XM’s Ultra-Low Spreads

XM uses a variable spread system, with spreads that fluctuate based on market conditions. Additionally, fractional pip pricing enables XM to offer exceptionally tight spreads, starting from less than 1 pip, creating a favorable trading environment for customers. The KIWAMI account provides even narrower spreads, starting from just 0.6 pips, with no commission charges, while the Zero account offers the tightest spreads, beginning at 0 pips. In the following, we will explain each of these XM spread features in detail.

Implementation of a variable spread system

XM has implemented a variable spread system to offer a more favorable trading environment for all customers. There are two types of spreads: fixed and variable. Unlike the fixed spread system, which maintains a constant spread regardless of market conditions, XM’s variable spread system adjusts dynamically, expanding and contracting in response to market fluctuations, similar to how spreads behave in the interbank market.

XM’s variable spread system may widen during significant market fluctuations. However, under normal conditions, it typically offers narrower spreads than the fixed spread system, resulting in lower trading costs on average. This makes it an appealing option for those concerned about wide spreads, as they can still trade with confidence. While the fixed spread system reduces the risk of fluctuations, it does come with higher costs.

Additionally, unlike many FX brokers that impose restrictions on trading before and after the release of important economic indicators, XM does not enforce such limitations, allowing you to fully capitalize on potential profit opportunities.

Provides fractional pip pricing

XM offers “fractional pip pricing” to obtain precise prices from liquidity providers (LPs) and ensure fair spreads. Fractional pips represent decimal places smaller than 1 pip for each currency pair. By using fractional pip pricing, XM can offer extremely tight spreads, such as “0.1 pips,” which are smaller than 1 full pip.

XM uses fractional pip pricing, displaying transaction prices up to the third to fifth decimal place. This allows for tighter spreads, enabling traders to profit from even small price fluctuations. Wide spreads can make it challenging to profit from narrow price movements, but XM’s ultra-tight spreads are ideal for scalping traders who target small pip gains.

What is a spread?

The spread is the difference between the buy price (Ask) and the sell price (Bid) of a currency pair. A narrower spread means lower trading costs, providing a more favorable environment for traders. Conversely, a wider spread increases trading costs, so caution is necessary. Since the cost from spreads grows with the number and size of trades, spreads are an important factor to consider when selecting an FX broker.

What is the spread unit, pips?

Spreads are typically measured in units called “pips.” A pip represents the smallest price movement in the market. Using pips makes it possible to express trading conditions in a standardized way, even for currency pairs with different quotation units.

For instance, the unit of measurement varies by currency pair—yen, sen, dollars, or cents—so you might see quotes like “the USD/JPY spread is 1 sen” or “the EUR/USD spread is 0.02 cents.” However, by using pips, these can be expressed in a standardized way, such as “the USD/JPY spread is 1 pip” or “the EUR/USD spread is 2 pips.”

How to Interpret and Calculate Spreads (in Pips)

The value of one pip differs depending on the currency pair. For pairs where the settlement currency is the yen—such as USD/JPY or EUR/JPY—1 pip equals 0.01 yen. In contrast, for pairs where the settlement currency is the US dollar—such as EUR/USD—1 pip equals 0.01 cents.

How to calculate spreads (transaction costs)

The above values represent the worth of 1 pip for each currency pair. For example, if you trade 1 lot of USD/JPY with a spread of 1 pip, the calculation is: 1 pip (0.01 yen) × 100,000 units = 1,000 yen.

To calculate trading costs, you first need to determine the value of the spread in pips. Doing this manually for every trade can be time-consuming, but with XM’s pip calculator, you can instantly find out the value without any complex calculations. Since costs expressed in pips can be difficult to grasp, converting them into the base currency makes it easier to visualize the spread as an actual trading cost. That’s why XM’s pip calculator is a useful tool to take advantage of.

The spreads offered on XM’s Standard and Micro accounts are generally in line with industry averages. However, some traders may feel that these spreads are wider compared to other account types. When XM’s generous bonuses are factored in, though, the effective spreads on Standard and Micro accounts become highly competitive with those of other brokers. Since wider spreads increase trading costs and make it harder to generate efficient profits, we’ll explain how you can reduce effective spreads by making the most of XM’s bonus programs.

Maximize Your Effective Spreads with XM’s Loyalty Program

XM Trading runs the “XM Loyalty Program,” which allows you to earn XM Points (XMP) with every trade. These points can be exchanged for bonuses, and by utilizing them effectively, you can reduce the effective spreads on your trades with XM.

What is XM’s Loyalty Program?

XM’s Loyalty Program (XM Point Program) ranks your “Loyalty Status” based on the number of trading days, which in turn increases the number of XM Points (XMP) you can earn. Currently, the “Double Up Campaign” is available exclusively to customers who open a new XM real account through this website. Normally, loyalty status starts at EXECUTIVE, but under this campaign, your status is immediately upgraded to GOLD upon opening an account. With the standard EXECUTIVE status, you earn 10 XMP per lot, while GOLD status allows you to earn 13 XMP per lot traded.

How much can you reduce the spread using XM Points (XMP)?

For example, if you trade 1 lot with a GOLD status account, you will earn 13 XMP (XM Points). By exchanging these 13 XMP for a trading bonus, roughly $4 is added to your margin balance per lot. Using XM’s Loyalty Program in this way can reduce your effective spread by approximately 0.4 pips.

Spreads fluctuate daily, so be sure to check the latest rates before trading.

Additionally, XM’s loyalty status rises based on the number of trading days, and the higher your status, the more XM Points (XMP) you earn per 1-lot trade. This means that the longer you trade with XM, the narrower your effective spreads become. Below is a summary showing how much you can reduce spreads using the XM Points earned per 1-lot trade at each loyalty status.

How Much You Can Reduce Spreads Using XM Points

The “XM Loyalty Program,” a key tool for improving effective spreads, is available exclusively for XM’s Standard and Micro accounts and does not apply to KIWAMI or Zero accounts. If you trade using a Standard or Micro account, we encourage you to take full advantage of the XM Loyalty Program bonuses to trade with the narrowest possible spreads.

Detailed instructions for checking your XM Points (XMP) and loyalty status are provided in the XM Member Page Usage Guide, complete with easy-to-follow illustrations.

On the XM Members Page, you can open an account, deposit and withdraw funds, adjust your leverage, and access the copy trading page. For step-by-step instructions on using the XM Members Page, please refer to the “XM Members Page User Guide.”

Reduce Your Trading Costs with New Account Opening and Deposit Bonuses

You can also use XM’s generous bonuses to help narrow your spreads. All new customers who open a real account receive a ¥15,000 account opening bonus (trading bonus) that can be used as margin, as well as a two-tiered deposit bonus of up to $10,500 ($500 + $10,000), depending on your deposit amount. By leveraging these bonuses, you can effectively reduce trading costs and trade more efficiently. Since wide spreads can increase trading expenses, taking full advantage of XM’s bonuses is highly recommended.

In particular, the ¥15,000 account opening bonus is provided free of charge to all customers who have never opened a real account with XM, allowing you to experience trading without any risk. Additionally, XM regularly offers limited-time bonus campaigns, so be sure to stay updated on the latest offers and use them to help narrow your effective spreads.

Please check the list of spreads for all products offered by XM. Note that spreads for XM’s FX currency pairs, cryptocurrency CFDs, and precious metal CFDs vary by account type. The spreads shown here represent average or minimum values. To view XM’s real-time spreads, please log in to XM’s MT4/MT5 platforms.

XM offers stable spreads thanks to its industry-leading execution capabilities. However, spreads tend to narrow when market trading volume is high and widen when trading volume is low. Please be aware of times when spreads are likely to increase. Specific periods when XM spreads may widen are as follows:

Spreads are more likely to widen in the early morning

XM uses a variable spread system linked to the interbank market, so spreads tend to widen during periods of low liquidity, such as early morning and late at night. Spreads are particularly prone to widening between 4:00 AM and 8:00 AM Japan time, which coincides with the New York market closing, and especially between 6:00 AM and 7:00 AM, when trading volumes are at their lowest. When trading with XM, please be mindful of potentially wider spreads in the early morning.

Spreads tend to widen during major economic indicator announcements.

Spreads may widen during sudden market fluctuations caused by the release of important economic indicators, periods of political instability, or unexpected external events. Excessively wide spreads can be disadvantageous for trading. The degree to which spreads widen depends on market conditions and liquidity, so it is wise to manage risk in advance by avoiding new orders during indicator releases. For reference, please note that spreads may temporarily widen when the following economic indicators are announced.

Economic Indicators That Often Cause Spreads to Widen

The spreads listed in the “XM Spread List” represent average and minimum values over a certain period. To view XM’s real-time spreads, log in to XM’s MT4/MT5 platforms or the official XM smartphone app. If you do not have a real account, you can also check spreads under real trading conditions using a demo account. Please refer to instructions on how to check and view spreads for each trading tool.