CMC Markets – have you got any confidence in them...?

[BigBob]

Well, I certainly don't.... For what it's worth, here's a brief note of my personal experience....

I first started trading with them in 2006 – I opened an account with a relatively small amount, my general idea was to trade shorter time frames to add another dimension to my investment portfolio. I didn't do particularly well the first time around, but in hindsight, maybe it wasn't just me.... I noticed that my stops always seemed to be hit with inexplicable swings just prior to moves in either direction and these did not always seem to be reflected in the underlying markets. I also had a number of problems when executing “market” trades – basically the orders would not confirm or cancel immediately which made it difficult to ascertain where my positions were at, but they would eventually trigger and clear and things would come right, so though it was annoying it didn't really bother me.

That first time around I lasted as a trader for about 6 months, before crashing out... I went back to the drawing board and didn't trade for about 12 months, before I started again in late 2007 and this is where I finally lost whatever confidence I had in CMC Markets...

The first major incidence was in the week of the first “Bernanke Put”. I had been doing OK on some short term trades and decided to pull some money out of the market. I did an online withdrawal request and received an e-mail to confirm that my request had been received and would be actioned the same day. Only the next day I found there had been no money transferred to my account and when I contacted them I was told that I had to lodge a complaint and that they would investigate. The market then moved against me and Mr. Market gouged back what I had tried to remove from his grasp.... About 2 weeks later I received a letter from CMC stating that they had been “busy” that day and that their manual process for my withdrawal request had not been actioned. No apology, no compensation (oh, not true – they offered me $4, which I by the way, never got), nothing basically.... The final straw, and no, this has nothing to do with the slowness of executing market orders, with the consequent re-quotes, that for some reason always seem to work against you, was today, where I came home from work to find that my account had been liquidated earlier today... I had received no notification that it was on margin call, that it was within liquidation limits or in fact that it had been liquidated... The market had moved in my favour, and had I not been liquidated I would have made a decent few thousand dollars... I again rang CMC to find out what was going on and again received no sensible explanation and was told to lodge a complaint... Well, instead I asked them to close my account and when they told me that they couldn't, I got slightly agitated and they hung up on me....

anyway, it's probably a blessing in disguise... I'm not really cut out to be a trader... but if I was to trade again, would I use CMC again....? not in a hundred years...!! I wouldn't touch them with a barge pole! And I hope this posting may make others think twice too....!

[AMR]

Ouch...sorry for your losses. But how much % of your account did you have on margin?

Generally I find CMC quotes are exactly what I see in ASB Securities. The difference is due to the bid-ask spread and the lack of market depth on some stocks causing huge spreads to open up and take out your stops.

If it helps, I am more than willing to post up charts of what I get from CMC to compare against what you get.

[STRAT]

Mate, thats a shocking story. Youre a very calm and collected fella. I would have been in my car after they hung up on me and looking for a nose to flatten

[POSSUM THE CAT]

AS you are dealing with what is really a bookmaker as they use their own market figures Not ASX did you really expect better.

[BigBob]

AMR - I generally trade indicies Dow Jones, ASX200 and FTSE - and these stay open "out of hours" so unless you know exactly which futures market is open at the time it is very difficult to check the underlying market... easier when the market is open of course...

Also, I was very aggressively leveraged on this last one - the US30 (CMC terminology for Dow Jones) market moved up to about 12125 this morning before dropping like a stone - I got closed out on the way down again at 12086... not exactly sure why it wasn't closed out higher... probably less than 5 mins after I get bumped I would have been off margin call.... what really riles me that I wasn't notified that anything was wrong or that it had been closed out...

Possum - yes you are right... they are basically nowt but bookmakers and it's taking me too long to realise....

Anyway, what doesn't kill you makes you stronger... :o)

[Soolaimon]

Hi Guys, this is my first quote and quite opertune as I have just ordered CMCs software with the view of starting an account with them, soooo, taking the comments on board, what are the alternatives? and has anyone had recent satisfactory service from them? Cheers.

[STRAT]

Hi Guys, this is my first quote and quite opertune as I have just ordered CMCs software with the view of starting an account with them, soooo, taking the comments on board, what are the alternatives? and has anyone had recent satisfactory service from them? Cheers.Excuse my ignorance but is the same crowd pushing their wares on NZ TV lately?

[Steve]

It is just the nature of the beast.

In a volatile market, spreads can be a detriment especially when the market 'gaps' over your stop. You know that it can happen, and should give yourself enough cover in case it does happen, while hoping that it doesn't happen. If the market has suddenlygapped enough to hit a stop, there may not be any opportunity to receive a liquidation warning. It is volatile times.

I only trade FX with CMC, never CFDs etc. While they are a marketmaker, I have never found the quotes to be materially different from the reality. Given the ease with which you can compare their quotes to the real market, it would be foolish of them to try and so blatently screw you over...

There have never been any delays in execution and they have always transferred funds back to me on request.

[AMR]

I don't think CMC "stop hunt". Several comparisons by members on another forum show that CMC and the indices match up tick for tick after accounting for the spread. Besides, any differences would result in arbitage opportunities. PM me for the link if you want it.

I've only had requotes on the HK33 which moves incredibly fast, but now I trade the Aussie200 mainly.

I think the real problem lies with the amount of leverage a typical CFD index allows. Some five times the leverage of a mini futures contract.

[BigBob]

For me it has turned out to be a matter of confidence....

Do I know that CMC "stop hunt"? no I don't... but I am not sure, as they certainly have the ability to do so and I also am not confident that they know if individual dealers do or if they have systems in place to stop them.

I am also not confident that CMC has general business processes and systems in place to match their sleek PR image... How can they be too "busy" to process a withdrawal request? How come market orders, especially when markets are busy, take a long time to process and why do they need manual intevention in the first place? What is the deal with these re-quotes and why are they rarely in your favour? Why do they suddenly stop sending e-mail notification? Also, while we're at it, why do their charting software sometimes not update and or even load the charts? Is it just another tin pot, mickey mouse outfit behind the flash facade...?

Also, not forgetting that indicies when traded as CMC CFDs are not actually reflecting the "real" market, but rather the futures market, and at times these will trade at a relatively constant difference to the "real" index value (ie the ASX200 CFD is often trading around 18-20 points less than the ASX200 as quoted by the ASX), this gives CMC enough "flexibility" to always cream the spread - do they do this...? I don't know, but I am not confident that they don't!

So basically I have lost all confidence in CMC Markets - and as a trader if you can't trust your broker, who can you trust....??? :(

[Wysiwyg]

AMR - I generally trade indicies Dow Jones, ASX200 and FTSE - and these stay open "out of hours" so unless you know exactly which futures market is open at the time it is very difficult to check the underlying market... easier when the market is open of course...

Also, I was very aggressively leveraged on this last one - the US30 (CMC terminology for Dow Jones) market moved up to about 12125 this morning before dropping like a stone - I got closed out on the way down again at 12086... not exactly sure why it wasn't closed out higher... probably less than 5 mins after I get bumped I would have been off margin call.... what really riles me that I wasn't notified that anything was wrong or that it had been closed out...

Possum - yes you are right... they are basically nowt but bookmakers and it's taking me too long to realise....

Anyway, what doesn't kill you makes you stronger... :o)

Bob, i had a brief experience with the CFD markets (not CMC) and i thought the index quotes and charts were as per the futures quotes and charts yet they are not.Where are these quotes and charts generated from and how can you tell if the price action is not manipulated if only the CFD markets are using them.They trade a non existent or psuedo instrument that IS NOT TICK FOR TICK.

[BigBob]

Bob, i had a brief experience with the CFD markets (not CMC) and i thought the index quotes and charts were as per the futures quotes and charts yet they are not.Where are these quotes and charts generated from and how can you tell if the price action is not manipulated if only the CFD markets are using them.They trade a non existent or psuedo instrument that IS NOT TICK FOR TICK.

I always suspected that they are not always based on an underlying futures market, but I asked CMC about this and they told me they are... It wouldn't surprise me if they were not tho... for example when the US30 showed an upwards move for CMC Asia Pacific, the public price feed from www.cmcmarkets.com did not show a similar move.... I suspect that the CMC Asia Pac US30 instrument is entirely artificial and exclusive to CMC Asia Pac....

[FarmerGeorge]

Bigbob I'm sorry to hear about your experience but I greatly appreciate you sharing it with us. I've been considering CMC for over 12 months now but never opened an account with them because of apriori concerns over just the sortf of things you mention. I have to say I'm hugely surprised they actually said you missed execution because they were 'busy', that just seems utterly ludicrous.

[BigBob]

I have to say I'm hugely surprised they actually said you missed execution because they were 'busy', that just seems utterly ludicrous.

Hi George - they weren't quite that bad... :) they were too "busy" to action a funds withdrawal request even though they sent me e-mail confirmation that it would be done....

[Greenfield]

Hi Bob, Im a bit lost, Had you closed out your trade and then asked for your funds to be withdrawn?

I have been using CMC Markets for 2 yrs now but only trade the aussie 200. After a year of on and off trading with lots of bad trades, I decided to not use "stop losses" as they always got hit no matter where I placed them even if the market was going my way. Im alot happier now!

I would not use a leveraged product for actual shares and only use a small amount for index trading. Cant say what there service is like as I have never had to contact them.

[AMR]

Guys,

Stop hunting is alive and well in the futures market by hedge funds and large players. That is what is causing the spikes and volatility, not CMC. Read the last 3-4 pages of this thread from Aussie stock forums where graphs are actually posted in comparison.

http://www.aussiestockforums.com/forums/showthread.php?t=7697&page=6

[Steve]

It appears that those who have been stopped out at a loss are not happy with CMC, while those who are on the winning side of the ledger are happy with CMC.

Go figure...

[BigBob]

Hi Bob, Im a bit lost, Had you closed out your trade and then asked for your funds to be withdrawn?

No, I still had some open trades but plenty of free equity to cover them - until a day or so later when market turned around.... If they had transferred my money as they should have, my positions would have been automatically been liquidated, but the withdrawal that I had requested would have been out of the reach of Mr Market and safe in my bank account....

[AMR]

BigBob, can I ask you what sort of risk management or position sizing strategies you use? Because it sounds like you had far too much leveraged on a counter-trend trade...

[BigBob]

It appears that those who have been stopped out at a loss are not happy with CMC, while those who are on the winning side of the ledger are happy with CMC.

Go figure...

Well, not really... it's not the potential for stop hunting that's got me posting here, it's more the inadequate systems CMC appear to have in place... manual processes in places where they are not needed cause mistakes and maybe point to systemic problems behind the scenes...

[BigBob]

BigBob, can I ask you what sort of risk management or position sizing strategies you use? Because it sounds like you had far too much leveraged on a counter-trend trade...

Well, I don't anymore... my trading days are over.... :)

Anyway, at the time when my withdrawal request was not actioned I was trading with the trend with a short position on the DOW - I don't remember the size... I was not using a stop loss, basically because of the stop hunting as discussed above (be that by CMC or others). I don't know if you remember but the DOW turned and swung about 600 points in about the last hour of trading a couple of days after the Bernanke put, and that basically eroded too much of my free equity - I was at work and as a rule I don't mix trading with work and had deliberately no way of quickly exiting the position... I never quite recovered from that, as I from then on in was far too focused on getting back what I thought was rightfully mine - and my discipline slipped with the wrong focus...

[Steve]

Well, not really... it's not the potential for stop hunting that's got me posting here, it's more the inadequate systems CMC appear to have in place... manual processes in places where they are not needed cause mistakes and maybe point to systemic problems behind the scenes...

So should we be asking if anyone else has experienced a delay in having their withdrawal request processed?

As I mentioned earlier, I have never had any problems in getting my cash credited back to my bank account...

[BigBob]

So should we be asking if anyone else has experienced a delay in having their withdrawal request processed?

Well, imho that's not the only CMC process that is a bit strange....:

Why doesn't a credit card account top-up show in your account immediately - even the TAB can do that...

Why does the daily statement arrive at a more or less random time every day - you'd expect it to be the same, set time...

Why do they have manual intervention when processing trade orders - surely it would be better and quicker if it were computerised...

Maybe the owls are not what they seem.... :)

[AMR]

Not saying it has anything to do with CMC, but other CFD providers are starting to raise margins. From the UK telegraph.
Brokers raise margins required to cover CFDs


By Richard Fletcher

Last Updated: 12:32am GMT 21/03/2008





A number of London's stockbrokers have followed the lead of MF Global and demanded that clients put up more cash to cover derivative positions.

The latest news and analysis from the banking and financial services sector (http://www.telegraph.co.uk/money/main.jhtml?menuId=242&menuItemId=10277&view=HEADLINESUMMARY2&grid=F7&targetRule=14) Finspreads, City Index, IG Index and Saxo Bank have all informed clients that they plan to increase the "margin" required to cover contract for differences (CFDs) on banking and other stocks.
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CFDs are increasingly used by both private and professional investors. The derivatives allow investors to put up a small amount of money - typically 10pc - to obtain exposure to large shareholdings, a process known as leverage. MF Global clients had until yesterday to put up extra cash, transfer or close their positions after the broker raised the margin on some stocks from 10pc to 90pc.
Saxo Bank raised margins on all stocks to 50pc. Both City Index and IG Index increased margins on banking stocks to up to 10pc. An IG Index spokesman said the group planned to review all its margin requirements in the coming weeks.
Traders fear the increased margins demanded by CFD providers could raise market volatility as clients, unable to find the cash or transfer investments to other brokers, are forced to close positions.

[frostyboy]

does anyone have any experience buying guaranteed stops for nz shares from cmc?

say i wanted to short whs.nz at $6 and put a guaranteed stop loss in at 6.40 what would the cost be? how do they calculate it? is it 1% or do they give you quote for the stop? What is the normal range they quote etc? how long does a stop last for?

can you buy guaranteed stops for any shares? ones in take over play? or say you are long nzo.nz when they are drilling a big wild cat can you buy a stop 10% below current market price

[CJ]

My understanding is that GSL are 3% paid up front. Can only be done over the phone. I am not aware of any restrictions.

[AMR]

does anyone have any experience buying guaranteed stops for nz shares from cmc?

say i wanted to short whs.nz at $6 and put a guaranteed stop loss in at 6.40 what would the cost be? how do they calculate it? is it 1% or do they give you quote for the stop? What is the normal range they quote etc? how long does a stop last for?

can you buy guaranteed stops for any shares? ones in take over play? or say you are long nzo.nz when they are drilling a big wild cat can you buy a stop 10% below current market price

The closest you can place it is 5% away from the current price (so 630 for your warehouse example). I've used it a few times and generally it works as intended. It's at their discretion though.

[Steve]

meant to read : CFD users mostly lose money because they over extend themselves... over leverage themselves as is set up by thr provider yep! the leverage is geared to work for the provider. Always hold at least 30% cash.... for opportunity...

AA

Although, going by the theme of this thread, some find that it is preferable to over-leverage yourself with no cash backup, get stopped out and then blame the CFD provider for the position that you got yourself into... :rolleyes:

It all comes down to risk management...ensure that you will always be able to fight another day.

[CJ]

Over leverage is an inherant risk but hothing to do with the provided.

The question is do they stop hunt as opposed to other customers stop hunt(ie. do they manipuate markets (since they are a market maker) or is is just other users doing it).

My question has always been with depth of market. If the market is very thin, then volitility is going to be bigger than the underlying market.

[Steve]

My question has always been with depth of market. If the market is very thin, then volitility is going to be bigger than the underlying market.

By default derivative markets are smaller than their underlying market, meaning that the volatility will always be greater.

You should understand that before entering such a market...

[CJ]

By default derivative markets are smaller than their underlying market, meaning that the volatility will always be greater.

You should understand that before entering such a market...
I understand that but measuring it is harder.

Also, CMC says they mimick the underlying market AND add additional depth.

Till I figure it all out, I will continue to play with lunch money.

[Drone]

Have used CMC for about 9 months so thought would give some feedback for those considering.

Pros:

-good (and free) trading platform, lot of info. Mobile phone trading also.
-as far as I have seen prices match underlying very closely (NZ and US shares and FX)
-You can get a trader on the phone easily if you need, seem to have decently knowledgable employees
-leverage (a lot if you want), two edged sword of course.
-very cheap commisions, OCR + 2% is not actually bad for leverage cost. Fed + 3% for US
-huge range of CFDs, truly global access. Easiest way to get o'seas exposure IMHO.

Cons

-Occasionally you get re-quoted when you can see the depth is there in the the underlying market to fill the order, sometimes you need to ring to get the price you should, only seems to be a prob on some small cap nz stock, some of the time.
-I have had an experience where the platform loaded duplicate trades onfor me, cost me a $1k in a few minutes, after a bit of wrangling they refunded me my losses, there is an audit built into the platform and this seemed to work ok. (it shows what buttons you press exactly)

Overall though I would reccommend CMC

They've helped me to do pretty well in the mkt!

Cheers

[Steve]

And I can happily report no issues or hassles in the last 3 months since my previous CMC-supportice post! :)

[AMR]

I did have one instance where I cancelled a stop and it didn't go through the system. I woke up the next morning with an extra 180 pips in my account :)

[FarmerGeorge]

Steve what do you mean by "by default derivative markets are smaller than their underlying market, meaning that the volatility will always be greater". I don't think I follow this logic sorry.

[Technical.Trader]

Correct me if I am wrong, but I think he means less people play in derivatives than in straight shares... which is probably the best thing for most people, there are not too many CFD traders who make money.

[FarmerGeorge]

Ah, thanks, though I think that many 'derivatives' markets (perhaps excluding CFD's) are larger in terms of volume/value, if perhaps with fewer players, than their underlying markets.

[Technical.Trader]

True, face value can be higher than the underlying market but the cash put down is way less.... In the right hands derivatives can be good, and are useful for managing risk, but for speculation risk needs to be managed agressively and a positive expectancy system is required.. DMA (Direct Market Access ) CFD platforms are much better than market maker platforms, far less slippage on stop orders!!

Cheers TT...

[Drone]

Oh, forgot to mention the one biggest problem with CFDs and CMC - the ird views it as a "financial arrangement" and therefore your profits are taxable.

[Technical.Trader]

Taxation a problem???...I'd say that was fortunate since most people lose on CFDs anyway....

[Drone]

Taxation a problem???...I'd say that was fortunate since most people lose on CFDs anyway....

Haha perhaps...

If you can make money trading shares you can money make trading CFDs IMHO. Without wanting to sound like I'm selling anything they have low financing costs, the same spreads as the underlying market and comparatively low commisions.

My experience anyway.

and to be clear - I don't work for CMC (or know anyone who does).

[Technical.Trader]

Sure, I agree, you can make money if you know what you're doing, but to many traders have no idea about risk management. I have been an advisor for several years now on CFDs, ETOs, equities futures and FX and am setting up a boutique broking firm oferring these products, but I can tell you first hand that winners are few and far between... but to keep the pipe dream alive, I have seen some poepl make some pretty decent money as well.

[CJ]

Oh, forgot to mention the one biggest problem with CFDs and CMC - the ird views it as a "financial arrangement" and therefore your profits are taxable.CFDs are for traders therefore you would be taxable anywah. If you have using CFD for long term positions, a margin account might be a better way as it would avoid the tax treatment of financial arrangements.

[STRAT]

, but I can tell you first hand that winners are few and far between... .Thanks for confirming what I already suspected TT.
Seeing the adds on TV aimed at joe public was a sure fired warning bell to me. Perhaps those adds would be better suited to a different time slot, say between the informercials for "Ab-Queen Poo" and " TXT Dirty to Hot Girls now":D

[Steve]

I must admit that trading FX thru CMC has not made my lifestyle as good as what the ads show on the tv, YET... ;)

[groovejet]

Thanks for this thread it has been interesting reading. Ive been trading cfd's for a long long time but have made very few posts, so even though I may have newbie status I may have actually traded more than most people. I have been with CMC since they first appeared in NZ (must be about 2005 or 2006). I remember they were still setting it all up anyway. Point is I have made literally thousands of trades with them (mostly in AUS as NZ market is too small and you will really get your bum kicked if you try). Do I trust them? No. Do I have confidence in them? No I think they are confidence tricksters. Would I recommend them? No way, never never never. Why? Read on...
There is an excellent book which is one of the top traders books ever written, its called Reminiscences of a Stock Operator and its about legendary trader Jesse Livermore. Written in about 1924. Anyway these CFD things are not new. They were around in the 1900's US and were known as 'bucket shops' where most people actually lost money (Livermore was the exception so they banned him). So that is the aim of the CFD provider? Pure and simple its to profit from its customers in its own virtual world that it can manipulate itself. Think about that before you open an account. So stop hunting, not filling orders, requotes, incorrect prices etc. etc. yes it all goes on. Ive been around too long to think otherwise. I even got one of their punk traders to admit it. He said 'its our market so what you going to do about it?' I may still have that dialog (which you can only screen print they wont let you cut and paste - eh strange that) - also the transaction logs which are supposed to be on your pc are not there so if you think you placed an order and it didn't get filled there is no way of checking.
Anyway, stay away! Be warned. If you've got a spare 10 grand sitting around take the kids to Disneyland. Do not give it to these b*stards.
By the way. Your probably thinking oh he's just bitter and twisted cos he lost all his money. Not quite. You'll be shocked to know I still have an account and still trade. I have never put any more money into my account. I am just extraordinarily careful now and focussed. I've learned the hard way what works and what doesn't (I've tried just about everything). I'm not into giving tips but if you do still go ahead bear in mind 100:1 leverage is poison, esp. in these volatile times.

[AMR]

I'm not into giving tips but if you do still go ahead bear in mind 100:1 leverage is poison, esp. in these volatile times.

Exactly...

The broker doesn't need to do any funny business, he can simply give huge leverage and wait for the client to blow themselves up.

[Drone]

Exactly...

The broker doesn't need to do any funny business, he can simply give huge leverage and wait for the client to blow themselves up.

I'm quite not sure why the broker would want people to blow up, given that they earn income when clients trade, which is not something clients tend to do when they are "blown up" so to speak.

Cheers

[POSSUM THE CAT]

Drone CMC Markets are esentially bookmakers

[George]

Thought I would start this thread again after a year when
markets have gone down and are now on the way up.
What are the experiences with CMC over this period?
I am considering opening a small ($1k) account and trade very
small positions both long and short on ASX stocks and hold for
1-10 days. Having both long and shorts (1-2 trades each) would
protect me if another Sept 11 occurred and would also reduce the
amount of overnight interest paid, so with $10 buy/sell commission
seems a cheap way to get back into trading mode.

My slight problem is don't have a computer with huge resources
needed for their Marketmaker platform so was going to simply trade
manually over the phone - anyone see a problem with that?

Will not be using stops as my position size will be such that they
will not be needed - if something bad happens to one of the trades
will simply pay what's required and move on.

Thanks
George

[peat]

George
Aussie trading costs $40 a month... I checked with them and you cant trade Aussie stocks unless you pay that - even over the phone...
You can trade the Aussie index tho and while that will allow you short or long of course you wouldnt be able to hedge too well unless you eg contra;d that with an S+P position

If you have a computer the main thing it will need to run Market Maker is more memory- which is really cheap these days. It cost me less than a hundred to bung 4 gb (the maximum unless you have 64bit computer and Operating System ) into my oldish PC and this helps enormously with running MM. Even if its an older/slower CPU it should still work with a bit of patience. Though there is a limit to that.
New PCs are really cheap these days so theres not really any excuse for hanging onto a dunger if you want to trade the markets.

[George]

Thanks Peat
I thought ASX was free with 5 or more trades a month ie. $50
brokerage in total.

[Dr_Who]

My broker at Macquarie charges me minimum of $100 per trade.

$10 is cheap. lol

[miner]

Just buy anything and go play a round of golf and make "lots of money".

[peat]

Thanks Peat
I thought ASX was free with 5 or more trades a month ie. $50
brokerage in total.

yes you're right there I'd forgotten about that ....so yeh thats okay if you're active enough.
You're commiting to a fixed cost either way tho.

[Jay]

Just buy anything and go play a round of golf and make "lots of money".

That's how they advertise themselves, must be that easy then.
Otherwise it is false advertising

Think I will throw a dart at the share page and start trading with them. :rolleyes:
Will be rich in no time at all.

[POSSUM THE CAT]

Question are you dealing with actual ASX market prices or their Market Maker prices which may be different. Please read this thread in its entirety.

[beacon]

Thanks for this thread it has been interesting reading. Ive been trading cfd's for a long long time but have made very few posts, so even though I may have newbie status I may have actually traded more than most people. I have been with CMC since they first appeared in NZ (must be about 2005 or 2006). I remember they were still setting it all up anyway. Point is I have made literally thousands of trades with them (mostly in AUS as NZ market is too small and you will really get your bum kicked if you try). Do I trust them? No. Do I have confidence in them? No I think they are confidence tricksters. Would I recommend them? No way, never never never. Why? Read on...
There is an excellent book which is one of the top traders books ever written, its called Reminiscences of a Stock Operator and its about legendary trader Jesse Livermore. Written in about 1924. Anyway these CFD things are not new. They were around in the 1900's US and were known as 'bucket shops' where most people actually lost money (Livermore was the exception so they banned him). So that is the aim of the CFD provider? Pure and simple its to profit from its customers in its own virtual world that it can manipulate itself. Think about that before you open an account. So stop hunting, not filling orders, requotes, incorrect prices etc. etc. yes it all goes on. Ive been around too long to think otherwise. I even got one of their punk traders to admit it. He said 'its our market so what you going to do about it?' I may still have that dialog (which you can only screen print they wont let you cut and paste - eh strange that) - also the transaction logs which are supposed to be on your pc are not there so if you think you placed an order and it didn't get filled there is no way of checking.
Anyway, stay away! Be warned. If you've got a spare 10 grand sitting around take the kids to Disneyland. Do not give it to these b*stards.
By the way. Your probably thinking oh he's just bitter and twisted cos he lost all his money. Not quite. You'll be shocked to know I still have an account and still trade. I have never put any more money into my account. I am just extraordinarily careful now and focussed. I've learned the hard way what works and what doesn't (I've tried just about everything). I'm not into giving tips but if you do still go ahead bear in mind 100:1 leverage is poison, esp. in these volatile times.

Grrovejet has hit the nail cleanest with CMC experiences. They are neither transparent nor trustworthy, full stop. But regardless of their bag of little tricks, you can lose a lot of money before you know it. And some pretty sharp operators in the market have lost big time with CMC. For most of their losses though, they have themselves to blame. These operators are MBAs and manage millions. They work with leverage all the time, and yet they lost. You think you are smarter. Try it at your peril...

Delaying redemptions, even disallowing them, insider trading like activities, stop hunting, spread arbitrage, suddenly increasing required margins to killing proportions without appropriate notice periods, non transparent fees and related bank accounts transactions, dividend as well as DWT cheating, cheating on intt rates, hidden ledger transactions and non-transparent fees, order slippage, requotes to disadvantage regardless of volume, inaccurate volume information to clients, false advertising, unfair trade practises, mass marketing without proper disclosure or education about risks - it is all happening as we speak.

Because they are not a bank, you can't go to Banking Ombudsman, and the time and red tape their internal dispute resolution process takes will see you on the street sooner than you think. You can go to disputes tribunal, but they won't take cases greater than 10k, civil court fees will see you sell your house to try and get justice. NZX won't regulate them as they create liquidity. Once you get sucked in, the odds are loaded against you as you increase your portfolio sizes.

To the smart alecs who think they can still beat the house, good luck. Off course, money can still be made with CFDs as well as with CMC.

[Dr_Who]

How can CMC markets quote and trade stockmarket shares on behalf of the client if they are not NZX member registered?

[George]

Well, have read their disclosure document, rang for it and they
posted next day - good service or not??
Seems similar to warrant market makers so nothing new there.
Most importantly, one should watch their leverage and factor in
a worst case scenario, whether using stops or not.
If they really do rip off the customer, it would become apparent
and it's goodbye CMC - as long as one is not over-leveraged when
it may be goodbye customer.
The main problem with CFD's as I see it is simply the fact you
have so much leverage available - very dangerous if you don't
know what you are doing or get a little greedy.
Interested in any comments on this subject.
George

[TTrader]

Is anyone currently using CMC (NZ) that can advise on the latency/pings to their servers. (Any ip's or tracert would be helpful)

[peat]

here you go TTrader

got this ip by doing a netstat command when running MM

Pinging dist-c4.syd.cmcnet.net [221.133.197.184] with 32 bytes of data:
Reply from 221.133.197.184: bytes=32 time=71ms TTL=114
Reply from 221.133.197.184: bytes=32 time=68ms TTL=114
Reply from 221.133.197.184: bytes=32 time=67ms TTL=114
Reply from 221.133.197.184: bytes=32 time=69ms TTL=114
Ping statistics for 221.133.197.184:
Packets: Sent = 4, Received = 4, Lost = 0 (0% loss),
Approximate round trip times in milli-seconds:
Minimum = 67ms, Maximum = 71ms, Average = 68ms


I really dont think this is particularly meaningful information tho.
what do you think knowing this will show?

[AMR]

It's the leverage and the appeal it has to newbies. If anyone ever comes to the Auckland meet then you can hear my story about the uni student who leveraged up his account 200x.

[George]

AMR, do u know whether he had all his account invested, what
numbers involved etc. Seems like as leverage goes up the size
should stay the same - all other things being equal.
This would be for currency trading, shares could have different
position sizes depending on the margin and different SP's.
You are supposed to have either US$200 or 10-20% of required
margin in yr account at all times.
I imagine he saw what he could win rather than what he could lose.
George

[AMR]

AMR, do u know whether he had all his account invested, what
numbers involved etc. Seems like as leverage goes up the size
should stay the same - all other things being equal.
This would be for currency trading, shares could have different
position sizes depending on the margin and different SP's.
You are supposed to have either US$200 or 10-20% of required
margin in yr account at all times.
I imagine he saw what he could win rather than what he could lose.
George

Correction after a rough calculation, it was only 50x leveraged. He had 50% of his account on margin at 1% (for index CFDs) because the salesperson said that 25% margin was suitable for conservative investors and he had read a book about moving average crossovers. He liked the look of the Hong Kong 33 index because each point was worth $1.6NZ at the time and on a good day it could move hundreds of points a minute.

After his first two hours daytrading he was up 25% and went out the next day to spend on a flash mp3 player as he was set for life and could now enjoy the good things. The next two days he lost 65% of his account and spent weeks working overtime to cover the loss.That student was me.What a lesson!

[George]

1% is 100x leverage and if he is daytrading should have taken
those profits when they were there. He had too much of his account
at risk to hold overnight. So greed and ignorance at play here -
can't blame CMC for that.

[CJ]

That student was me.What a lesson!Geofge - I think you missed his 'small print' highlight the quote above in case you cant se the silver on white (I have increased the size from 1 to 8

[TTrader]

here you go TTrader

got this ip by doing a netstat command when running MM

Pinging dist-c4.syd.cmcnet.net [221.133.197.184] with 32 bytes of data:
Reply from 221.133.197.184: bytes=32 time=71ms TTL=114
Reply from 221.133.197.184: bytes=32 time=68ms TTL=114
Reply from 221.133.197.184: bytes=32 time=67ms TTL=114
Reply from 221.133.197.184: bytes=32 time=69ms TTL=114
Ping statistics for 221.133.197.184:
Packets: Sent = 4, Received = 4, Lost = 0 (0% loss),
Approximate round trip times in milli-seconds:
Minimum = 67ms, Maximum = 71ms, Average = 68ms


I really dont think this is particularly meaningful information tho.
what do you think knowing this will show?

I was just curious if they actually had servers located in New Zealand... Appears they are on the cheap and routing to their gear in Syd.

[peat]

I was just curious if they actually had servers located in New Zealand... Appears they are on the cheap and routing to their gear in Syd.

that doesnt matter imo
those ping times are fine.
but that doesnt guarantee a responsive application of course as that only represents the IP layer.

re CMC
I think they are potentially dodgey as others fret over... but I cannot say they've done anything specific to me to actually back that up.

AMR - we all have made mistakes and learnt lessons , thats how trading is.

[Balance]

Apologies if this has already been posted but this article from Australia gives a good perspective on what a firm like CMC is about.

CMC is not a financial advisory firm - it is more like a bookie who takes positions against punters - after assessing how much of a sucker a punter is.

Firms like CMC provide greater depth to financial markets - good for seasoned investors. But for ordinary punters - watch out!

THE ODDS ARE AGAINST YOU NO MATTER HOW CLEVER YOU ARE

THE INSIDER
MARCUS PADLEY

June 6, 2009

PUT A bet on through a bookie and the reality is, if you win, they lose and, more importantly, if you lose, they win.

Work that out and you will realise that behind that flashy smile and flirty comment the bottom line is that they want you to lose. It is in their interests that their customers lose.
An ethic that would doom most businesses to the graveyard yet, after centuries of losing customers money, the bookies are still, somehow, in business.

They stay in business of course because everyone loves to punt, needs to punt even. They stay in business because they provide an "essential service". But if they didn't make money they wouldn't exist so just how do they make money? Why do they make money? Learn that and maybe you too can win. Well it's simple. Two things.

The first is risk management. Not losing money. Bookies succeed because they put structure around risk. They manage risk. It is the same in the stockmarket with the new breed of stockmarket bookie, the CFD providers. They too take the opposite side of your trade.

They will tell you that controlling risk means knowing when to hedge. Who to hedge. You probably have the idea they hedge everything, but they don't. It would cost too much.
Instead they simply identify people who have a habit of winning and when a winner takes a position they hedge the risk and move the price.

With CFD providers it means they spend some time differentiating between the good traders and the bad. That's why they ring you up, to suss you out. Otherwise they just watch what you do. The winners, they hedge. The losers, they don't.

Which brings up the second reason they make money. By taking bets off losers. Off Joe Public. Off the majority. Off the people who don't take their betting seriously. People who fly by the seat of their pants. People who "love having a punt". "Love to Punt" means "Love to Lose". This is where the real money is.

There's no need to hedge losers, all they need to do is encourage loser activity with a host of bait. Like blowing smoke up customer's arses. Glamourising the life of a trader. Telling them how sophisticated they are. By trumpeting winners with hindsight examples. By offering sexy software, free. And, most importantly of all, by making it really easy and terribly tempting to just "click and trade" and place that bet.

But amazingly enough when it comes to making money as a do-it-yourself trader it is not the product you are up against. On the contrary CFDs are a fantastic product for winners. What you are up against is something far more dangerous. Far more damaging.

It is you, or more accurately, your weak and feeble mind that is in no position from a standing start to be trading highly leveraged products against professionals. So what do you do? How do you narrow your odds?

Well it's what you don't do first. You don't trade just because you can. Just because you can trade shares or CFDs from your kitchen doesn't mean you should. What you do do is educate yourself about what it really means to be a "trader".

Ultimately trading is a business activity. It is not glamorous. It is not exciting. It is methodical. It is a routine. It is boring. Fifty per cent of the game is handling risk, 40 per cent is discipline, nine per cent is vigilance and the rest is picking winners. You can't do it part time.
A trader is a title you will only gain through many losses and much experience, through constant effort and an appetite for education and while you elevate yourself from beginner to "trader" you have to try not to get wiped out. Something few achieve.

That means start small, start on paper even and meanwhile get educated. It means doing what the professionals do and learn how to put structure around risk.

Trading is everything you have been told it is. Interesting, fulfilling and challenging. But it is not punting and it's not sexy or and it's not glamorous. It is business. Learn how to do it. Don't just do it.

[AMR]

That actually took place a few years back now and I'm glad I went through that. CMC did nothing wrong, it was entirely my fault for being an overconfident teenager who thought reading a book about TA made him bulletproof.

George if you pay $40 per month for ASX stock trading you are already down $360 a year or 36% on your $1k account. Perhaps you could take a look at GFT Australia, they have no ASX fee.

[George]

Balance, great article, so if one can consistently make money,
how do they hedge - how does it affect the good trader, if at all?
Even if the odd trader wins they must still make money ie. commissions
and any interest charges from holding overnight.

AMR, as noted, 5 commissions a month and the ASX feed is free.
That's only 3 buys and 2 sells.

[Balance]

Balance, great article, so if one can consistently make money,
how do they hedge - how does it affect the good trader, if at all?
Even if the odd trader wins they must still make money ie. commissions
and any interest charges from holding overnight.

AMR, as noted, 5 commissions a month and the ASX feed is free.
That's only 3 buys and 2 sells.

I suspect CMC will take positions in the same direction as the smart traders they have identified. Hedging is not hard as they can borrow stock if you short and they can buy stock if you buy to cover on market at same price.

You cannot win consistently against them as they MAKE their own market.

[George]

I guess one has to get in and try, up 80% on my grand on paper
after 2 weeks trading only top stocks with 3% margin. The $10
brokerage is key for small amounts but one must be strict about
position sizing, even my small $150 amounts could go awry quickly.
Checked reactions to Sept 11 and even holding a balance of shorts
and longs may not protect as many stocks went down just a little
while QBE was down by half. Being long would mean being down
about $1600 down on my $150 size and having to front up with that
amount - that appears to be the worst case scenario and one that
is manageable. I can see where some get into trouble, esp FX with
100-200 leverage.

[arco]

CMC
Very interesting situation.

I recently downloaded the demo platform to see whether it was still as power hungry as a few years back. (Basically I wanted to use them to trade Oil which is not available at Oanda).

Now a week later and despite 5 e-mails to their customer support, I have still not received a reply regarding my log on details.

They have my e-mail and my home and mobile - so no excuse really.

If they are this inefficient do I really want to trade through them?

+ Whats going to happen if I get a serious problem?

[peat]

arco

that is pretty terrible response indeed - you think they would be following
any leads aggressively

the oil trades in MM are 3 mth futures which means you dont get very long graphs. (still would allow you to trade it tho )

what about the old ABN Amro platform which is now being run by Royal Bank of Scotland ?

https://marketindex.rbs.com/uk/AboutMarketindex.aspx

[marknz88]

CMC
Very interesting situation.

I recently downloaded the demo platform to see whether it was still as power hungry as a few years back. (Basically I wanted to use them to trade Oil which is not available at Oanda).

Now a week later and despite 5 e-mails to their customer support, I have still not received a reply regarding my log on details.

They have my e-mail and my home and mobile - so no excuse really.

If they are this inefficient do I really want to trade through them?

+ Whats going to happen if I get a serious problem?

I attempted to email their tech staff after having glitches with their marketmaker software (it does not like to work with windows7) and never heard back from them....(admittadly my account was a demo as part of a uni competition) but I thought it was still quite slack, espicially as their goal would have been to encourage as many students who were particiapting to sign up and lose their $$$$$

IGmarkets are far more helpful in my experiences

[arco]

arco

that is pretty terrible response indeed - you think they would be following
any leads aggressively

the oil trades in MM are 3 mth futures which means you dont get very long graphs. (still would allow you to trade it tho )

what about the old ABN Amro platform which is now being run by Royal Bank of Scotland ?

https://marketindex.rbs.com/uk/AboutMarketindex.aspx

Thanks Peat - I've just downloaded it, and its up and running.....a very professional company obviously.

CMC -thanks for nothing ......you obviously dont need my money :)

[Dr_Who]

arco

that is pretty terrible response indeed - you think they would be following
any leads aggressively

the oil trades in MM are 3 mth futures which means you dont get very long graphs. (still would allow you to trade it tho )

what about the old ABN Amro platform which is now being run by Royal Bank of Scotland ?

https://marketindex.rbs.com/uk/AboutMarketindex.aspx

Is it easy to open an account with these guys?

They dont have an office in N Z.

[blackcap]

Funny thing that about CMC. I was recently in NZ and wanted to close my account with them remembering that I had an odd $200 still in the account (not used for over 1 year) Rang the 0800 number, was directed to the web site to fill in a form. Faxed this form and the next day the $250 was in my account. After reading the comments on here I was mightily surprised.

[ananda77]

...as a long term client of CMC Markets, have to say that I never run into problems with them; as far as cashing out is concerned, e-mail and the cash is in the account the next day

...Never, Never, work with stop losses on a market maker platform, as you are creating your own counterparty and because you never know the spread or liquidity in the markets at the Open or during periods of future trading etc, your stop loss is like digging your own grave;

...instead of a stop loss, it is better to counter, for example, a long position in equities with a short position in an index; markets are extremely dynamic, volatile, and 70% of the time not trending; your positioning on market maker platforms needs to reflect that reality;

...finally, before ever attemting to make a profit against a marketmaker, your positioning MUST be backed up by extremely reliable FORECAST probabilities

Kind Regards

[Balance]

...as a long term client of CMC Markets, have to say that I never run into problems with them; as far as cashing out is concerned, e-mail and the cash is in the account the next day

...Never, Never, work with stop losses on a market maker platform, as you are creating your own counterparty and because you never know the spread or liquidity in the markets at the Open or during periods of future trading etc, your stop loss is like digging your own grave;

...instead of a stop loss, it is better to counter, for example, a long position in equities with a short position in an index; markets are extremely dynamic, volatile, and 70% of the time not trending; your positioning on market maker platforms needs to reflect that reality;

...finally, before ever attemting to make a profit against a marketmaker, your positioning MUST be backed up by extremely reliable FORECAST probabilities

Kind Regards

Excellent advice.

[Steve]

...as a long term client of CMC Markets, have to say that I never run into problems with them; as far as cashing out is concerned, e-mail and the cash is in the account the next day

Ditto for me - no problems getting cash out or solving technical issues...

A happy CMC user... :)

[bung5]

...as a long term client of CMC Markets, have to say that I never run into problems with them; as far as cashing out is concerned, e-mail and the cash is in the account the next day

...Never, Never, work with stop losses on a market maker platform, as you are creating your own counterparty and because you never know the spread or liquidity in the markets at the Open or during periods of future trading etc, your stop loss is like digging your own grave;

...instead of a stop loss, it is better to counter, for example, a long position in equities with a short position in an index; markets are extremely dynamic, volatile, and 70% of the time not trending; your positioning on market maker platforms needs to reflect that reality;

...finally, before ever attemting to make a profit against a marketmaker, your positioning MUST be backed up by extremely reliable FORECAST probabilities

Kind Regards


Yes I also had some very close calls with having stop losses. Esp when the market just opens there can be some big spreads.
Now I monitor my trades closley and have my stop loss on paper.
I am only trading stocks that mostly on NZX and ASX thou. Might be different story if on forex

[loofa]

There is a rumour that AxisODL out of Australia will be operating in NZ soon.
I have used CityIndex, CMC and Finspreads at various times since 2003.
Learn the tricks and make your own bed to lie on.
Indices trades are worth the effort and Forex momentum.

[AMR]

Now I monitor my trades closley and have my stop loss on paper.I am only trading stocks that mostly on NZX and ASX thou. Might be different story if on forex

NZX stocks are horrible for spreads...i.e during the last round of volatility we had PRC Buy 90 sell 98...

[Dr_Who]

What will this mean for CMC market and CFD?

Regulator to tighten CFD rules

THE corporate regulator is moving to close a legal loophole that is potentially putting hundreds of millions of dollars at risk in trading instruments that allow investors to make bets on the direction of the share, currency and commodity prices using borrowed funds.

http://business.smh.com.au/business/regulator-to-tighten-cfd-rules-20090823-ev2e.html

[beacon]

Too little, too late, but still a baby step in the right direction. NZX is sleeping, as usual

[George]

Don't see any probs with CMC at moment after 2 weeks.
Just done some research to cover a worst case like Sept 11.
With a 2000 a/c I would have say 2 longs and 2 shorts open but
the outcome would depend on luck in which stocks were held as
some fell more than others. The a/c could still fall by $1500 in
which case you may be liquidated and asked to bring a/c back up
to at least $1000.
To hedge with a short index position would certainly provide some
peace of mind but the gains on longs would simply (maybe) be
matched by losses on shorts - so what's the point. Surely one must
take a risk to gain a reward.
However, if I made the mistake of having all longs even tho they
amount to half or less my account, the total loss in an extreme
case would be about $4,500 or twice the account size.
Perhaps one must simply take a risk but have plenty set aside
in case - then start again. Correct me if I'm wrong here.
George

[ananda77]

...market risk can not totally be eliminated and risk is necessary for success, but it is good to do a conscious risk assessment before trading

...in general, I would not START to design a trading system using a one-off event like 9/11, but would rather base the system on usual day to day trading

...I use the derivative market ONLY to hedge positions in the original market; and for trading, hold ONLY positions in the original market that follow an index very closely; then design a hedge with one or two indices, starting for example with a 5% hedge on equity as the market becomes top heavy, increasing/decreasing the hedge as necessary; and as a sideshow, it is always facinating to try to beat your own hedging, but that is another matter;

...remember and it is something not often mentioned:

-MOST MARKET PARTICIPANTS SELL AT THE BOTTOM and
-MOST MARKET PARTICIPANTS BUY AT THE TOP and
-A MAJORITY OF TRADER (APPROX: 70% (+) LOOSE

???ever wondered why financial institutions own the biggest buildings in cities??? (they do not necessarily have the better traders, they just have tons of peoples money who think, they are better traders; and the supposedly better traders DO STUFF IT UP ON A REGULAR BASIS BUT THEN THE GOVERNMENTS (people again) BAIL THEM OUT WITHOUT ANY REPERCUSSIONS FOR THEM)...in short:

----VETTERNWIRTSCHAFT-----

...so take care and be happy to pick up little pieces in front of the steamroller

disclosure: average return over the last 15 years in the trade = net 20% (yes...that's all)

Kind Regards

[George]

Appreciate yr comments Ananda
Just familiarising myself with the system at present, lots of
dangers out there. Watched the HK33 and if you happened to be long
at 20,100 with the minimum 10 contracts, you were down 400 points very
rapidly. The cost would only have been about $NZ190.95 (guesswork here),
but yr loss would have been about $760 in less than 5 mins.

I may have my figures wrong but with the HK spread at 15 points
and each point worth 1 $HK or NZ19cents that is $2.85 per spread.
At 10 contracts min. that's $28.50 per 15 point spread. The Aus200
index can be traded with 1 contract and the 2 pt spread only amounts
to about $NZ2.40. Keep it v. small in the meantime I think.
Cheers
George

[Dr_Who]

George, you are treating this market like a casino... LOL

[George]

Hope you are wrong Dr. Simply trying to find the best strategy.

[AMR]

Yes very sensible the aussie200 can be scaled suitably to match your risk tolerance, much harder to do that with the big HK33 contract.

[George]

Must say, don't know what all the fuss is about CMC, so far they
seem ok. Just got to watch that leverage and do the figures.
Brilliant platform and it runs fine on 512mb even with XP as the system.

[Crusader]

Have been using CMC for 2 weeks and they're appauling.... today IT issues and the rep in Singapore has no idea. IG are far superior, deal the underlying market (if you havent worked it out yet CMC dont) and do not have consistent IT problems.

[loofa]

Got a message today that they are increasing the margin call percentage on most items.

[bung5]

Got a message today that they are increasing the margin call percentage on most items.

Yeah I am not happy about the margin call increase while in the middle of a long trade

[Steve]

Yeah I am not happy about the margin call increase while in the middle of a long trade

If you are not overstretched in your trade, then it shouldn't make a difference...

[beacon]

It can make a difference, as they have the power to change margins right upto 100% at short notice. No appeal. No (appropriate) notice. No reason (need be) provided. They are judge, jury as well as executioner. and they've done it before ...

That would be a rare sod who played margin games, and yet carried full cash backup. Wait till you get caught. What the big print giveth, the small print taketh away. read their disclosure document. It is a scary piece of unlimited power transfer from client to supplier. And in NZ, where people don't even understand basic share and property investment, let alone derivatives like options and futures, CFDs are a one way street to pain and misery. CMC are masters at looking after their own interest at the cost of punters. They are a sophisticated bucket shop of old. Might pay to read Lawrence Livermore's "Reminiscences of a Stock Operator". Play if you still wish, but know that the odds are against you as they have never been before. The rewards are great if you win.

[PartTimeTrader]

I've been using CMC markets since Oct 08.

I have a few complaints about it.

1. a few times their login server has had issues during critical trading days/hours, which really pissed me off as CFD's are leveraged.

2. if you are using it to trade the NZX, they don't truly reflect the underlying market.

3. there are times when CMC markets will shaft you if they get the chance.
I once closed a trade on AIR NZ a few months back at 93cents, 5 minutes later an admin messaged me saying that the order should not have gone through and reversed my trade. Then asked me if I wanted to close at the current rate of 91cents.

But overall, I've made a 200% return since Oct 08 so I'm not complaining too much. The largest position I've held was at 6x my cash balance. It would be a huge mistake to be holding positions at 20x your cash balance (which is what is allowed for most nzx stocks).

People just have to realize that being leveraged means you have multiplied your risk / rewards by the leverage factor. A lot of people who get burnt on CFD's / FX do so because they never truly understood the downside risks.

It's simple, if you trade at 100:1 or 200:1 like what is available for FX trades. You have just multiplied your downside risk by 200x!, that means if the market moves 0.5% against you. You will lose your margin on that position, any further movement and it eats into the rest of your equity. Infact, you could end up owing the CFD provider a ton of money if the movement was significantly against you.

Too many idiots deposit 1000$ into an account and start trading FX $100,000 lots not realizing that a 1% movement against them wipes out their equity. All they thought about was if the market moved in their favor by 1% they would double up their $.

THERE IS NOT A SUCCESSFUL TRADER IN THE WORLD who would trade at 200:1 on their equity. Show me a person who has done this and I will show you a degenerate gambler.


Bung5, the change in margin requirements should not have a negative effect on you. For NZX stocks, it went from 5% to 10% for the top50 and 10% to 15% for the smaller cap stocks. If this forces you to close positions, then you are way way over leveraged. I do not know your personal circumstances, but I would hope your equity in CMC markets isn't a significant portion of your total equity if you are going to be running at such a high leverage.

[Soolaimon]

I have been using them for more than 2 years and only trade the Aust200. I did venture into NZ shares and got burnt. It has taken me 18 months to slowly recover and I am now up only 1.5%. Beleive me, after 45 yrs following and investing in the stock market via shares, bonds,options and CFD's I now only play with the CFD,s in a very minor way when I get bored. Long term investing in good companies with good records is far better for your bank account, your mind and the country. If you want to gamble, go to the casino and hedge yourself by buying their shares.

[bung5]

I've been using CMC markets since Oct 08.

Bung5, the change in margin requirements should not have a negative effect on you. For NZX stocks, it went from 5% to 10% for the top50 and 10% to 15% for the smaller cap stocks. If this forces you to close positions, then you are way way over leveraged. I do not know your personal circumstances, but I would hope your equity in CMC markets isn't a significant portion of your total equity if you are going to be running at such a high leverage.


I am only leverage about 4 times so it is not an issue about closing my trade just the fact they are willing to up margin even with open trades. As mentioned above there is nothing stopping them putting it to 50% if they wanted.

End of the day I guess CMC want you to loose... thats the way they make money.

At the moment milking CFD's on the NZX with little risk. Only had a few issues with CMC and the spreads not accurate to the underlying market at the start of market open

[loofa]

Even with CMC working to get the last cent out of me, I am content to operate.
My nadir was a loss of 75% of my initial capital. However I now am well in profit with very conservative positions and using dividend credits to finance the 5.5% interest on NZ shares, I can win with that alone.
Unfortunately I did lose out because I used a stop loss while travelling overseas for a week and got chopped. In retrospect the stop was too tight and cost me a future 20% gain on my overall account balance.
There will be more competition for CMC in the future and there is no reason why the providers in Australia or UK will not let you in. I did have an account with City Index but they got greedy on minimum commission and I see they are now trying to win back custom. Too late!

[loofa]

Well,well!
IG reduce their margins on exactly the day that CMC up theirs.
Reduce on 900 shares
Cut to 5% on 650 shares

However their margins in some cases are still higher than CMC.

[peat]

anybody played the CMC No Loss day?

Playing the HK33 would be fun with someone there to suture you.

I couldnt see anything too scary in the fine print but dont take my word on thiat , I know I'd be nervous about taking a loss and having someone else say they'll cover it. Hopefully there would be no cough 'misunderstandings'


http://www.cmcmarkets.co.nz/en/content/open_an_account/special_offer.jsp

The No Loss Trade Day is available to new clients, and allows them to trade risk-free for one day on either the TIQ Aussie 200 index or TIQ Hong Kong 33 index

[Dr_Who]

No lost day?? WTF?

How does a broker do that? Do they hedge the position? Do you keep the profits also?

[beacon]

No lost day?? WTF?


Suck them in. how much daring will a novice have? what is a typical trade worth for a beginner? Remove their fear, get them to open an account, and let greed do the rest. if somebody is disciplined, CMc's bag of tricks and opaque costs will ensure they'll get them in the end. Simple!

[DTB]

Hi there,

I've been recently looking at CFD providers more as a way of reducing trading costs. I've had a margin account for some time with ASB and am fully aware of the risks - to my cost - of even moderate leverage.

Is this a valid way to look at these types of products? The potential for manipulation of their own market and dodgy practices is a bit of a worry from what I've read in this thread!

Are any of the ST gurus out there using these platforms as part of their investment strategy?


Cheers

[George]

IG to set up in NZ, be interested to see how it affects CMC.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10602829

[arco]

One of UK's leading independent traders to visit New Zealand


One of the UK's leading independent traders, Nick McDonald is visiting New Zealand to share his unique knowledge about technical trading.
Originally from New Zealand, McDonald founded Trade with Precision, a company which teaches people the nuances of technical analysis and real life trading strategies after he became a full time trader.
"I teach people realistic trading strategies through a step by step process that can be translated to the real world," says McDonald. "People who participate in any of the Trade with Precision courses that I am running in New Zealand will learn the fundamentals of being a successful trader and through CMC Markets they will be able to put their newfound knowledge to work."
McDonald set up Trade with Precision in London in 2006 and is a specialist in the Index and Currency Markets. The company now consists of five professional traders, who cater for complete beginners to more seasoned traders.
"We do not just try and sell the dream to people who want to learn to be successful traders," says McDonald. "Our approach is pragmatic and based on a solid foundation of technical analysis (the study of price charts) which is where a successful career in trading begins."
CMC Markets has brought Nick McDonald to New Zealand to help existing traders develop their skills and to introduce people new to trading to some fundamental attributes of the practice.
"We are very pleased to have the opportunity to give our clients access to a professional of the trading world," says Chris Smith General Manager CMC Markets New Zealand. "The courses Nick is presenting have a lot of value for experienced CFD traders and those starting out."
The courses being run throughout New Zealand from October until December and more details can be found here:


(http://www.sharechat.co.nz/seminars.html)
http://www.sharechat.co.nz/seminars.html