XM vs AvaTrade: Who Is the Better Broker?
In the bustling realm of online forex and CFD trading, choosing the right broker isn’t just a matter of preference—it’s a strategic decision that can significantly influence your trading journey and financial outcomes. Among the myriad of brokers available today, XM and AvaTrade stand out as two of the most reputable and widely used platforms, each boasting a rich history, diverse offerings, and a strong global presence.
If you’re a trader based in the United States, seeking a comprehensive comparison between these two giants to discern which aligns better with your trading style, goals, and needs, you’re in the right place. In this exhaustive guide, we’ll walk through every facet of XM vs AvaTrade, dissecting their offerings with an expert’s eye, all while maintaining a relatable and human touch.
Let’s delve into this detailed comparison to help you make an informed, confident decision.
Introduction: The Importance of Choosing the Right Broker
The path to consistent success in forex and CFD trading begins with selecting the right broker. A broker isn’t just a platform to execute trades; it’s your partner in navigating the complexities of financial markets. The right broker should offer rigorous regulation, competitive spreads, user-friendly interfaces, robust educational resources, and trustworthiness.
For traders in the US, the stakes are often higher due to regulatory nuances and market differences. Both XM and AvaTrade have garnered global reputation, but they differ in various aspects such as regulation, product offerings, trading conditions, and customer service.
In our discussion, we aim for clarity in these differences, highlighting both strengths and potential limitations to assist you in making the best decision.
Company Background and Regulatory Status
XM: A Brief Overview
Founded in 2009, XM has grown rapidly to become one of the most recognized online trading brokers. Headquartered in Cyprus, XM operates under several regulatory licenses, including:
- Cyprus Securities and Exchange Commission (CySEC)
- Australian Securities and Investments Commission (ASIC)
- Financial Conduct Authority (FCA) in the UK
However, in the United States, XM does not hold a license from the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). This absence significantly affects US traders’ ability to access certain accounts or products directly using XM’s platform.
AvaTrade: A Brief Overview
Founded in 2006, AvaTrade is a veteran in the online trading industry, with licenses in multiple jurisdictions such as:
- Central Bank of Ireland
- ASIC (Australia)
- FCA (UK)
- FSP in South Africa
- Japan Financial Services Agency (JFSA)
While AvaTrade’s global licenses are extensive, it does not hold a US-specific license. Like XM, this limits direct access for traders from the United States, especially concerning certain trading features and products.
Regulatory Framework and Implications for US Traders
Regulation plays a critical role in ensuring the safety of trader funds and fair trading practices. Both XM and AvaTrade are regulated in several jurisdictions; however, neither is regulated by US authorities such as the SEC or CFTC.
Implication for US Traders:
- Limited Access: American traders often face restrictions when attempting to open live accounts directly with international brokers not regulated in the US.
- Alternative Access: For US traders, the typical approach entails going through US-regulated brokers or using localized versions of these platforms, which might be limited or unavailable.
Regardless of the limitations, both brokers are transparent and adhere to strict regulatory standards in their respective regions, providing peace of mind to traders worldwide outside the US.
Account Types, Minimum Deposits, and Accessibility
XM: Account Options and Accessibility
XM offers diverse account types, designed to meet different trader needs:
- Micro Account: Suitable for beginners, allows trading with small lot sizes.
- Standard Account: Offers spreads from as low as 1 pip with no commission.
- XM Zero Account: Provides raw spreads starting from 0 pips with a small commission per trade.
Minimum Deposits:
- Starting from as low as $5 to $50, depending on the account type and region.
Accessibility:
- XM offers a user-friendly web-based platform and supports MetaTrader 4 (MT4) and MetaTrader 5 (MT5).
- Also accessible through mobile apps for iOS and Android.
AvaTrade: Account Options and Accessibility
AvaTrade’s account types include:
- Standard Account: No commissions, fixed spreads.
- Daily Premium Account: Offers variable spreads and additional perks.
- Swap-Free Account: For traders with specific religious or ethical considerations.
Minimum Deposits:
- Typically start at $100, though it varies by payment method and region.
Accessibility:
- AvaTrade provides a web trading platform, with proprietary options plus support for MT4 and MT5.
- Mobile trading is robust, with dedicated apps for iOS and Android.
Comparison Summary
| Feature | XM | AvaTrade |
|---|---|---|
| Account Types | Multiple, tailored to different trader levels | Several, including standard, premium, swap-free |
| Minimum Deposit | From $5 | Starting at $100 |
| Access to MT4/MT5 | Yes | Yes |
| User Interface | Intuitive, beginner-friendly | User-friendly, versatile |
Takeaway:
Both brokers cater to traders of all experience levels, offering flexible account types and accessible platforms. XM’s lower minimum deposit makes it ideal for new traders testing the waters, while AvaTrade’s slightly higher deposit threshold still remains accessible for most.
Trading Platforms: Features, User Experience, and Compatibility
MetaTrader Platforms: The Industry Standard
Both XM and AvaTrade provide access to MetaTrader 4 and 5, which are highly regarded for their stability, customizability, and extensive analytical tools.
Key features include:
- Advanced charting
- Automated trading capabilities
- Multiple order types
- Extensive historical data
Proprietary Platforms and Other Tools
AvaTrade:
- Offers AvaTradeGo, a proprietary app that simplifies trading with an intuitive interface.
- Provides AvaTradeFX and AvaOptions for options trading and more advanced strategies.
XM:
- Primarily relies on MetaTrader platforms, no proprietary platform, focusing on stability and widespread familiarity.
User Experience and Performance
- Both platforms are optimized for desktop, web, and mobile.
- XM’s MetaTrader is renowned for fast execution speeds and reliability.
- AvaTrade’s proprietary app is sleek and user-friendly but may lack some advanced features found in MetaTrader.
Conclusion:
If you prefer a familiar interface with customizable analytical tools, MetaTrader’s offerings from either broker serve well. For traders seeking a more straightforward, mobile-centric experience, AvaTradeGo is a solid choice.
Trading Instruments and Asset Offerings
Forex Pairs
- XM: Offers over 55 currency pairs, including major, minor, and some exotic pairs.
- AvaTrade: Offers around 50+ forex pairs, with a focus on majors and minors.
CFDs and Other Products
- XM: Provides CFDs on stocks, commodities, indices, and cryptocurrencies.
- AvaTrade: Has a broad spectrum, including:
- Indices
- Commodities
- Cryptocurrencies
- ETFs
- Bonds (availability varies)
Cryptocurrency Trading
Both brokers support cryptocurrency CFDs, including Bitcoin, Ethereum, Litecoin, and Ripple, providing a viable avenue for crypto traders.
Unique Offerings
- AvaTrade: Offers social trading through platforms like DupliTrade and ZuluTrade.
- XM: Focuses more on traditional forex and CFDs without social trading features.
Summary:
Both brokers furnish a comprehensive suite of tradable assets, with AvaTrade slightly edging out in diversity of product offerings, especially given its inclusion of bonds and ETFs.
Spreads, Commissions, and Leverage
Spreads and Commissions
| Feature | XM | AvaTrade |
|---|---|---|
| Spread Type | Variable for all accounts | Fixed or variable, depending on account |
| Spread On Major Forex | From 1 pip (standard account) | From 0.9 pips (standard account) |
| Commissions | Zero for standard accounts; $3-4 per lot for zero accounts | Zero on standard, but varies with account type |
| Additional Fees | Overnight (swap) fees | Similar swap rates, plus inactivity fees after 12 months |
Leverage
- XM: Offers leverage up to 1:30 for US clients (regulatory restriction) and higher for clients outside the US.
- AvaTrade: Leverage up to 1:30 for US traders, higher leverage for non-US traders, sometimes up to 1:400 on certain assets.
Important Note:
US traders face diminished leverage owing to strict regulations, typically capped at 1:30.
Customer Support and Educational Resources
Customer Support
Both brokers excel in providing multilingual support through:
- Live chat
- Phone support
XM:
- 24/5 support with quick response times.
- Support available in multiple languages.
AvaTrade:
- Similar hours, with dedicated account managers for VIP clients.
- Offers 24/5 multilingual services.
Educational Tools and Resources
- XM: Provides webinars, trading guides, daily market analysis, and a forex glossary.
- AvaTrade: Offers in-depth eBooks, webinars, video tutorials, and a comprehensive trading academy.
Trading Tools and Analysis
- Both brokers offer economic calendars, technical analysis tools, and market news updates.
- Features like auto charting and advanced order management are present in MetaTrader platforms.
Fees, Deposit, and Withdrawal Policies
Deposit Options
- Both brokers support bank transfers, credit/debit cards, and e-wallets like PayPal and Skrill.
Withdrawal Processes
- Processing times vary from same day to 3-5 business days, depending on the method.
- No withdrawal fees are generally charged, but some payment providers might impose charges.
Inactivity and Other Fees
- AvaTrade: Charges a small inactivity fee after 12 months without trading.
- XM: No inactivity fees, which is favorable for casual traders.
Regulation and Security of Client Funds
Both brokers segregate client funds in reputable banks, ensuring protection against broker insolvency. Additionally, they employ:
- Advanced encryption protocols
- Strict compliance with international standards
Regulatory oversight further adds a layer of security, but the absence of US-specific regulation might be a concern for US-based traders.
Pros and Cons Summary
XM:
Pros:
- Low minimum deposit
- Wide range of account types
- Strong regulatory presence outside the US
- Competitive spreads
- Good educational resources
Cons:
- No US regulation, limiting access to US traders
- No proprietary platform
- Limited product diversification outside forex and CFDs
AvaTrade:
Pros:
- Extensive product offerings, including ETFs and bonds
- Well-established with multiple regulatory licenses globally
- Proprietary trading platform that is user-friendly
- Strong social trading features
Cons:
- Higher minimum deposit compared to XM
- No US regulation, which may affect US traders
- Slightly higher spreads on some assets
The Final Verdict: Which Broker Is Better?
Choosing between XM and AvaTrade ultimately hinges on your individual needs, trading style, and location.
If You Are a Beginner or Have a Small Budget:
XM’s low minimum deposit and beginner-friendly interface make it an excellent choice, especially if you’re just starting to explore forex trading.
If You Seek Diversification and Advanced Trading Tools:
AvaTrade’s wide array of trading products and proprietary platform appeal to more experienced traders or those looking to diversify their portfolio beyond forex.
For US Traders:
Both brokers are not regulated by US authorities, which naturally complicates direct access. US traders should consider brokers regulated in the US for safer access or use A-Book brokers with appropriate licensing.
Overall:
Both brokers are trustworthy, regulated in key jurisdictions, and equipped with solid features. Your decision must align with your preferences for trading assets, platform usability, educational support, and regulatory comfort.
Frequently Asked Questions (FAQs)
1. Are XM and AvaTrade regulated in the United States?
No, neither XM nor AvaTrade are regulated by US authorities such as the SEC or CFTC. US traders should be cautious and seek brokers with US regulation for more direct access and protections.
2. Which broker offers the lowest minimum deposit?
XM generally offers a lower minimum deposit starting from as little as $5, making it more accessible for new or casual traders.
3. Can I use MetaTrader 4 or 5 on both platforms?
Yes, both XM and AvaTrade support MetaTrader 4 and MetaTrader 5, allowing traders to utilize powerful analytical tools, automated strategies, and familiar interfaces.
4. Which broker has better customer support?
Both brokers offer 24/5 multilingual support via live chat, email, and phone. The quality can vary depending on the region, but both are known for reliable service.
5. Do these brokers charge inactivity fees?
AvaTrade charges an inactivity fee after 12 months without trading. XM does not charge inactivity fees, which is a plus for passive traders.
6. Which broker offers better educational resources?
AvaTrade tends to have a more comprehensive educational suite, including webinars, eBooks, and video tutorials. However, XM also provides robust learning tools suitable for beginners.
7. Is leverage higher in AvaTrade or XM?
Leverage is regulated to 1:30 for US traders. Internationally, both offer higher leverage — up to 1:400 — but US traders are restricted to lower levels.
8. Which broker offers more asset classes?
AvaTrade generally provides a broader range of assets, including bonds and ETFs, beyond the typical forex and CFD markets.
Conclusion: Making an Informed Choice
Deciding between XM and AvaTrade is about aligning their offerings with your trading aspirations, experience, and comfort with regulation. Both are reputable, regulated globally, and offer comprehensive trading features.
If your priority is low-cost entry and simplicity, XM is an excellent choice. On the other hand, if you desire broader asset diversity and more advanced trading tools, AvaTrade can serve your needs well.
In the end, your success depends more on your knowledge, discipline, and strategy than on the broker you select. Use this detailed comparison as a guide, but always ensure to test platforms with demo accounts before risking real money.
Happy trading, and remember, informed decisions are your best trading allies.