Choosing a broker is one of the most important things that every good investor should thoroughly consider before embarking on the actual investing. There are many brokers on the market today, so it is important to know how each broker differs from the other. Every investor is looking for something a little different. Today I will focus on XTB, formerly X-Trade Brokers.

XTB was founded in 2002 in Warsaw, Poland. Since 2016, the firm has been publicly traded on the Warsaw Stock Exchange, so it is forced to issue annual reports. So you can see for yourself how XTB is doing financially. Broker transparency is one of the important things. It has licenses from both the Czech National Bank and the National Bank of Slovakia. We can find more than 10 branches of the company across Europe, including the Prague branch, which was the first foreign branch. It offers trading in stocks, CFDs, ETFs, forex, commodities, but also cryptocurrencies.

Platform

Trading takes place on the X Station 5 platform, which has both a desktop and mobile version. Navigating it is easy, as you can see in the screen below. On the left, trading takes place and you can create lists of your favourite assets. The assets are hidden under different acronyms such as FX (forex-currency pairs), IND (indices), CMD (commodities), CRT (cryptocurrencies), STC (stocks), ETF (ETF funds). We will, of course, be most interested in the STC category. On the right you will see charts of your instruments, news from the macro world, a calendar of important events (especially central bank meetings or the release of various macroeconomic indicators), various analyses, educational videos and, in the last tab, your money transaction and order history.

Readers will welcome the fact that the platform enjoys full Czech support. Support can be contacted both by email and by phone, which is nice.

The biggest problem is the lack of two-step verification. This should become standard now, as other brokers operating on the Czech market have had this feature for a few months or years.

XTB offers, among other things, a DEMO account where you can try out trades for real. You will have a virtual deposit of 200 000 CZK. However, this account is only open for 30 days. This is a bit unfortunate, but it serves you well in terms of getting a feel for the platform.

The choice of currency for your real account is important, it's related to another thing I'll cover a paragraph below. With XTB there is the option to open up to 4 real accounts, which can be held in dollars, euros, or Czech crowns. This gives you the option of avoiding the currency conversion that the broker will do for you if you buy an instrument in a different currency than your account is held in.

Deposit and withdrawal

A plus point with XTB is definitely the wide range of options for depositing funds into a trading account. There are 3 options in total.

• Visa/Mastercard payment card - fast transfer, funds are in the account immediately, but there is a fee of 0.95% of the deposited amount
• Paypal - fast transfer, funds are in the account immediately, no fee is charged. However, you can still pay a fee to PayPal itself if you have, for example, crowns in it, but you will be sending dollars to XTB. So again, it's best to send money in the same currency.
• Bank transfer - the transfer can take a few days, but is free of charge. The recommendation here is the same as for the Paypal deposit method, i.e. same currency.

With withdrawals, the range of options is already quite limited. The only option is a bank transfer, where it is again most convenient to send the money to a bank account in the same currency as the XTB account. Banks can charge up to 3% for currency conversion, so beware of this. Withdrawals are otherwise only charged up to CZK 3,000 (or €100 and $150), with a fee of CZK 350. I see this more as a plus, it motivates investors to invest in larger amounts and not withdraw their funds right away. The money will arrive in your bank account within one or more business days.

Fees

In addition to the aforementioned fees for deposits and withdrawals, there are other fees. The conversion fee is 0.5% of the amount you wish to purchase. Sure, that may not seem like an extra lot, but why get charged an unnecessary fee, right. Let's give some examples. If you know you're buying something in dollars and you have a dollar account, you'll pay nothing for the conversion. If you know you're buying something in dollars and you have a euro account, you'll simply open a dollar account and avoid the conversion.

You will pay a commission of 0.3% when trading CFDs. There is an overnight swap charge when you hold a position. This varies.

Someone who invests regularly is likely to avoid this fee as it is an inactivity fee. It will start charging you €10 if you have any spare funds in your account and also especially if you have not been active in the last 12 months. So if you haven't closed or opened any positions in the last 12 months, XTB will charge you €10 every month as long as you have some funds there.

At the end of the fees section, they have to mention spreads. XTB obviously can't offer to buy shares completely free, that wouldn't last very long in their business model. That's why the broker charges a spread, which is nothing more than the difference between the purchase price and the fair market value. We can see this below with the example of Apple stock.

Dividends and fractional shares

If you're looking for dividend stocks, one of the most important things is Form W-8BEN. XTB didn't provide one a few years back, but that's no longer the case. When you fill out this form, you avoid double taxation of dividends, instead of paying 30% tax, you get the classic 15% withholding tax. This is the case for US stocks. But beware of Czech shares, where XTB unfortunately taxes dividends at a 35% rate, and there is nothing you can do about it. So if you're looking for Czech dividend stocks, be sure to look elsewhere.

Fractional shares are popular especially among smaller investors, but they will be out of luck with this broker, unfortunately. If you want to buy shares of Berkshire Hathaway, for example, you'll need to prepare over $276. XTB itself has said many times that fractional shares are in the cards, but the question is when and if it will ever happen.

Am I the beneficial owner of the shares?

This is a burning question that you don't usually come across much in reviews. That's why I was interested in answering it, because it's one of the fundamental things. So whether the stock is really mine or not.

Well, it's supposed to be. Legally, we actually own our shares, we get dividends, we can attend shareholder meetings at some companies, etc. Anyway, in practice, there is a crutch. The broker at the custodian holds the shares under his name in a bulk, so-called omnibus account. This is in order to minimise the service fees of that custodian, which would then fall on each individual investor.

In the event of an XTB collapse, which is unlikely but not unrealistic, we need not worry about our shares. So if XTB were to go bankrupt, a trustee would be appointed. This would deal on a case-by-case basis with whether the shares should be taken over by another broker, or whether, at our discretion, the trustee should sell them. In any case, it should certainly not happen that XTB disappears and your investment with it.

Theshares are held in separate accounts from the broker. Free funds are also 100% insured up to €3,000, above that amount the money is 90% covered up to €22,000.

Additional information and other XTB activities

XTB is also very active on YouTube, where you can find a lot of interesting content for investors. Whether it's the Morning Market Commentaries or the Quarterly Results of various companies.

Finally, I would like to point out that besides XTB, I also use eToro, Degiro, and Interactive Brokers. I don't find any harm in using multiple brokers at once and try out which one suits you best. My answer to the question in the headline? If you always buy stocks, deposit and withdraw your money in the same currency, XTB can really rank among the most fee-advantaged brokers on the market.

Which broker do you use? Is there anything else about XTB you'd like to know that's missing? I will be glad for feedback 😁.