XM Trading:Meaning of Terms What is CFD? Brands handled


XM Trading does not only deal with exchange rates. In addition to FX currency pairs, we offer a number of CFD products including precious metals, stock indices, crude oil, agricultural commodities, and more. The unique appeal of XM is that you can trade a wide range of Forex and CFDs just by opening a real account.

What are CFDs?

Forex is a very well-known trading product, but not much is known about “CFD”, which has similar characteristics to Forex. CFD is an abbreviation that stands for Contract For Difference, which means “cash settlement transaction”. To explain it in a little more detail, “difference” refers to the difference between the time of ordering and settlement, and is a transaction in which only the difference is exchanged without the delivery of the underlying asset (actual product).

Since the target of investment is price fluctuations, if there is no fluctuation, the profit or loss will be zero. And when doing CFD trading, it is common to deposit part of the price as margin. However, at XM Trading, the margin amount is set low.

Difference between cash and futures

There are two types of stock index CFDs on XM: spot and futures. If you do not correctly understand the difference between “spot” and “futures”, you may suffer unexpected losses in trading, so be careful. The difference between cash and futures is summarized below.

the actual thingfutures
contract monthNone (indefinite)Yes (with time limit)
Spreadnarrower than futureswider than actual
swapcan benone
DividendDepends on brandnone

Spots are advantageous for short-term trading because the spread is narrower than futures and swap points are not collected unless the day is crossed. Futures have wider spreads than cash, but neither swap points nor dividends accrue, making them suitable for long-term trading. When the contract month (deadline) is reached, it will be forcibly settled, so don’t forget to “roll over” to switch to the next due date.

Stocks handled by XM Trading

XM does not only deal with exchange rates. We carry many brands such as:

Number of stocks available for CFD investment

CategoryNumber of investment stocks
virtual currency27 types/31 currency pairs
Stock index14 stocks and 10 futures
precious metal4 types / 8 issues (*including zero account issues)
energyprecious metal5 types/6 brands
merchandise8 types

Advantages of trading CFDs

Some of the advantages of trading CFDs with XM are:

Tradeable for both buy and sell

In CFD trading, the underlying asset is not delivered, and only the profit or loss resulting from the transaction is delivered, such as “purchased” or “sold”. Therefore, it is possible not only to “buy and sell”, but also to “sell and buy back”, and you can aim for profits in both rising and falling trends. By grasping the trend of the market well, you can make a profit in both rising and falling markets.

high leverage

At XM, you can trade with high leverage of at least tens of times, and more than 100 times depending on the stock, so you have the opportunity to increase your funds more efficiently than other companies. High leverage has the advantage of not only pursuing profits, but also reducing the required margin.

Zero cut system

Since XM has introduced a “zero cut system”, there is no need to worry about additional calls being made. There is a possibility that a negative amount exceeding the account balance may occur. However, even if the account balance becomes negative, XM will compensate for the negative amount and return it to zero.

trade on one account

Other companies require you to open separate accounts if you want to trade both Forex and CFDs. Balance will be managed separately. However, with XM, you can trade both Forex and CFDs in one trading account just by opening one “standard account” that has the most stocks. Moreover, it is very easy to open an account and you can start trading as early as the same day.


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