CMC Markets Review – Canadian CFD Brokerage

Since I had canceled my account with TimAlerts, I was searching for a new style of trading. I have tried options selling with limited success (for now), I have tried simply buying and selling regular stocks with no margin, and I find it almost impossible to make any sort of real money in a reasonable (ie: weeks) amount of time. I am also not  a long-term investor, so enter in CMC Markets. I am now somewhat a happy camper.

I first heard of CMC Markets from a co-worker whom was telling me all about the good points of it, namely:

• No-uptick rule for shorting. I can short a stock as quickly as I can long a stock. Immediately.. great for swing plays and reversals in market movement
• Massive leverage. This is good and bad of course, but I believe you need leverage to make money. (when starting anyhow)

I decided to open up a no obligation trial account to see what all the fuss was about.

To make a long story short, my trial went amazingly well. They gave me $10K in trial money, and I traded my way up to $29K in just over 2 weeks. Now THAT is serious money! Keep in mind that there were no commission costs, and I was trading full out all the time.

One thing that I have to mention here about CMC Markets, is that you aren’t trading actual stocks. You are trading CFD’s.. you can read the official definition here, however I can tell you that it’s similar to a ‘virtual stock market’. With the exception that the trades mimic REAL stocks and the money is most definitely real as well. The drawbacks being you  are not actually purchasing the stocks, so you do not get dividends, you do not ‘own’ any part of the companies that you are trading. This for me works out perfectly. I really don’t WANT to own most of the companies I trade in, I simply want to trade.. make money, and get out. The last thing I want is a bunch of documentation on stakeholders meetings and proxy votes!

My first impression of the interface was that it was limited. It was  flash based, which sort of threw me as I was expecting something else. It’s also Windows only (I use a Mac at home so I have to use virtualization software Parallels to run it). But after the trial I was very comfortable using it. On to my live experience, with live money!

The initial application form was like any other.. but one odd thing about funding, was that they needed a cheque first. No automatic banking, no wire transfers, they needed a hand written cheque from me. This wasn’t a problem, but I did find it odd.

After I was funded.. it was off to the races.. I had $2000 and my very first day I ended up trading my way to a loss of more than 1/2 of it!! BOO!! A few problems which I encountered with the software which pissed me off were “re-quotes”. Instead of the immediate transaction times I was getting with the trial, there would be a delay with some of the securities, most actually.. and then a ‘requote’ would come up. This would happen with market orders.. which pissed me off.. truthfully sometimes it saved me money as the price would keep going past the point I wanted to buy, but I would trade that off for immediate market order execution. In any case, the way around it, was to set limit orders, as long as the bid/offer was at your price… you would get the price requested, even if there was a delay. This was a lesson I learned later on. Another problem I encountered was the bid/ask delay. Sometimes even though my quoting software had a bid/ask of say 5.10/5.11.. CMC reported it as 5.10/5.15 or something like that.. it was slower to update.. however the few milliseconds of delay weren’t that big of a deal for me.

So I was down to about 800 after one day of trading.. and decided that I’d put in another $2000.. This was done via Bill Payment in my bank, and a MUCH smoother/faster transition. And on day 2, I was able to recover my account to being down only $500.I will also mention that I have since made a withdrawal of $500, and it was in my account the very next day. This is impressive to me.

My goal was to get to $10,000… then make smaller trades and try to cash out enough money  to pay off what I put in ($4000) and try to make some really good trades using leverage so that I could really grow my account without losing any original capital. I’ve gotten over the $10,000 mark twice so far.. and cashed out $500 in the meantime as I’ve mentioned, however I’ve made some large, poorly timed trades since that time which has brought my account back down below my goal.

One thing I LOVE about CMC is the leverage. I am able to make trades which are worth $20,000 without any costs even if my account is only at $5000. The only time I incur charges for this leverage is if I carry it overnight, which I have done, however the costs are very minimal.

The trade costs are now flat.. $5 a trade (new this year). This is great as one day I remember making over $300 worth of trades! (fortunately for me it was a $1500 profit day!).

Anyhow, I am still very much active using CMC Markets. I do think it’s the ideal platform for day-trading. However, that being said.. I also think it’s only idea for the trading itself. Not for the research, not for alerts, not for much else. I use ThinkOrSwim for my quotes, alerts, etc. I find it’s a much more stable platform and much less sluggish. I think between the 2 systems, I have a very good tandem going on.