CMC Markets Review: strengths & weaknesses
‘Top 3’ CMC Markets strengths
‘Top 3’ CMC markets weaknesses
1) Market leading leverage
Whilst undergoing our CMC Markets review, research found that the best forex broker leverage levels in Australia are 500:1, while firms like OANDA only offer 50:1. CMC Markets posses a leverage rate of 500:1. Although this rate can be found in other firms, this is a highly competitive when combined with the other key features of CMC.
Leveraging, which is also known as trading on margin, means you can make a profit if markets move in your favour, though you can also lose more than your initial deposit should markets move against you. This is because any profits and losses are based on the full value of the trade, and not just the deposit amount.
Forex is traded on margin, with margin rates as low as 0.20%. A margin rate of 0.20% can also be referred to as ‘500:1 leverage’ (leverage is commonly expressed as a ratio). This means you can open a position worth up to 500 times more than the required deposit to open the trade.
By having this forex leverage level, traders can have more efficient use of their funds while attracting a high risk. A lower percentage of the overall value needs to be held by an Australian forex trader while full exposure occurs. This means that higher profits can be achieved, but on the flip-side larger losses can be incurred as well.
An example of a 500:1 forex leverage strategy at work would be having $200 as underlying equity which would ultimately provide traders with $100,000 worth of funds for trading currency. Any changes in the currency pairs will amplify the losses or gains incurred which is a critical issue as explained below and must be understood when using our forex broker comparison. They also offer this same leverage for CFDs trading.
2) Guaranteed stops
The best forex brokers in Australia not only need to offer high leverage for brokers, but also help forex traders manage their risk. CMC Markets offers Guaranteed stop losses which are a key way to ensure losses on a trade don’t exceed the amount set.
As the only Australian forex broker to offer both 500:1 leverage and guaranteed stop losses this is the ideal platform for intermediate forex traders who require high leverage. It should be noted that without a guaranteed stop-loss feature a broker can lose more then their deposit, especially when high volatility occurs such as during interest rate announcements. This is commonly called spreads betting with more risk associated with the higher leverage.
Another nice feature of CMC markets is their trailing stop losses. This ensures stop gaps are moved when a currency pairing moves in the predicted direction leading to profits. When the currency then moves the other way by a certain amount of points the stop loss will come into force at the more favourable price.
3) Award-winning platform
Our CMC Markets Review found that unlike more of CMC Markets competitors this best forex broker Australia doesn’t offer a range of forex trading platforms to choose from. Instead, they focus on their own propriety forex platform called the ‘Next Generation platform’. This platform has features such as 100% automated execution, accurate pricing with no requotes and a customisable platform layout.
The CMC Nextgen platform has apps for the iPad, iPhone and Android which can be helpful for those on the go but most traders will want a mainstream platform for their office. The CMC Nextgen platform also allows you to trade on other financial markets including a stockbroking and CFD service. These services have one of the lowest trading fees of the major share trading providers in Australia backed by outstanding research based on the trading volumes made each month.
Another advantage of using the Next Generation Platform when you open a CMC account is that you get a free feed from Reuters news. You can even filter the news to make sure it’s relevant to your forex trading needs. You can also view client sentiment through the CFD platform.
The platforms demo account has no expiry time-frame and offers unlimited trade volume. For this reason, the demo feature is popular as the first step to currency trading.
1) Below average spreads
CMC Markets has below average spreads for the largest forex pairs, indices, and Commodity CFDs. Some of the spreads are shown in the table below, updated as per 02/01/2020. View the financial service guide to understand all the charges and fees of CMC Markets.
The account type you choose doesn’t impact the spreads, rather the type of spread betting offered. This primarily impact the spread betting of cryptocurrency. Below shows the two CMC Markets CFD account types.
Another account type is for share trading only. This is a cash settled trading account, margin loan (leverage) or sell share service.
Overall, when trading with CMC markets which uses a market maker model the spreads will be wider than a true ECN broker like Pepperstone. ECN trading accounts will have competitive spreads but they also attract commissions. Risk can also be increased which should be considered considering the high 500:1 leverage offered by CMC. It should be noted that as of January 2020 CMC stated that 77% of their retail investors lose money through their CFD trading facilities. Spreads and risk management tools should be considered closely when trading CFDs and other derivative products.
2) Lack of platform diversity
CMC Markets Platform is the “Next Generation” trading platform which is browser-based and supports complex order types and account analytics. The platform includes customisable charts, advanced studies, templates, customisable display styles. Clients can trade directly from the charts, and research and analysis trading tools, including screeners, market calendar, and social charting, are integrated into the platform. It also offered mobile trading across android, iPhone and iPad devices. The cross device functionality and technical indicators are the key strengths of the CMC Markets platform.
CMC Markets also now also offers MetaTrader 4 (MT4) which is the most popular forex trading platform worldwide. Unlike the CMC Markets platform it’s used by other international and Australian forex brokers. It’s popularity is due to it’s social trading, technical analysis and user-friendly interface.
MT4 also has advanced features for trading strategies from pattern recognition to an economic calendar. It has advanced chart types and drawing tools offering extra market insights such as customer sentiment. The online trading platform has a demo account and live account allowing uses to test trading in a simulated environment.
Pepperstone are the only Australian forex broker to offer 7 platforms including MetaTrader 4 and cTrader, the two most popular trading platform worldwide. The graph below shows a ranking of platforms created by brokers.
As you can see, the CMC platform is ranked the second lowest out of leading brokers. This is a concern as they only offer one platform. By comparison, Pepperstone, which was voted as the broker with the best trading platform, has 7 different platforms, including the world renowned MetaTrader 5 and cTrader. Clearly indicating customers prefer variety and reputable platforms rather than home grown ones
Our CMC Markets review found that the CFD Trading mobile app can do basically anything you want to do on your desktop. Traders can access CMC Markets’ trading instruments, complex order and account types, account details, screeners, and charting from the Android or iPhone apps.
The app is extremely intelligent. It allows clients to create their own layout, so whats important to them is the first thing they see on the screen, creating a truly personal experience.
Whilst the iPhone app includes fingerprint security, the Android version does not. Although the app includes fingerprint security in the iPhone version, there is otherwise no added security beyond the login password.
Ideally, the applications should include classical security features such as automatic sign out and verification of log in from other devices. Many traders trade with an incredible amount of money, as a lack of security is quite unnerving.
Overall, Authors CMC Markets Trading Review
Our CMC Markets review found it was the best forex broker for intermediate forex traders. This is because it offered high leverage, a strong trading platform and guaranteed stop-loss orders.
The company has also stood the test of time having been founded way back in 1989. With the ever-increasing rate of FX and CFDs brokers going out of business, CMC’s 25 years’ experience is reassuring. While it shouldn’t be the determining factor when selecting a reliable broker, knowing client funds are in safe hands provides traders with confidence.
The only reason that CMC Markets in our best forex broker comparison was voted higher for experienced forex traders was due to that broker’s marginally lower spreads which is noticeable when day-trading or adopting automation trading techniques. There was also improved execution speeds for both IC Markets and Pepperstone reducing issues such as slippage.
Furthermore, the other weaknesses of average security and lack of platform diversity can be concerning to potential clients, detracting slightly from the CMC markets experience.
CMC Markets Minimum Deposit
There is a $0 CMC Markets minimum deposit requirements on CFD or corporate accounts when trading through CMC Markets UK plc or CMC Markets Asia Pacific Pty Ltd. The $0 minimum deposit also applies to CMC spread betting facilities available to United Kingdom residences.
Other Information About CMC Markets
CMC was is listed on the London Stock Exchange and founded in 1989. It’s one of the largest forex brokers and CFDs brokers in the world with a presence in markets like Australia, Canada, New Zealand and the United Kingdom. In Australia, it’s regulated by ASIC while in the UK the local regulator is the Financial Conduct Authority (FCA). The registration number under the FCA is 173730.
CMC offers a wide range of educational resources. This ranges from technical indicators to platform guides. These educational resources range from videos, online guides to webinars. This comes from their Sydney staff who rate the broker at 64% according to Glass Door. The Sydney office also assist in their customer support across e-mail, live-chat to the phone. This support is designed for all market conditions and times of the day and night.