CMC CFD Trading: A Must-Have Guide for Traders 2021!

Oct 22, 2021CFD Trading0 comments

The general meaning of CFD refers to ‘contract for difference’, a short-term contract within an investment bank and an investor or even a spread betting firm. The parties exchange the difference between a particular financial instrument’s opening and closing prices as the contract ends, whether Forex, shares, or commodities.

Trading them can either incur your gains or losses based upon your selected assets price movements.

You can easily trade contracts for difference (CFDs) and access thousands of products with competitive spreads with CMC CFD trading. Trade CFDs on Forex, indices, cryptocurrencies, commodities, shares, and treasuries.

In this article, we’ll learn the entire trading procedure of CMC CFD for your ease of understanding.

Part 1: What is CMC Markets?

CMC Markets (CMC), launched in 1989, is a publicly traded, well-recognized, and highly regarded U.K. forex broker that has successfully transitioned to the dominant landscape of online brokerage firms. CMC Markets is well-maintained through financial authorities, including the Financial Conduct Authority (FCA). And so CMC Markets is considered secure. The company is under the London Stock Exchange (LSE) under the ticker symbol, CMCX. They also do not accept U.S. traders like most of the other broker firms. CMC Markets serves 80,000 active clients globally.

CMC Markets provides an excellent fit for all kinds of investors, with a broad product range of assets and a feature-rich platform (Next Generation). In addition, CMC Markets emphasizes research amenities, excellent customer services, and educational resources.

1. CMC Markets CFD Trading Procedure

It has a trading platform for web, tablet, and mobile – Next Generation to please tech geek clients wishing to upgrade from MetaTrader 4. The navigation is also intuitive and enough to experience all the features packed into one platform bundle. Cryptocurrency CFD trading and spread betting are seamless, requiring no particular exchange or interface, but the client interest is reduced after high spreads.

The platform features advanced charting with 115 indicators/overlays, 35 drawing tools; 12 chart types; personalized watchlists; streaming Reuters feed, and client sentiment. Charts are popped out and optimized with complicated layouts of the desktop. The platform also provides price projection and pattern recognition tools and a built­-in connection to the client­-based trader’s forum.

Next Generation has three fundamental orders as “take profit” and “stop-loss” charges. Moreover, the trader can place an initial stop loss anytime while the market orders execution and then amend it to a guaranteed stop-loss after the performance. For pending orders, the trader can select both trailing or guaranteed options when filling out the order ticket before the execution.

Market – The most straightforward order where a trader signals that their trade request is at the prevailing market rate.

Limit – A pending order at a predetermined point above or below the current market rate based upon whether it’s a sell or buy. The trader also has the option to choose expiration order dates.

Stop – A pending order placed at a predetermined point below or above the current market rate based upon its selling or buying position. The trader also has the option to choose the order’s expiration time.

The provided customer service of CMC Markets includes options such as live chat, phone support, and email in several languages. At CMC Markets, customer support provides relevant answers.

cmc markets trading platform

Clients can select between MetaTrader 4 and Next Generation for iOS and Android platforms. Their app is also greater than MT4 in nearly all areas but has fewer features than the web version. Here, they also focus on chart optimization. Clients can place complex orders and generate personalized alerts through email or push notifications.

The apps further offer fingerprint I.D. entry, but this valuable function isn’t part of a two-tier authentication process. MetaTrader 4 is provided as a standalone or an add-on account option but restricted to CFDs without any share capacity.

Next Generation also does not have backtesting functionalities, convincing some account holders to use MT4, which is inferior to the web trader platform in other ways.

CFD CMC Markets doesn’t offer direct VPS service, either. The same holds for an intuitive API user interface that allows more complicated trading platforms that support both automatic and algorithmic trading routines.

2. CMC Markets Products Catalogs

CMC CFD Markets provides clients one of the greatest product catalogs available in the online forex brokerage community. As the company website advertises, clients can trade around 10,000 instruments, which further opens up many new possibilities, specifically with the managers of long-term portfolios. Available instruments on the CMC market are Forex, Indices, Cryptocurrencies, Shares & ETFs, Commodities, and Treasuries.

These include:

  • 330+ FX pairs
  • 90+ Indices
  • 12 Cryptocurrencies
  • 9000+ Shares and ETFs
  • 110+ Commodities
  • 50+ Treasuries

Spreads are competitively low, and all other financial instruments, except the individual shares, have listed margin percentages. CFD CMC Markets shares margin rates begin from 20% on U.S. and U.K. listed shares.

Also, margin rates vary for large shares position sizes based on the tier they fall upon.

3. CMC Markets Fees, Commissions, Margin Rates and Account Minimums

CMC Markets hasn’t any minimum deposit requirement to open an account, although you are required to have enough money as a margin to trade live in your account.

There are deposit and withdrawal options. The will be a fee for international bank transfers of £15 for withdrawal.

Forex traders can benefit from CMC Markets’ ultra-low dealing spreads that generally begin at 0.07 pips for USD/EUR. Given below are minimum average spreads and margin rates on some of the most popular CFD CMD Markets.

Asset Avg Spread Recent Quote Margin Rate From
Crude Oil Brent $2.50 $45.80 1.90%
U.S. Shares $0.02 per share Minimum $10 20%
GBP/USD 0.00009 1.3300 0.21%
Gold $0.30 $1,840 -1.75%
US NASDAQ 100 1.00 11,921 0.08%
Germany 30 1.80 13,197 0.51%
US 30 1.60 29,643 1.44%

CMC Markets will be 30:1 when a margin of 3.3% on Forex. The leverage ratio will be on the provided margin.

CMC offers a ‘Next Generation’ platform for trading with a more straightforward and modern design that you can customize. There is no option for two-step authentication.

Part 2: All About CMC Markets CFD Trading

You can access over 11,000 international instruments at competitive spreads and margin rates on the CMC CFD account.

With CMC CFD, it’s easy to trade CFDs on major forex pairs beginning from 0.7 points and famous indices from 1 point.

4Asset class Number of instruments

View our range of markets>

Minimum spreads

View our spreads>

Margins rates from

View our margin rates>

Forex 330+ 0.7 points 3.3%
Indices 80+ 0.3 points 5%
Cryptocurrencies 14 3.8 points 50%
Commodities 100+ 0.3 points 5%
Shares 9,000+ 0.10%1 20%
Treasuries 50+ 1 point 20%

Account Types

  • Demo Account

Their demo CMC CFD account filled with virtual funds is a risk-free environment.

  • Live Account

Their live CMC CFD account consists of a wide range of products, features, and trading tools.

Key Specialties

  • Risk Management

Our extensive risk management tools consist of trailing, regular, and guaranteed stop-loss orders (GSLOs). These tools allow you to handle risk and secure potential profits and minimize losses. Unlike other stop-loss order types, GSLOs provide 100% assurance that trade will wrap at an exact price for a premium. Your premium charge will be refunded fully if the GSLO is not triggered.

  • Potential CFD Trading Costs

Your risk management approach and how long you hold a profit position can impact your potential CMC CFD trading costs. However, the charges are levied to hold an overnight position and for executing a GSLO. For share CMC CFD trading, there is also a commission charge and a market data feed.

How does CMC Markets CFD Trading works?

With CFD CMC Markets trading, you don’t sell or buy the underlying asset (for example, a currency pair, a physical share, or a commodity). Instead, you sell or buy several units for a particular financial instrument​based upon your anticipation of prices going upwards or downwards. The CMC CFDs are available on many global markets, including stock indices, currency pairs, commodities, treasuries, and shares.

An example of one of their famous stock indices is the UK 100, which sums up the price movements of all listed stocks on the UK’s FTSE 100 index.

For every price movement moving in the investor’s favor, you gain multiples of the number of CMC Markets CFD units you have sold or bought. And, you will incur a loss if the price moves against your favor.

  • Defining CMC CFD Margin and Leverage

CMC Markets CFD Leverage means that you are only required to deposit a small portion of the full value to open a trade position. It refers to the margin requirement or called ‘trading on margin.’ While margin requirement assists you in multiplying your returns, your losses will also magnify depending upon the full position’s value. It risks all your capital, but you can’t lose more than your account value as the account has negative balance protection.

cmc cfd margin leverage

  • Costs of CMC CFD Trading

Spread: While trading CMC CFDs, you should pay the spread, the variation between the sell and buy price. Using the buy price quoted, you enter a buy trade and exit via the selling price. It will be the lower price if the spread is narrower is in your favor before making any gains, or a loss is there if the price moves against your favor. However, they offer continuously competitive spreads.

Holding costs: At 5 pm New York time, the end of the trading day, any open positions in your account are subject to a charge called CMC CFD holding cost. The holding cost can be negative or positive based upon the direction of your position and the applicable holding rate.

Market data fees: To view or trade their share CMC CFD prices, you must activate the relevant market data subscription at a certain price.

[Applicable on shares]Commission: Commission on CFD platforms of the UK begins from 0.10% of the full position’s exposure, and £9 is the minimum commission charge.

Here are some example trades of CMC CFD account:

Example – Opening Trade

UK Company ABC

 

– 5,000 unit trade at a price of 100p would incur the minimum commission expense of £9 to enter the trade:

5,000 (units) x 100p (entry price) = 5,000 x 0.10%

= £5.00 £9.00

Note: CFD trades incur a commission charge during the opening and closing trade. The above calculation can apply for a closing trade; the only variation is using the exit price instead of the entry price.

  • Short-selling CMC CFDs in a falling market

CFD trading allows you to short sell an instrument if you believe its value falls, to profit from the predicted upwards or downwards. If your prediction turns out to be genuine, you can repurchase the instrument at a lower price to get gains. If you are incorrect and the value goes upward, you will incur a loss. This loss can exceed your deposits.

  • Hedging physical portfolio with CMC CFD trading

If you have already invested in a physical shares portfolio with another broker and you think they may lose some of their short-term value, you can use a CMC CFD hedging strategy​. By short selling the same CMC Markets CFD shares, you can try and make a gain from the short-term downtrend to offset any existing portfolio loss.

For example, say you hold £5000 worth of physical ABC Corp shares; you could hold a short sell or short position the equivalent value of ABC Corp with CFDs. Then, the CFD trade can be closed to secure your profit as the short-term downtrend comes to an end and the worth of your physical shares begins to rise again.

Trading CFDs refers to hedging physical share portfolios, famous for various investors, specifically within the volatile industry.

cmc cfd hedging

Part 3: A Detailed Comparison Chart of Top 5 CFD Trading Platforms

Broker

CMC Markets eToro AvaTrade Pepperstone FP Markets
Regulation Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) (Germany); Financial Conduct Authority (FCA) (UK); Financial Conduct Authority (FCA); Cyprus Securities and Exchange Commission (CySEC); International Financial Services Commission (IFSC); Polish Securities and Exchange Commission (KPWiG) Central Bank of Ireland, Australian Securities and Investments Commission, Financial Securities Authority, South African Financial Sector Conduct Authority, Financial Stability Board, Abu Dhabi Global Markets etc. FCA, ASIC, CySEC, Federal Financial Supervisory Authority, Dubai Financial Services Authority, Capital Markets Authority of Kenya ASIC, CySEC
Minimum Deposit $0 $50 $250 $200 $100
Funding Bank transfer, Credit/Debit Card, Paypal Bank Wire transfer, Credit/Debit Card, Paypal Bank Wire transfer, Credit/Debit Card, Paypal Bank Wire transfer, Credit/Debit Card, Paypal Bank Wire transfer, Credit/Debit Card, Paypal
Benefits Allows hedging

Zero minimum deposit

Offers negative balance protection

Offers STP

Low Minimum deposit

Offers negative balance protection

Allow scalping

Allows hedging

Offers negative balance protection

Low minimum deposit

Allow scalping

Allows hedging

Offers negative balance protection

Low minimum deposit

Allow scalping

Allows hedging

Offers negative balance protection

Low minimum deposit

Accounts Demo account;

CMC CFD account; Corporate account

Demo account; Standard account; Islamic account Demo account; Micro account; Mini account; Standard account; Islamic account Demo account; Mini account; Standard account; ECN account; Islamic account; Demo account; Mini account; Standard account; Zero spread account; Managed account; ECN account; Islamic account.
Spreads Variable spreads with spread betting Variable spreads Fixed spreads and variable spreads Variable spreads Variable spreads
Platforms Web Trader, Next Generation, MetaTrader4 Web Trader, Tablet and Mobile app Web Trader, MT4, MT5, AvaTradeGo, AvaOptions, Mac, Mobile Apps, ZuluTrade, Zupli Trade, MQL5 MT4, MT5, Mac, Zulu Trade, Web Trader, cTrader, Tablet, and Mobile apps MT4, MT5, IRESS, Mac, Web Trader, Tablet, and Mobile apps

Part 4: Some FAQs

1 – Is CMC a good broker?

CMC CFD is considered a low-risk broker with no minimum deposit and public trading recognition. It is a publicly traded, regulated platform with no operation of a bank.

2 – Does CMC Markets have a demo account?

Yes, they have a demo account for practice.

3 – Is CMC free?

CMC Markets does not have minimum deposits, but they have certain other fees which an investor has to pay accordingly.

Conclusion

So, that’s all for you to know about CMC CFD trading. We’ve tried to include aspects of the CMC Markets CFD trading, including the trading procedure, live examples, and a detailed comparison chart of CMC Markets with other top brokers.

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