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

**PartTimeTrader** · 18-09-2009, 09:54 AM

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** · 18-09-2009, 10:24 AM

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** · 18-09-2009, 12:06 PM

Originally Posted by PartTimeTrader

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** · 21-09-2009, 08:36 PM

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** · 22-09-2009, 07:06 AM

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** · 30-09-2009, 04:17 PM

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/conte...cial_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** · 30-09-2009, 04:56 PM

No lost day?? WTF?

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

**beacon** · 01-10-2009, 01:01 PM

Originally Posted by Dr_Who

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** · 03-10-2009, 10:53 AM

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