection | High initial deposit |
| No commission fees | Slow withdrawal process |
| No fees on stock and ETF trading | No direct market access |
| Regulated by international agencies | |
| Social trading |
Tradable Instruments
XM offers over 1,000 instruments, including 55 forex pairs, CFD, stocks, indices, commodities, precious metals, energies, and agricultural assets. This diverse set of assets allows the trader to diversify their investment portfolios.
eToro has an impressive collection of over 2,000 assets, such as forex, CFD, stocks, indices, commodities, and Bitcoin, along with several currency pairs. You can learn more about its trading instrument from the eToro review page.
Note: CFDs are complex assets, and you should consider whether you can afford to take the high risk of losing your money.
Trading Platforms
XM has integrated third-party tools like MetaTrader 4 and MetaTrader 5 on its platform. Both the platforms boast in-built tools and features, such as technical indicators and advanced charting.
Instead of MT4 or MT5, eToro has its proprietary OpenBook and Web Trader platforms. These platforms are intuitive and support one-click and automated trading. All this enables the trader to monitor their investment portfolio.
Both eToro and XM are available for use as desktop platforms, web platforms, and mobile app.
Trading Accounts
XM has four main account types – Micro, Standard, Ultra-Low, and Shares. While the first three facilitate commission-free trading and tighter spreads, the last one requires a higher initial deposit and charges commission fees.
There is only one account available for trading with eToro that provides access to its proprietary platform with built-in copy trading functionalities. eToro categorizes its clients, and traders have to choose between being a retail or professional client. Regardless of the categorization, all clients will be provided negative balance protection. Professional clients will be offered leverage of up to 1:400 for certain assets. eToro also makes it possible for clients to change their status.
Both eToro and XM feature a demo account that gives the novice trader the option of practicing with the platforms. Also, Islamic traders may request a swap-free account or Islamic account at low trading costs.
CFDs are complex assets, and you should consider whether you can afford to take the high risk of losing your money.
Minimum Initial Deposit
At XM.com, the minimum initial deposit varies with account types. The Standard and Micro account holders need to deposit a minimum of $5, while those having the Ultra-Low Account and Shares account have to deposit $50 and $10,000 respectively.
Traders at eToro, on the other hand, have to invest a minimum of $200 regardless of payment methods.
With its low minimum initial deposit, XM surpasses eToro.
NOTE: Since 75% of retail investor accounts lose money when trading CFDs with this provider, you should consider whether you understand how CFDs work.
Payment Methods
XM accepts credit cards, debit cards, bank transfers, and e-wallets like Moneybookers, Neteller, and Skrill. Multiple payment options make it easy and flexible for traders from all over the world to trade with the broker.
In addition to the payment options available with XM for making deposits and withdrawals, eToro accepts other payment merchants like PayPal, Yandex, Giropay, and WebMoney.
Bonuses and Promotions
According to its website, XM offers a free virtual private server for members with a minimum balance of 5,000 US dollars or currency equivalent. Also, it gives a $30 in non-deposit bonus for new members, and 50% deposit bonus up to $500, and a 20% deposit bonus of up to $5,000.
eToro offers a bonus of $100 on referring a new member. Bonuses also vary on an investor’s level: Cadet, Rising Star, Champion, and Elite. At the lowest level, Cadets receive a one-time bonus of $100. Elites at the very top receive a one-time bonus of $2500.
Spreads, Commissions, and Fees
XM offers the lowest possible variable spreads depending on the account types. In an ideal situation, it could be 1.7 pips on EUR/USD for commission-free accounts and 0.1 pips on EUR/USD on the Zero Spread account. It charges a commission of $3.5 per lot on the Zero Spread account.
eToro offers fixed spreads but charges no commission fees. Such tighter spreads of 3 pips on EUR/USD on a Standard account are higher than other international forex brokers in the market. However, using copy trading is free of charge.
Apart from spreads, XM and eToro rely on swap fees and the account inactivity fee to generate additional revenue.
Maximum Leverage
The maximum leverage for XM traders ranges from 1:1 to 1:500. XM offers flexible leverage that the trader can modify anytime.
As opposed to XM and many other brokers, the maximum leverage at eToro is pretty low at 1:30.
The advantage of using leverage is that investors can trade larger positions than their account balance. Please be advised that higher leverage can lead to a higher risk of losses.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you can afford to take the high risk of losing your money.
Research and Education
XM’s website features a great selection of research and educational resources to upgrade trade skills. Some of its useful research tools include newsfeeds, technical reports, AutoChartist, Trading Central, and an economic calendar. The education section comes loaded with podcasts, webinars, and tutorial videos.
eToro’s research and educational offerings are competitive and in line with industry standards. Core components of research include daily market analysis, newsfeeds, and an economic calendar. Because of copy trading, eToro has kept its educational materials limited to blogs and tutorial videos.
Licensing and Regulation
To ensure credibility among traders, an online forex broker needs to comply with strict international regulatory rules and regulations.
XM and eToro are regulated by top-tier financial authorities, including the Australian Securities and Investments Commission (ASIC), the UK Financial Conduct Authority (FCA), and the Cyprus Securities and Exchange Commission (CySEC).
Security of Funds
An internationally regulated broker guarantees the safety of client’s funds during unforeseen economic events. Having been licensed by ASIC and CySEC, eToro and XM traders are covered by statutory compensation schemes.
Such investor protection measures safeguard the trader’s hard-earned money in times of default, or insolvency, or bankruptcy. Besides, licensed & best forex brokers in uk keep client’s funds in segregated bank accounts instead of operating funds.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you can afford to take the high risk of losing your money.
Risk Management Tools
Trading comes with the high risk of losing money, and that is why both brokers incorporate features intended for protecting the trader from incurring significant losses.
Stop Loss Order
The stop-loss order allows the trader to set a price beyond which the broker automatically stops the trade. The main objective of this order is to limit the loss of a security position.
Negative Balance Protection
Using zero balance protection protects the trader’s account balance from going negative. Once activated, the broker ends the trade if the account balance reaches zero.
Customer Support
If you seek assistance or guidance on trade-related or technical issues, customer support at XM and eToro can help you with prompt and relevant solutions. You can reach their 24/5 available customer service executives via email, or live chat, or the phone.
Be it XM or eToro, both brokers support multiple languages such as English, French, German, Italian, Spanish, and many more, making it convenient for you to communicate problems with the customer care professionals in your local language.
Verdict – XM Vs eToro
When choosing a broker, traders usually look for the availability of financial assets, the trading platform, and secure transactions. When comparing internationally recognized brokers like XM and eToro, we found each of them to be better in one area or another.
XM promises to offer a wide range of instruments, award-winning platforms, transparent pricing, and flexible and competitive trading conditions. The broker has also made regular updates such as the integration of the latest MetaTrader 5, which is the best option for high volume and seasoned traders across the globe. The low minimum initial deposit, lower spreads, different account types, and enough risk management tools make XM superior to eToro.
eToro is regarded as an advanced trading broker for several reasons. With features like social and copy trading, no doubt, eToro has become an industry leader in online trading. However, eToro is let down by its higher minimum deposit requirement, lack of hedging, scalping, and expert advisors, and absence of the MT4 or MT5 platforms.
Now that you know the difference between the two leading online forex brokers, it is up to you to choose between XM or eToro based on your trading requirements.