CMC Markets CFDs Review

CFDs traders strategy will be impacted by the broker they select with elements such as the platform and commissions charged impacting profits and losses.

Our January 2016 CMC Markets CFDs review compared the broker to other leading players.

CMC Markets is one of Australia’s most experienced Contract For Difference (CFDs) traders with over two decades of experience. Their key strength includes:

  • A unique CFDs trading platform
  • Market leading CFDs broker fees
  • Outstanding customer service

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CMC Markets CFDs Platform Review

CMC Markets uses their own property platform called ‘Next Generation” which features:CMC Markets CFDs Platform

1) Award Winning Charts

The platform has 80+ technical indicators, comparison charts and pattern recognition capabilities.  There pattern scanning includes over 60 candle patterns and other charts from Roint to Renko figure charts.

2) High Customisation Ability

There is the ability for CFDs traders to adjust the features on the Next Generation platform through the smart layouts with the option to save 5 layouts depending on the individual’s trading style. The aim is to customise the platform to suit you.

3) Automation

Execution can be completely automated at the traders request with no re-quotes occurring through the CFDs platform. There are also risk management tools with the ability to trade directly from charts.

4) Guaranteed Stop LossGuaranteed CFDs Stop Loss

From March 2015 an enhancement for CFDs traders is the introduction of Guaranteed Stop Loss Orders. As the screenshot to the right highlights, traders can attach a Guaranteed Stop Loss order to any trade, providing certainty of the price that a trade will be closed out regardless of how volatile the market is.

Its critical to note that a premium is charge for a Guaranteed Stop Loss order but you can cancel the feature at any time when trading a CFDs. A certain percentage of the Guaranteed Stop Loss order is refunded also if it is not triggered when trading due to a manual trade occurring, a Take Profit Order or a regular stop loss order.

What Fees Does CMC Markets Charge For CFDs?

There are also spread charges for currencies which is the difference between the buy and sell price for any currency pairing. This can be calculated by subtracting the currency buy price from the sell price. In the below example this is 1.

CMC Markets CFDs SpreadsCFDS Currency Trading Examples

CMC Markets CFDs shares traded are charged a commission which in Australia is 0.09% with a minimum  commission charge of $7.00.

CFDS Trading Examples

There can be other charges for CFDs depending on your trading technique, duration (ie, there are holding costs if you keep positions overnight) and utilisation of other features (eg guaranteed stops). CMC Markets CFDs platform also charges Market data fees which pay for subscription services.

CMC Markets CFDs Customer Service

The biggest point of difference for CMC Markets CFDs is the fact they pair all traders with a dedicated trading team member. These individuals are experts in CFDs and provide advice and information ranging from market insights, dealing solutions through to education. They also provide access to industry-related events when suitable for the trader.

CMC Markets Review of Customer Service

CMC Markets also provide their traders with seminars, events and even workshops that are held both online and in-house. Access is also provided to yearly seminars that include the leading traders worldwide as well as social events.

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How Do CFDs Work?

Contracts for difference (CFDs) provide flexibility to traders for multiple financial products including currency, shares and even commodities.

When you buy CFDs from CMC Markets, you don’t actually buy the asset but units based on a predicted movement. When the movement direction is correct, you can earn multiple times the number of units purchased/sold but if it moves in the other direction it will result in a loss. This loss with CMC markets can surpass your deposit to it’s critical to understand the risks.

The multiple of any unit is determined by the leverage you choose which with the CMC trading platform can be as high as 500:1. The diagram below shows how a small deposit (your margin position) can lead to multiples of position value to be established in the market.

CFDs Leverage

The diagram below shows a successful trade where a trader purchased a share at $1.00 and sold it at $1.10 (the sell price). The 10c price improvement which the trader predicted in the right direction was leveraged to 10,000 units. Therefore, 10,000 multiplied by 10c is $1,000 which is the raw profit. After traders fees which is $21 commission the final amount if $979 profit.

 

Profit

You can also bet in reverse, short selling a currency, share or a commodity predicting it will devalue and buying it back once it has. Like above, commissions will be incurred and losses can mount if movements occur in the reverse situation.

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