Tuesday, December 9, 2008

Review on CMC Markets

Last month I opened a CFD account with CMC Markets. The main reason for me signing up is because I wish to make short term trading in stocks to take advantage of the short term market trend. But I realized it is not that easy to be a trader and I think it requires a separate article to post my small trading losses. But in this article, I am going to make a short review about CMC Markets.

Basically CMC Markets is an online trading company which deals in Foreign Exchange (FX) CFD. CFD means Contract For Difference (CFD). Apart from foreign currencies, their account allow allows you trade a huge range of local and overseas stocks, market sectors, global indices and treasuries. For a full list of tradeable products, please click on the link.

The good thing I like about CMC Markets is the funding process. For quick funding of your account, you can simply do a fund transfer to their DBS current account. Unlike other foreign trading accounts, with CMC Markets you don’t have to write a cheque anymore and you can save time waiting for the cheque to be cleared. As for the withdrawal, there is a fee of $1.50 for money to be deposited into your bank.

I have always told myself if I want to do short term trading in stocks, it is advisable to trade through CFD because of the lower costs involved for a round trip of buy and sell. Moreover there are some important tools available with a CFD account like CMC Markets that most other traditional trading accounts don’t offer. The useful trading tools that I am talking about are risk management orders.

The common order type from traditional accounts is market order type and is only good for the day. CMC markets allows you to make some of the following type of orders.
  • Limit orders
  • One Cancels the Other orders (OCO orders)
  • If Done or Contingent orders (If Done orders)
  • Good ‘Til Cancelled orders (GTC orders)
  • Guaranteed Stop-loss orders (GSLO orders)

I don’t think I can go through explaining each type of orders but let me just touch on an OCO order. In my opinion this a very useful order that you can implement on your trades. It allows you to manage the risk and reward of your trades efficiently. For example, you see bullishness in a Stock XYZ and decided to go long at $1. You wish to take profit when the price reaches $1.20 and cut loss when the price reaches $0.90. Therefore you should do an OCO order for such a scenario without the need to monitor the market constantly after the OCO order is made.

In order to trade with CMC Markets, you have to install their award winning MarketMaker software into your computer. My computer is an AMD Athlon 2600+ with 512 MB of RAM. I find the Java built-in software a little bit CPU intensive on my hardware configurations and thus causing the software to slow down at times. I believe those computers with higher end configurations should not have any lag with the software. Nevertheless I really like the interface inside. The following picture is a screenshot inside the MarketMaker software.

Screenshot of CMC Markets MarketMaker software

What you see in the picture is a saved layout of my workspace in the software. You can customize your own layout, save and reload your favorite layout at any time in future. On the top left of the picture is a summary of cash balance in the account. Beside it are all the single pricing windows of some of the major currency pairs. The software has good charting features and you can view live charts of any counter down to a scale of one minute.

The other good thing about CMC Markets is the in-house educational courses. Regularly they will organize training courses for traders at absolutely free of charge. I think they are useful courses especially for those who wish to learn about technical analysis and foreign currency. For a list of trading courses, please click on the link.

In overall, I am impressed with their platform. I didn’t manage to touch many other aspects of CMC Markets like their mobile trading platform. But I hope this brief review can give you a rough guide of what they can offer. If you are interested, you may open a demo account with them and practice your trading skills at the same time. You don’t need a deposit to try out the demo account but you are given a virtual amount of cash to trade. Good luck.

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