CMC Markets has established itself as a prominent player in the online trading world, offering a range of platforms and services to suit both beginners and seasoned traders. While the firm boasts a number of strengths, including competitive spreads, innovative platform features, and a broad range of markets, there are also some drawbacks that may affect certain traders. From platform stability to execution limitations, this article explores the key pros and cons of CMC Markets, helping you make an informed decision about whether it’s the right broker for your trading needs.
Good Points
- Visually Appealing Platform: The “Next Generation CMC Platform” offers a visually distinct interface with colourful graphics and numerous features. While it may appeal to those who enjoy advanced visuals and functionality, it might not suit users who dislike visually intensive designs.
- Extensive Market Coverage: CMC Markets covers FTSE 350 stocks, All Smallcap shares, and the top 300 AIM companies, alongside UK stock market sectors. This breadth enables a more general market view without deep knowledge of individual stocks.
- Competitive Spreads: Spreads are generally good for shares and forex, with rates like 2-3 pips on major forex pairs. However, spreads can fluctuate based on underlying market volumes.
- Diverse Trading Platforms: CMC offers three platforms: a web-based version, MT4 and a mobile app. The mobile apps, particularly for iPhone and Android, are robust and feature-packed, including drawing tools, price alerts, and enhanced charting.
- Fast Execution: Claims include 100% automated trades, millisecond execution, and no dealer intervention. We still need to validate this claim out of user experiences.
- Customizable Platform: The platform is highly customizable with resizable panels, multiple templates, and real-time alerts, making it adaptable to various trading styles. The platform is excellent with good charting facilities if you know how to set up the trading layouts. You can create/save different templates so they can easily display different markets in varying time frames. Additionally, all the panels are movable and resizable so you can arrange the screen layouts however you want. I have the system just showing the FTSE 100 index price in a little floating window up in the top right hand corner of my screen as I write this – allowing me to keep an eye on that and do other things and even better this system will allow you to set alarms when whatever you are watching reaches a certain level! Being able to set up alerts is really useful and there are three types of alerts which can be selected. The first is a visual alert – it throws a bright red box into the centre of the screen – great if you only have half an eye on the screen. The second is an audio alert – it will play audio files and the third is the email alert – I set this to email my mobile if I am going to be away from the PC for any length of time.
- One Click Dealing: The new Next Generation CMC Markets platform supports one-click dealing (which is not on by default to help new clients familiarise themselves with the platform) – go into ‘Settings’ and choose order tickets and turn off ‘placing an order’. This will eliminate ticket confirmation and give you one click trading. You can also switch off auto stops and auto profits from ‘Settings’ as well in ticket settings. So you can deal using one click without margin stop loss and auto profit and ticket confirmation.
- Rolling Daily Contracts: These contracts automatically roll over without requiring daily closing and reopening, helping traders manage their positions efficiently.
- Advanced Order Support: ‘If Done’ and ‘One Cancels the Other’ orders on the spread betting platform are supported – an If-Done order is a way of linking two conditional orders together, so that if one of the orders is executed, then the other order is placed in the market as a result. For example, a trade may use a stop-buy order to open a long position with an associated stop-sell order to limit any potential losses. Therefore, if the stop-buy order gets executed, then the stop-sell order is placed in the market. However, if the stop-buy order is not executed, then the stop-sell order does not become active in the market. The new CMC Next Generation platform also supports automated margin stop loss orders which can be disabled if required.
- Guaranteed Stops: Available for a number of instruments, guaranteed stop orders provide an added layer of risk control. GSO’s must be placed at the same time as entering the market. If you wish to edit the stop, you must close out the position at market and then re-enter with the new GSO attached. CMC also have an additional limitation in that guaranteed stop losses cannot be placed in the last hour of trading. There is no maximum distance you can place the GSO from the current market price. The minimum distance to place a GSO on a share is 5% from the current price (for sectors and indexes it is at 1%).
- Commitment to Development: CMC has invested heavily in platform upgrades, including sophisticated charting tools with pattern recognition and over 66 technical indicators.
- Real-Time News and Analysis: The platform offers Dow Jones news feeds, expert analysis, and access to CNBC live feeds, keeping traders informed of market trends.
- Good Support: Phone and chat support receive praise for quick issue resolution, improving over past concerns.
- Suitability: Excellent to use if you’re profitable and a swing-position type trader. There are usually very few problems in my 5 or so years experience with CMC Markets other than when the markets are moving very fast or, presumably at times when everyone is winning!
Bad Points
- Platform Stability Issues: The trading platform can experience freezes or disconnections, especially during high trading volumes. You might also experience re-quotes (delays) especially in fast markets. One thing I would say is that you need to ensure that you have good memory on your PC otherwise the CPU can get overloaded leading to the platform freezing.
- Limited Contracts: CMC restricts trading to the nearest available contract, which can limit trading flexibility.
- Stop Management Challenges: With CMC you can’t amend your orders, you must cancel previous active orders and put in new ones. A real disadvantage I see is that CMC Markets will not automatically cancel any stop orders tied to a position once you’ve closed the position. This means that you still need to manually cancel the stops once you’ve closed an order unless you have specifically linked a pending order (i.e. through an if-done). This can land you in trouble if you forget to cancel a stop.
- Charting Limitations: The in-house charts are functional but lack the sophistication of third-party alternatives like Prorealtime, which is no longer integrated.
- Not Ideal for Scalpers: Scalpers may face delays, re-quotes, or being placed on dealer referral, which impacts fast-paced trading. If you try to scalp them you will quickly end up on dealer referral. Being put on ‘refer to dealer’ effectively means it takes at least a few seconds to confirm your trade and/or you get a re-quote when you open or close a trade. Seems to me that CMC Markets have never wanted the scalping business although they are not prepared to admit this. That is not in the least surprising, since they are dependent on trading on the LSE order book to match positions taken by what is probably a largish number of traders, often acting in unison or nearly so. Even with clever computers they would be dependent on trading using aggressive orders thereby costing themselves the spread and making ‘dealing for free’ totally uneconomic for those trades.
- Re-Quotes: In the past CMC somewhat had built a reputation for running stops and moving prices that do not reflect the underlying index. Also, there have been reports of re-quotes (although re-quotes can also be in the clients favour) and spiked out stops. However, it would be unfair on them to single them out, as their behavior is common throughout the market maker world. As they say ‘CMC Markets is a market maker and as such sets the applicable price. It is the customer’s responsibility to decide whether or not they wish to deal at those prices.’ Having said all this, their new ‘Next Generation Platform’ is designed to eliminate re-quotes.
- Spreads in Fast Markets: During periods of high volatility, spreads can widen significantly, sometimes reaching unusual levels. Spreads may get wider if there is a huge increase in client trading on a particular product. As they say: CMC Markets quote a two-way price and the quote indicates the price at which we are prepared to deal with you. However, this price is not available irrespective of the size in which you want to deal. As term 6.4 of our terms of business state, “if you place a Bet which by virtue of its size is deemed by us to be abnormal by reference to the relevant instrument or its volatility or its liquidity, it may be subject to special conditions and requirements as notifed to you by us at the time you place the Bet. In particular, we may quote a revised price or spread applicable to the proposed Bet which you are free, at your absolute discretion, to accept or reject.”
- Restricted Access to Small Caps: AIM companies and small-cap stocks are no longer quoted. Only FTSE350 shares now at +/- 3% over the benchmark interest rate.
- Index Policy: If a stock drops out of an index, CMC may cease making a market for it, and may require existing client positions on that stock to be closed after a deadline date – which policy doesn’t seem fair.
- Level 2 Data Costs: Access to advanced market depth data costs will cost you a fee per month.
Summary
CMC Markets offers a feature-rich platform with extensive market coverage, competitive spreads, and robust customer support. It excels in customization, mobile functionality, and risk management tools like guaranteed stops. However, issues such as platform stability, charting limitations, and policies affecting scalpers and small-cap traders can be drawbacks for certain users.
