Our CMC Markets Australia review completed in November 2015 found the forex broker had the following strengths:
- Guaranteed stop loss orders
- Low Spreads
- High Leverage
The broker also have the following weaknesses:
- Slow execution speeds
- Limited forex platform options
Advantages Of CMC Markets Australia
1) The Ability To Implement Guaranteed Stop Orders
Slippage is a major concern for all brokers with the inability to exit markets at a predetermined price even with when a stop loss order is placed. Only a guaranteed stop loss order facility can ensure that you don’t lose more than the predetermined amount set, especially in turbulent markets. CMC Markets is one the best forex brokers that offers this feature.
CMC charges a premium for Guaranteed Stop Loss Orders which you can see at the bottom of a ticket (as shown in the screenshot below) and is based on the market price of the order. This mean that Australian forex traders should consider every trade need for this facility prior to executing this strategy. For more risky currency pairings such as ‘exotic pairings’ or when trading with high leverage it makes more sense to use this strategy.
2) Low Spreads & Fees Offered
CMC is one of the best forex brokers when it comes to spreads and fees. The table below shows the minimum and typical spreads shown on the table below for the week commencing on the 30th of August.
On-top of spreads, there are holding costs if after the New York market closes you still hold a currency position. Of course, as mentioned above, there are also costs when choosing to have a guaranteed stop loss option on a trade. CMC also has a price ladder technology for larger trade sizes with widened spreads that reflect this larger trade size.
3) High Leverage
CMC Markets Australia offers Australians the equal best forex broker leverage rate of the major Australian forex broker firms.
The maximum leverage on major currency pairings is 500:1 also know as a margin of 0.20%. It means that for every one dollar in a deposit, an individual can trade up to $500. A $1,000 deposit therefore could result in $500,000 being traded on the market meaning an increase of just 0.10% could mean losing or gaining 50% of the total deposit. The profit this allows is high as is the risk so inexperienced traders should consider reducing the maximum leverage as should any trader with a low risk tolerance. It’s critical to understand that currency trading has risks involved so facilities such as demo accounts and guaranteed stop losses should be adopted to manage this factor.
Concerns Of CMC Markets Australia
1) Slow Execution Speeds
CMC is not an ECN trader and has a dealing desk as shown below. This prevents individuals trading directly with liquidity providers limiting the speed of execution with the market.
The fastest execution speeds are offered by ECN providers including IC Markets & Pepperstone. This helps ensure you get the price quoted on the market for currency pairing and can reduce slippage. That said, these traders don’t offer stop loss guarantees with Pepperstone only offering a no negative balance protection while IC Markets offers no protection.
The truth is, the main traders who will be impacted by slower execution speeds are those using third party software and programs which make high frequency trades in the market. For the average Australia regular trader, this loss of speed will have minimal implications in their trading strategies and profits/losses incurred.
2) Limited Forex Broker Platform Options
Unlike most other currency trading providers, CMC Markets Australia only offers one platform known as the ‘next generation’ provider.
It should be noted that this platform has won awards in the past for the interface, charting and usability. The lower score simply came because there is a lack of choice to suit different traders. Also Australian forex traders often like to use a universal platform like MetaTrader 4 as it makes it easier to switch traders.
A big advantage of CMC’s next generation platform is the ability to trade other financial products from shares to CFDs. In fact, stockbroking is even more popular in Australia for CMC with low trading fees offered to small, medium and large frequency share traders.
CMC Markets Australia is registered as ‘CMC Markets Group Australia Pty Ltd’ as shown on official Australian business registers as seen below.
The Australian forex broker has a solid resource and training centre with events, on demand video and a blog to help improve knowledge and an understanding of market conditions. Additionally, they have 24/5 customer support for traders in any market.
Who Is Best Suited For CMC Markets?
CMC is ideal for occasional to medium frequency currency traders in Australia. They have some of the best spreads and leverage of any mainstream forex broker. They also have a guaranteed stop loss facility which at an extra charge, can protect you from large movements in currency markets. The only concerns raised is that you have to use their platform (which can be difficult to get used to and hard to change) and that as a non-ECN trader execution speeds are not market leader. Overall, they are one of the best forex brokers and those also trading other financial products such as shares should consider them for an ‘all-in-one’ provider.