eToro vs XM

Your trading costs and fees

In terms of trading costs and fees, our trading methodology largely focuses on spreads, those that are advertised by the broker and those we’ve tested. All up, this encompasses 60% of our overall trading costs score.

As a result of testing this way, XM marginally wins out when it comes to trading costs. A large reason for this is XM’s flexibility in account structure, which offers 4 different trading accounts with different execution types. This allows XM to offer spreads from as low as 0 pips with its XM Zero Account.

Having said all this, XM’s lowest spreads are only available in the UK and Europe. So most traders will only have access to spreads from as low as 0.6 pips.

As a standard market maker, eToro can only offer relatively wide spreads from upwards of 1 pip. This means the broker also doesn’t offer a commission-based account, whereas XM does.

eToro also imposes inactivity fees and withdrawal fees, which hurts its score considerably.

Standard Account Spreads

Let’s dive into the average standard account spreads for the forex pairs across eToro, XM, and the industry average.

Standard Account Analysis Updated September 2023[1]September 2023 Published And Tested Data

Looking at the data, it’s clear that eToro consistently offers lower spreads across all forex pairs compared to XM. For instance, the EUR/USD pair, one of the most traded forex pairs, shows a spread of 1 for eToro and 1.6 for XM. This trend continues across all pairs, making eToro the more cost-effective option in terms of spreads.

However, it’s essential to consider the industry average as well. The industry average spread for EUR/USD is 1.35, which is higher than eToro’s but lower than XM’s. This pattern is consistent across all forex pairs, placing eToro below the industry average and XM above.

In conclusion, based on the spread data, I would argue that eToro offers a more cost-effective trading environment in terms of spreads. However, it’s crucial to remember that spreads are just one aspect of trading costs. Other factors such as commission fees, withdrawal fees, and inactivity fees can also impact the overall cost of trading. Therefore, traders should consider all these aspects when choosing a forex broker.

Our Verdict

Overall, our trading cost score of 3/10 for eToro and 5/10 for XM shows both brokers are average at best. XM offers average spreads across the board, whereas eToro just can’t compete and adds additional fees which doesn’t help the broker’s cause.

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Your trading experience (account types)

Your overall trading experience is one step further from trading costs. We measure trading experience based on execution speeds (30%), ease of account opening (35%) and withdrawals (10%). The last 10% is leverage offered for professional traders.

With that in mind, both XM and eToro offer a lot of similarities from what we observed and tested. Both brokers are market makers, although XM’s prices are matched from its liquidity network, meaning it can offer close to ECN-like spreads.

The main difference we saw between XM and eToro was that XM offered more account types, which gave it a little more flexibility. Having said that, we don’t have execution speed data or account opening information, so can’t comment either way.

Every other factor yielded very similar results, hence why we gave both brokers a 6/10 for overall trading experience.

Our Verdict

We couldn’t split XM and eToro overall, when measuring their trading experiences. Having not opened accounts with either broker nor tested their trading speeds, we only have half the picture.

Your tradeable products

When measuring tradeable products, our weighting leans heavily on forex (25%) and share CFDs (15%) as two of the most popular financial markets to trade. Having said this, a lot of brokers are CFD specialists, so we have encompassed the full spectrum of asset classes a broker can offer.

As you can see below, we have given eToro and XM the same score, despite eToro having a greater diversity in asset classes. This is largely due to XM offering over 50 forex pairs and over 1000 share CFDs, which we have given full marks for. Interestingly, XM offers both the normal currency pairs and micro currency pairs (55 for both).

Other than forex, In all other markets eToro basically sweeps the board. eToro’s share CFD range is more than double, it has more commodities and offers ETFs, which XM doesn’t. We like ETFs as a complex derivative to diversify your portfolio.

eToro also offers physical stocks (underlying assets) and customer index baskets in addition to its forex, crypto and CFD range, while XM doesnt.

Our Verdict

Overall, while we have given both brokers the same score of 6, in reality, eToro offers a more diverse range of markets. eToro would score much higher if the broker offered more forex pairs and XM is only held up by its forex and share CFD range.

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eToro vs XM: Your trading platform experience

For some traders, your trading platform is the most important aspect a broker offers. When rating brokers based on trading platforms, we weighted more towards third-party platforms, particularly the MetaTrader platforms (30%), cTrader (10%) and TradingView (10%). The rest of our weighting is evenly distributed across proprietary platforms, demo accounts, automation, copy trading and mobile trading.

As such, XM scores big points offering both MetaTrader 4 and MetaTrader 5. eToro, by comparison, only offers proprietary platforms. While these platforms are all very solid, we only give proprietary platforms a 5% weighting in our rating.

XM also offers its own proprietary platform, so scores points there too. eToro offers better social and copy trading, given its specialisation in social trading, while XM wins in the automated trading department.

Our Verdict

Overall, XM is just above average in its trading platform range, but eToro is well below average. Not offering at least one of the most popular trading platforms in MT4 or MT5 hurts eToro’s cause considerably.

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eToro vs XM: Trust and Reputation

We measure the trust and security of a broker based largely on regulations, which are rated in tiers, from Tier 1 (most trusted) down to Tier 3 (least trusted). This makes up 50% of our testing methodology for trust and reputation.

With that said, we gave eToro a slightly higher score only because it offers more Tier 3 regulators than XM. Offering less regulations doesn’t necessarily mean XM isn’t to be trusted, it simply means eToro offers more financial services in different parts of the world.

XM also offers a guaranteed stop loss, which helps prevent slippage (or unnecessary losses) from undue market volatility, while eToro doesn’t.

Verdict

Overall, both brokers are reputable and trusted. The main reason we scored eToro a 7 over XM’s 6 is due to offering one more Tier 3 regulator.

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Education, Funding and Support

For the last section of our eToro Vs XM comparison, we have lumped a number of trading factors together.’ These categories combine the lesser discussed, but no less important, trading factors that add to your overall customer experience.

When looking at the table below, eToro and XM are very evenly matched, across the board. XM only slightly edges out eToro in its educational tools and customer support while eToro offers more funding methods.

XM’s educational tools include daily videos, webinars, podcasts, organised articles and courses. We particularly like XM’s own in-house broadcasting feature for its video content, which is professional quality.

XM also stands out with its customer support bot, while eToro only offers email support.

Our Verdict

Overall, both eToro and XM offer a decent customer experience, with eToro scoring extra points for its funding methods while XM has superior educational resources and customer support.

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