If you’re anything like me, you probably like keeping up to speed with the latest trends in market trading – and you’ve probably seen CFD trading pop up more and more recently. As it happens, this type of traded derivative is available to buy and sell across several different platforms and apps. The two that have really caught my eye the most recently are CMC and XTB, but what sets these two platforms apart from the pack?
In this head-to-head review, I’ll dig down into what both CMC and XTB have to offer, as well as a few of the intricacies surrounding CFD trading. As always, don’t invest a penny until you’ve read what I have to say below!
CMC vs XTB: A quick summary
- CMC provides over 12,000 trading instruments, while XTB offers around 10,000.
- CMC offers more forex pairs and CFD options than XTB in general.
- Both CMC and XTB are easy to sign up for online and via app.
- CMC has two account options, XTB has one.
- It’s free to sign up to CMC or XTB, and there’s no minimum deposit (unless you have a corporate account with XTB).
- Both are comparable in terms of costs, though CMC charges more on average for stock CFD trading – however, it has more options than XTB.
- You can deposit with cards, e-wallets, and via bank at both CMC and XTB.
- XTB charges for e-wallet deposits, while CMC charges for international withdrawals.
- You can only withdraw via bank through XTB.
- Both platforms have lots of education and research tools, though XTB tracks progress, and CMC has Autochartist.
- Both services have apps available to download for Android and iOS, though CMC has more chart options.
- Overall, I feel CMC is the better option amongst the two services.
What exactly is CFD trading?
‘CFD’ stands for ‘contract for difference’. It’s a trading option that lets you make money on how a commodity performs on a given market. This could be stock, bonds, or even currency via forex.
With CFD trading, you’re placing money behind how prices move. You don’t physically own any assets or even any stocks. It works rather like you’d expect at a bookmaker – you’re ‘betting’ on which way pricing is going to travel.
For example, if you’re a CFD trader betting on an instrument that you think will increase in value, you’d ‘buy’ a position through a broker. If you’re right and the value increases, you may choose to ‘sell’ the difference between your position and its new peak at a profit. Conversely, you’d ‘sell’ your difference in position, if you anticipate a drop and don’t want to lose any more money.
You can also bet negatively on instruments, i.e. go short, via CFD by setting an opening position and then purchasing a later trade to profit on the difference.
A good example of CFD trading in global practice is forex. Forex traders invest in positions, or essentially bet, on whether or not a specific currency pair will rise or fall in value. For example, you may choose to go long in the USDGBP pair if you believe USD will appreciate in comparison to the GBP. Alternatively, you could sell it if you believe the USD will depreciate.
You’ll find that plenty of different CFD trading platforms let you invest directly in assets, too. For many people, buying and selling on a CFD basis takes away the pressure of owning stock or bonds outright, instead letting them bet on how they think markets will turn.
It’s important to note that a large majority of retail investors lose money in trading CFDs, so you have to proceed with caution. Trading CFDs (or any asset for that matter) requires good research, knowledge, time, and emotional control. As exciting as it may sound, please only proceed if you are comfortable doing the requisite work and can execute your trades with caution.
Now you know a little bit more about how CFD works, let’s run through CMC vs XTB.
What is CMC?
CMC Markets has been a part of the trading scene since 1989 and is highly regarded as one of the safest brokers online. Its presence on the London Stock Exchange (LSE) should give plenty of confidence to newbie and seasoned investors.
CMC provides more than 12,000 unique instruments to trade in and is considered one of the lowest-risk platforms specialising in CFD. It’s also gained plenty of good press in recent years thanks to its comparatively low running costs.
An important risk disclaimer: 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.
What is XTB?
XTB, or X-Trade Brokers, is a little newer than CMC, having started life in 2002. Like CMC, it’s known for being fairly low-risk, and it’s gained a lot of fans thanks to its extensive education and training library.
XTB largely focuses on European trading and provides a limited demo account for traders to get started with. It boasts around 10,000 instruments to trade, and around 50 forex pairs. On the face of things, it’s a little smaller in scope than CMC – but there’s plenty more to break down.
That’s the introductions out of the way – let’s start to break down how each of these platforms scores in the categories that matter most, and which is most worthy of your time and money.
Ease of use
Both CMC and XTB score highly in usability stakes, with it being simple to open accounts online at either platform.
CMC is wholly online and doesn’t require a deposit for you to open an account. You can choose from two different accounts, CFD or spread betting. You can use your CFD account across a wide array of territories, while the spread betting system is rooted in the UK and Ireland.
XTB, meanwhile, matches up with no need for a minimum deposit if you’re an individual. However, you’ll need to pay a handsome £15,000 at least if you want to open a corporate portfolio. Unlike CMC, there’s only one standard account type to choose from – but it’s just as easy to get started with (you’ll likely be up and trading within 30 minutes to an hour).
Fees and costs
CFD fees can be tricky to balance, as the price you can expect to pay may vary depending on how long you hold and which index you choose.
Based on holding a CFD position for a week, you’re likely to pay around $1.7 – $1.8 (USD representative) on the Europe 50 – with both CMC and XTB. XTB appears to demand lower rates on company-specific holds compared to CMC, though again, these fees will vary depending on who you buy into and how long for.
CMC claims to be one of the most transparent brokers in the market, and they help you to know your costs up front. Trading fees are charged when a user trades, the fees can be commissions, spreads, financing rates and conversion fees. Non-trading fees cover costs not directly associated with trading, like withdrawal fees or inactivity fees. CMC Markets has no account, deposit, or withdrawal fee.
Both CMC and XTB apply £10/€10 per month if you leave your account inactive for more than a year. Spread costs seem to be lower on average with XTB compared to CMC on the Europe 50, but on S&P 500, there’s not much difference.
The main leaping-off point here seems to be stock CFD costs. If it’s specific company stock you’d like to speculate on, you’ll probably save money using XTB in the long run.
XTB lets you transfer to your bank for free, while CMC doesn’t expect a penny for withdrawals in any shape or form. Speaking of which…
It’s currency availability where CMC stretches ahead of XTB slightly. You can trade in one of ten international currencies at CMC, while XTB presently supports just five. USD, GBP, PLN, and EUR are included in both, but CMC allows you to trade in CAD, AUD and NZD, too.
Both CMC and XTB allow you to deposit with credit and debit cards, through bank transfers, and via e-wallets. XTB also supports Paysafecard, if you prefer a prepaid route. I do however strongly recommend against trading using borrowed funds from your credit card. It’s a very quick way to drive yourself in to financial ruin!
You won’t need to pay to deposit at CMC at all, whereas that’s mostly true for XTB – unless you pay using an e-wallet, where you may face a 2% surcharge. Domestic bank transfers, thankfully, are free in both cases.
Withdrawals are just as easy to acclimatise to, though fees will apply in some cases. CMC normally applies a £15 flat rate for bank transfers arriving from overseas.
XTB, on the other hand, may add a withdrawal fee for smaller transactions, which can vary depending on where you’re trading from. At the time of writing, in the UK, you’ll get charged £12 if you withdraw less than £60.
Keep in mind, too, that XTB will only let you withdraw through bank transfer – it’s less flexible than CMC by some way.
In either case, transferring money is typically nice and quick, with e-wallet payments taking less time than card and bank requests on average.
The great news is, both XTB and CMC are regulated by the Financial Conduct Authority, or FCA, regarded as a ‘tier-1’ regulator, and therefore of the highest esteem.
CMC has an edge in that it’s on the LSE, and that you’re protected if your balance heads towards the negative. However, it’s not listed as a bank and doesn’t have such a licence.
Interestingly, XTB matches CMC here point for point, meaning both are trustworthy and should provide you with ample confidence to get started.
Both CMC and XTB have cleanly-designed, user-friendly mobile interfaces, meaning it’s easy enough to head straight to your accounts from your mobile browsers if you so wish. There’s a small syncing issue that’s raised concern with CMC, but on the whole, everything you need is available from your handheld. The nice thing is that CMC supports MetaTrader 4.
XTB goes a little deeper with trading platforms in the shape of MetaTrader 4 and xStation 5, both of which are developed for mobile users. xStation 5 is extremely easy to use in particular, providing users with auto-save and indicator toggle features. Again, there doesn’t seem to be a sync option with web-based XTB, so if I were you, I’d pick a platform and stick to it.
Both CMC and XTB have native apps available for iOS and Android, though CMC goes a little deeper with more chart drawing and indicator tools. You get one whole extra watchlist with CMC’s app, and a forex calendar to boot.
Education and research tools
Both CMC and XTB are research-focused, providing news and analysis content that’s easy to access via mobile apps and desktop devices. Both also offer educational resources, with XTB being better known for its academy features than much else.
CMC offers market commentary and on-demand news regarding forex and also provides access to Autochartist, which XTB sadly misses out on. When it comes to news and gossip surrounding the markets, CMC appears to give you more upfront through the app itself. That said, XTB does still allow you to stream news headlines and analysis directly.
On the education front, XTB offers more than 200 different lessons for you to pore through at your leisure. It’s not the best-organised collection of materials, but around ten of the video tutorials will break down CFD for you in impressive detail. You can track your progress, too, as you start to learn more about how it all works.
CMC provides a wealth of content, too, with well-organised YouTube content and regular webinars. Where it loses out to XTB, however, is with a lack of progress tracking – there’s no way to see how far you’ve come. In either case, educational and research resources are excellent across both apps.
CMC is the clear winner of the bout when it comes to available instruments and products, with around 2,000 more symbols available compared to XTB. It also offers around scores more forex pairs, making it a great starting point if you prefer to pick from a wider pool.
Both CMC and XTB are fairly balanced with crypto speculation, offering 14-15 options to choose from. CMC’s pool of stock CFD options is also much larger than XTB’s, perhaps justifying the higher costs. CMC also wins out over XTB on bond CFDs, with the latter not offering any options at the point of writing.
CMC and XTB let you CFD trade on pairs, indexes, stock, commodities, ETFs and crypto – but CMC gives you a lot more options and thus more flexibility.
Who’s the winner?
In the battle between CMC and XTB, it seems CMC Markets offers greater choice in products and analysis, though it may be a little more expensive if you’re speculating on stock. CMC is also much more flexible with transfer options and costs.
That’s not to say XTB doesn’t have its benefits. Both services are easy to get used to via mobile apps, and both focus highly on education and research. There’s no minimum deposit for either platform, either – so why not give them both a try?
CMC Markets Risk Disclosure: 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider“
by Jon Craig
I am the creator of Project Financially Free and I started this journey to both educate myself and share my insights on personal finance. I’m passionate about financial literacy and I invite you to join me on this transformative path. See more.