Best Thread CMC Markets owner answers your questions

[Physicsman]

Hi PC,

Thanks for the speedy reply - it helped a lot to clear up my confusion on the subject. Don't worry, it didn't confuse the matter further at all!

From what you've written on this thread, your next gen platform sounds very promising so I'm going to give it a try.

As an existing CMC client on the Marketmaker platform, do I need to fill out an application form for a new account, or can I call your client services and say "I've got a Marketmaker account and I'd also like to open up a next gen account?"

Thanks!

PS: although my previous question was the first post on your thread, it isn't my first post on the site (Trade2Win). I'm just one of the legion of Lurker's who tend to read the information posted but don't write much ourselves. :cheesy:

 

[Ross Spur]

Hi Ross
You said it yourself ''generally'' you didn't say 100 percent of the time. Nobody has fixed spreads 100 percent of the time because of market volatility. The spreads of any major asset class are determined by the exchanges, market makers and banks etc. not spread bet firms. If the spread widens in the under line market doesn't matter if you have variable spreads or fixed spreads the spread bet firms spreads widen. If you want proof come and watch the banks that are quoting us on forex over gdp numbers. Another example, when the Dow is closed the spread betters offer wider spreads than when the market is open. why because the under line market is illiquid and that is the market spread. I repeat markets determine spreads not spread betters.

people make a lot of fixed or variable spreads but the bottom line is spreads move up and down with the markets. I suppose technically if you trade with sb firm in normal markets on fixed spreads you have more of a chance of executing the trade because fixed spreads normally take into account normal market fluctuations. with variable spreads you probably get more ticket cancellations but do not know this from experience and I do not have evidence of this just thinking logically. What I do know is that generally clients want to trade quickly without re quotes and ticket killing. Spreads are important at all times but getting the trade away in normal or volatile markets is just as key.
tks pc

We seem to be agreeing and disagreeing at the same time again! Yes, I know that the spreads of major asset classes are determined by exchanges, banks, etc, but that's the point. SB markets aren't the 'real market, they're the market that the SB company makes, so you do control the prices and the spread. T&Cs always make it clear. If the spread on the real market widens and a SB is committed to offering a fixed spread (as happens in FX), that's obviously a potential risk and might seriously upset your hedging.

Of the SBs I've used, one had a constantly variable spread and others changed the T&Cs (I think as a result of MiFID) to say in a very ambiguous way that although the spread was normally fixed they could change it when they wanted.

 

[uchiki]

Peter,
I appreciated the call from Michelle. Have since tried to post a detailed reply on overnight financing twice, but for some reason, it seems to be being intercepted by moderator.
I've received some email follow up from CMC. One outstanding clarification, then I will try to post tomorrow.

 

[Ross Spur]

Hi Ross
Didn't realise you were expert on how spread bet firms make their money.

I think the term spread betting is a bit misleading. I believe spread bet to be the ultimate way to trade the financials markets if you live in UK. Providing you work with top firm like cmc where the execution, pricing, spreads and service are strong.
Spread betting is the modern day stock broker and as such most spread bet firms of any repute have to treat a spread bet as a financial product and hedge the risk accordingly. I did not start my life as spread better. I worked in banking as a forex dealer for 15 years and the way we hedge forex spread bets here is exactly the same as when I hedged forex exposure in a bank.
You are wrong to assume that spread optimisation is not part of the way we make our money, it is a key component of how we manage risk.
Also if you have a sizeable book of business (which we do) then you just cannot sit back and wait for clients to lose money. there are all sorts of issues with that namely capital adequacy, risk controls, exposures, major loss potential. I suppose if you were a small spread bet firm with a couple of hundred clients and plenty of capital you could operate this way but we are not.. we have a share book that runs into the hundreds of millions and billion dollar plus turnover in forex daily, not even thinking about our commodities and index books. I would need a reinforced pair of under pants if I ran the risk on that lot.

hope that helps
peter

I'm not an expert on anything, although after about ten years of SB-ing I'm in quite a good position to comment on how you make your profits.

Nor was I casting aspersions on CMC -- all I meant was that it's naive to believe that SB companies make their profit only from the spread. If they did, scalpers would be welcomed with open arms, not flagged up as clients who try to take unfair advantage.

I can't see how the term spread betting is misleading if that's what we're actually doing, as distinct from buying and selling anything.

 

[PC at CMC Markets]

Hi Physicsman

Nothing wrong with a bit of lurking now and again.

The best thing for you to do if you want to give next gen live account a try is to go on line and fill in the application form. We have to treat you as a new client because we have to go through all the regulatory checks again but because you are existing client this should not take too long.

You can keep your market maker account open and you can trade live on next gen and market maker at the same time. There is no requirement for you to close one platform to trade on another platform. you can keep them both live. There are no plans to close off market maker platform. you will have to fund next gen account either with new funds or internal transfer from your market maker account. You will need to leave sufficient funds on both accounts to trade both platform. sorry know that is obvious but it is for other lurkers reading this blog.

If you have any problems you can either blog me on here or you can contact Vaugh Moody on direct line 0203 003 8422. he is in office till 6pm today and if he is not there others will pick up your call. I do not know your name so when you call refer to this blog. Vaughn follows the blog as well.

Once you are up and running let me know what you think of new platform. Good luck with your trading and thanks for your time and confidence in us.

best regards peter

Hi PC,

Thanks for the speedy reply - it helped a lot to clear up my confusion on the subject. Don't worry, it didn't confuse the matter further at all!

From what you've written on this thread, your next gen platform sounds very promising so I'm going to give it a try.

As an existing CMC client on the Marketmaker platform, do I need to fill out an application form for a new account, or can I call your client services and say "I've got a Marketmaker account and I'd also like to open up a next gen account?"

Thanks!

PS: although my previous question was the first post on your thread, it isn't my first post on the site (Trade2Win). I'm just one of the legion of Lurker's who tend to read the information posted but don't write much ourselves. :cheesy:

 

[PC at CMC Markets]

HI Ross
Not an expert in anything, I think you underestimate yourself.
I already explained we make our money from more than the spreads, from flows, from natural hedging, from accumulating positions, hedging, nothing new in there all old stuff just that it has become easier to manage risk because most trades are done on the Internet so we can gather small and big deals and net them off quickly.
This improves profit potential but doesnt always mean profits on individual deals. With a book size the size of ours we operate a flow model.
Would never expect you to cast aspersions on CMC, you are one of our biggest fans. ha ha

have a nice evening
Arsenal playing tonight playing the mighty Ipswich. we need to win this Carling cup but have a feeling that West Ham have their name on the trophy after their second goal last night.

cheers pc

I'm not an expert on anything, although after about ten years of SB-ing I'm in quite a good position to comment on how you make your profits.

Nor was I casting aspersions on CMC -- all I meant was that it's naive to believe that SB companies make their profit only from the spread. If they did, scalpers would be welcomed with open arms, not flagged up as clients who try to take unfair advantage.

I can't see how the term spread betting is misleading if that's what we're actually doing, as distinct from buying and selling anything.

 

[PC at CMC Markets]

Hi Ross
to a certain extent our hands are tied on making the spread bet prices. Because you are betting we have to build in the commissions, exchange fees, betting levy etc into the spread price. what you get in effect is the net price with nothing added on.
I know you know all this but just want to state it for other bloggers reading this space.
cheers peter

We seem to be agreeing and disagreeing at the same time again! Yes, I know that the spreads of major asset classes are determined by exchanges, banks, etc, but that's the point. SB markets aren't the 'real market, they're the market that the SB company makes, so you do control the prices and the spread. T&Cs always make it clear. If the spread on the real market widens and a SB is committed to offering a fixed spread (as happens in FX), that's obviously a potential risk and might seriously upset your hedging.

Of the SBs I've used, one had a constantly variable spread and others changed the T&Cs (I think as a result of MiFID) to say in a very ambiguous way that although the spread was normally fixed they could change it when they wanted.

 

[PC at CMC Markets]

thanks Uchiki have a nice evening.
regards Peter

Peter,
I appreciated the call from Michelle. Have since tried to post a detailed reply on overnight financing twice, but for some reason, it seems to be being intercepted by moderator.
I've received some email follow up from CMC. One outstanding clarification, then I will try to post tomorrow.

 

[PC at CMC Markets]

hi guys going home now all blogged out for the day. speak again tomorrow.
cheers peter

 

[uchiki]

Have tried to post a complete update on overnight financing charges, but again referred to moderator. It includes one website link (a page at cmc) and is necessarily a longish post. I now have the info I need. Hopefully the post will appear for the benefit of others...

 

[barjon]

Have tried to post a complete update on overnight financing charges, but again referred to moderator. It includes one website link (a page at cmc) and is necessarily a longish post. I now have the info I need. Hopefully the post will appear for the benefit of others...

uchiki

sorry - your post was caught by the automatic modbot. it's here now http://www.trade2win.com/boards/spr...er-answers-your-questions-42.html#post1380470

jon

 

[gle101]

hi gle101
I am not aware of any other spread bet firms that generates an automatic margin stop loss every time you open a trade (also a profit take as well at same time) can you tell me who else does this.
we have operated regular stop loss orders and limit orders on our platformw since 1996, for forex, 2000 for cfds and 2001 for spread bet, thought I would put you right about the facts.
the margin stop loss is new concept in that it is generated automatically when you open trade. it can be switched off and we put it in voluntarily. I have stated before on this blog we want our clients to make money and anything we can do to help clients during volatile market periods we are happy to assist. Don't forget we have been offering trading education for over ten years now.

thanks peter

Ragarding a user predefine stop loss in points on market order ticket.
I do believe IG have got it, as well as GFT, Worlspreads and Capitalspreads.
Capitalspreads and all their white labels for sure, as I have been trading with them for years. Smart Live Market with their MT4 platform. And now finally CMC. Sorry to say not one of my favorites, Cityindex, but they got so many other advantages. I do hope we are talking about the same thing, you are mentioning a margin stop loss, what do you mean by that? On the same margin requirement as the position or stop loss same as margin, please clarify.

 

[pster]

I wrote:
Peter, on your system, for candlestick charts, can you sometimes have two dashes in a row when the market is dead? Like this: _ _

You replied:

hi pster
good point and it is on its way. the fix is in production now and I think we are weeks away not months.

thanks for blogging
peter

But I wasn't making a point Peter. I was asking a question. I'll ask it again:
For candlestick charts on cmc, do you sometimes have two dashes in a row when the market is dead? Like this: _ _

 

[PC at CMC Markets]

Good morning pster
Sorry to misunderstand your question. I understand now.
You are right there are _ lines on charts when markets are closed. Normally weekends. We are removing them and should be taken out in next week or so.

thanks Peter

I wrote:
Peter, on your system, for candlestick charts, can you sometimes have two dashes in a row when the market is dead? Like this: _ _

You replied:



But I wasn't making a point Peter. I was asking a question. I'll ask it again:
For candlestick charts on cmc, do you sometimes have two dashes in a row when the market is dead? Like this: _ _

 

[PC at CMC Markets]

Good morning gle101

Not feeling great today my team were turned over by the mighty Ipswich Town when I was expecting a comforting 5 zero victory. Just shows what I know about footie diddly squat....

so what I mean by margin stop loss, is the following.
I just opened an up bet ticket on euro/dollar on my demo platform when the ticket was generated I put in £2 for the stake it then showed an automatic stop loss at 1.299760 or or £262.40.
The £262.40 is the amount of margin we need for a £2 up bet on the euro/dollar and this stop loss is placed automatically when you open the trade. I believe we are the only company that offers a stop loss based on the margin for each bet. There is also a profit take which is two times the margin requirement. so the profit take automatic limit order is at 1.339050 or £524.80.

I know other companies allow you to place different levels of stops but with us we calculate the margin for you automatically and place the stop for you with profit take as described above. all orders are tagged. The opening bet, the margin stop loss and the profit take. if the stop gets hit the limit is automatically cancelled. You can adjust stop loss and limit levels at any time during the whole process.

So my question is.
Do any other spread bet firms calculate a margin stop loss for you when you open a trade and place that stop loss along side the trade. I do not know of any other company that does this. do you. (you can switch the process off to allow one click trading and place manual, tagged stops and limits from position keeping window)

cheers pc

Ragarding a user predefine stop loss in points on market order ticket.
I do believe IG have got it, as well as GFT, Worlspreads and Capitalspreads.
Capitalspreads and all their white labels for sure, as I have been trading with them for years. Smart Live Market with their MT4 platform. And now finally CMC. Sorry to say not one of my favorites, Cityindex, but they got so many other advantages. I do hope we are talking about the same thing, you are mentioning a margin stop loss, what do you mean by that? On the same margin requirement as the position or stop loss same as margin, please clarify.

 

[PC at CMC Markets]

Hi Uchiki
Many thanks for taking the time to blog this info.
regards peter

Have tried to post a complete update on overnight financing charges, but again referred to moderator. It includes one website link (a page at cmc) and is necessarily a longish post. I now have the info I need. Hopefully the post will appear for the benefit of others...

 

[spreadbettingnurd]

PC ,why is the maximum stake that CMC Markets allows in equity spread betting so small[especially when compared with your spread betting competitors ] ?

I suspect that the reason is because spread betting on equities offers a greater possibility for a trader to win compared to trading on cable currencies or indices.

I look forward to reading your answer.

 

[PC at CMC Markets]

Good morning sbgnurd

Thanks for your question but it has nothing to do with clients trading ability. It is everything to do with liquidity on any spread bet product we offer.
When we quote a sb price that price is good for an amount. I just checked on vodafone and it is £500. That is not the maximum stake you can take on vodafone with us. It is the maximum stake that the quote is good for. You can hold a position of £1000 per point but you will have to do it in two deals. at the moment we are quoting vodafone 170.626 to place up bet. you can hit that price upto £500 per point. beyond that we quote you again.

Each product is different. the more liquid the product the more you can hit the price for. Remember our price is good for an amount, it is automatically executed without dealer intervention.

if you open a ticket and click on the chevron in top left hand corner you will find product details and this lists what every price is good for.

We could easily increase the amount we are good for on each product by going down the depth of market levels and quoting an average price for any amount but that would disadvantage clients that only want to do say £5 per point on vodafone.

In coming weeks there will be facility to hit our prices for larger amounts beyond what we offer now. However, all of our prices are very competitive and you can bet on very decent amounts.

hope that helps
peter

PC ,why is the maximum stake that CMC Markets allows in equity spread betting so small[especially when compared with your spread betting competitors ] ?

I suspect that the reason is because spread betting on equities offers a greater possibility for a trader to win compared to trading on cable currencies or indices.

I look forward to reading your answer.

 

[spreadbettingnurd]

Peter,many thanks for your reply - I appreciate you taking the time SBN.

 

[PC at CMC Markets]

That's what I am here for SBN

cheers Peter

Peter,many thanks for your reply - I appreciate you taking the time SBN.