Our CMC Markets review found the following three key strengths:
- Market leading leverage rates
- Guaranteed stops on trades to protect traders
- The ability to trade other financial products including shares
Three weaknesses found though with the Australian Forex Broker include:
- No option to choose a universal forex trading platform like MT4
- Spreads that are not market leading
- No option for an ECN account providing direct market access
View the detail of the key points above from the partly owned Goldman Sacks broker in the CMC Markets review below.
Key Strengths Found In The CMC Markets Review
1) Leverage Levels
Our CMC Markets review found a key strength was their leverage which is the equal highest of the Australian forex brokers.
A leverage level of 500:1 (also know as a position margin of 0.20%) means that you can trade up to 500 times the amount you deposit into the account. So if you were to deposit $150 into an account you could trade up to $75,000 on currency markets. This means that the small changes that happen daily on currency markets can lead to huge gains or losses. For example, if the currency pairing moved by 0.08% it would mean a gain or a loss of $60. This may not seem much but it is a 40% profit or loss on that original deposit.
Due to the high risks of leverage it’s critical to consider the of risk management tools as highlighted below.
2) Guaranteed Stops
With such high leverage, sudden movements in the market can lead to large profits or losses. To limit the exposure CMC Markets has four tools including Guaranteed Stop Loss orders. Only EasyForex has more risk management features including deal cancellation and no negative protection.
a) Stop-loss orders
In an unfavourable forex market this order will help close out the trade as a predefined price. This is mostly calculated by how much the forex trader says they are willing to lose. Slippage though can lead the trader to lose more in volatile markets which must be considered due to the high leverage levels.
b) Take-profit orders
The opposite of a stop-loss, a take-profit will close a trade after a predefined profit level is reached. It should be noted that the market opens as a superior price, the improved price will be provided ultimately leading to slippage leading to superior profits.
c) Trailing stop-loss orders
This stop-loss mixed both the two features above (take-profit and stop-loss). It therefore limits a traders losses when the market moves in the wrong direction but if the market moves in the right direction the ‘stop-loss’ moves with the market.
d) Guaranteed stop-loss orders
This is the most important feature which only a handful of Australia forex brokers offer. It means that a trader can put an absolute limit on how much they can lose on any trade. No slippage can therefore occur (even in turbulent markets). The downside is that additional fees apply so most traders will only place guaranteed stop-loss orders when trader larger amounts or when the markets are turbulent.
It’s critical to note that guaranteed stop loss orders do have a premium with CMC Markets and you can only place the order during normal trading hours. When placing a stop loss order it needs to have a set distance from the actual market price.
3) Other Financial Products
CMC Markets is not just an Australian forex brokers. They offer other products including share trading, EFTs, Indies, Treasuries and even Commodity trading. Most of these financial products can have leverage applied to maximise profit or losses.
The key advantage of CMC Markets is you can trade all these financial products with the same forex trading platform. For those traders who are looking for an ‘all in one’ broker, this makes CMC Markets a logical choice.
Key Weaknesses Found In The CMC Markets Review
1) The Requirement To Use The CMC Markets Forex Trading Platform
CMC Markets in unlike any other broker as they offer their own platform called “the next generation platform” with no other options available..
Many experienced forex brokers consider CMC Markets the best forex broker because of their unique platform while others that are more used to mainstream platforms such as MetaTrader and cTrader may struggle with this unique platform. An older reviewed voted the platform the ‘Best Online Trading Platform’ from Shares Magazine* but no recent review has found this platform the best.
The key features of Next Generation are:
- Advanced charting that can be fully integrated with over 80 technical indicator and pattern recognition scanning capabilities
- The ability to have 100% automated execution of trades
- Price, economic announcement and technical pattern forex alerts.
- Fully customisable platform layouts
- Mobile trading applications
The big weakness of using this platform is that it makes it hard to leave the Australian forex broker. Other trading platforms such as the most popular MetaTrader 4 is offered by most other brokers. This makes it easy to switch from one to another and share trades and information with other traders.
2) Spreads that Are Not Market Leading
CMC Markets has relatively competitive spreads as you can see on our Australian forex broker comparison table.
The broker highlights that they offer one of the most consistent spreads of any Australian forex broker. Our CMC Markets review found they provide institutional-grade pricing believing in total transparency with historical spread charting tools provided for all Australian forex traders.
The reason CMC Markets doesn’t have the leading spreads is that they use a trading desk, which doesn’t allow traders to trade directly with liquidity markets. Based on this brokers like Pepperstone often have lower spreads on major currency pairings as our spread comparison table highlights.
3) No ECN Account Option
Most intermediate and expert forex brokers want to minimise their brokerage costs and are looking for a transparent model. This has led to ECN forex brokers which allow traders to make trades directly with liquidity markets. These forex broker such as Pepperstone and IC Markets have minimal spreads with a fixed commission instead charged based on volume. Our CMC Markets review found the broker doesn’t offer this which may lead traders to consider other options.
Reputation & Service CMC Markets Review
CMC Markets is one of the best known Australian forex brokers with an office in Sydney including their call centre and a strong local presence.
The forex broker Australia firm is nationally certified as shown below. This means that they hold all their clients deposits in a segregated bank account in one of Australia’s banks. They must also meet training standards, have an external auditor and other requirements set by the national regulator.
In addition to this certification, they sponsor the NSW Waratahs in the rugby union which is why many individuals in Sydney and Newcastle know the broker.
They also have an excellent education program providing several different tools at no cost to ensure their traders are kept up to speed, improve knowledge levels and improve trading strategies.
About Our Australian Forex Broker Comparison
Compare Forex Brokers is a website designed to help Australian forex traders compare brokers that are nationally certified. No overseas brokers that don’t hold an Australian financial service licence were considered to protect traders from dishonest fx brokers. The forex brokers Australia firms compared were done so based on spreads, commissions, trading platforms, execution speeds, customer service and bonus offers. This information was sourced through the authors interaction with the firms (including in some cases opening accounts), the information on the providers websites and when needed, information requested from the broker. It was all put together in June 2015 and then updated on the 21/02/2017.
When the best forex broker was found for a key area, a comparison table showing this broker and four others was created followed by a full recommendation. We appreciate any feedback you may have in regards to these tables or reviews but will not consider adding additional brokers unless they are certified in Australia and have a competitive offering.