Making a claim against a cfd provider

[djgandy]

CMC are a**holes but still you opened ridiculous positions.

lets say FTSE @ 4000 and S&P @ 1000

500 FTSE x 4000 = £2M
1000 S&P X 1000 = $1M = £600,000

£2.6M of positions.

I smell troll.

 

[fibonelli]

The OP should've posted this on a Gambling thread.

FTSE @ £500/point is equivalent to a £2.5m position in the underlying. An insane example of over (gambling)/trading.

I posted this quote on another thread earlier this week.
“A very successful hedge fund manager recently told me that his project for the next six months was to increase his trading size. He never risked more than 0.5% equity on a trade – and was going to teach himself to risk 1%. Good traders tend to stay well below the 2% limit” Alexander Elder

Also, I can't understand with a £30k pot, why trade OTC CFDs when you can trade DMA CFDs or the futures contracts.

 

[dreamer628]

Dreamer

OK, how's this then. You open an account with £30k and last Monday (week back) buy the FTSE at £500 a point. The £30k is quickly lost and then the market falls several hundred pounds the next few days.

The SB firm though is 'happy' though because you've said that their £600k+ cash is on the way

C'mon, it just aint going to happen. People don't have a lot of sympathy for you (don't confuse this with not liking you) because you traded SO agressivly on such a small amount of money. Surely if you make your living in this game you should have understood that your position was SUPER HIGH risk the moment you put it on. High risk in regards to potential p&l and high risk in regards to be forced out because not nearly enough excess free cash in the account.

Ok, a lot of the points made here I have already answered in previous posts, but there are two new issues raised which do not require repeating myself. Beforehand though, I repeat, your 'it just aint going to happen' example is one that I have personally experienced with IG without it being anything particularly unusual. Having said that, as I wrote in my second post, in which I described standard practise amongst cfd providers, most do have a limit, whether the £10000 of cityindex or the £20000 of spreadex, above which they require payment to arrive on the same day.

In relation to the issue of the large stake with a small deposit, that is how cfd/spread trading accounts operate, and I am well aware of the risks if the positions move against me. I have no issue with giving profits back to the market if my analysis turns out to be wrong. In the event I was 100% correct on this trade, which is probably making the readers feel rather jealous, and in fact if those positions had been kept open I would by now have made approximately £500,000. Perhaps I should sue them for that as well since it was their atrocious customer service that caused the loss. The point is that the risk should be that of the market moving against me, not of their refusing to answer the phone to take a payment that I can easily afford.

Those who think I am mad and gambling should bear in mind that I began trading 1 year ago with £5000, and in that time have made several million. It's called having courage in your convictions. I only trade when I am certain of the market movement over the next few days and when I do I see no reason to hold back. If I am unsure I will simply not trade.

I am not looking for sympathy, if I was I would go to a psychotherapist. Further it is impossible for readers to like or dislike me as they do not know me. I am writing so that others will know that cmc alone of the cfd/spread providers have an unstated policy of requiring you to have sufficient funds in the account to cover any potential losses from the outset. To many that may seem perfectly reasonable. If they were a futures broker it would be reasonable. But they are not, they are a provider of spread betting and cfds, and as such have a vastly inferior margin procedure to all of their competitors. Again anyone who disagrees simply hasn't any experience with other cfd/spread trading providers.

My case is however not based upon their inferior procedures as their terms and conditions are wide enough to allow them to do pretty much whatever they like. My case is rather that by refusing to answer the phone for over twenty minutes and closing my position after two, they didn't allow me to make a margin payment in accordance with their own t&c. This caused me a loss which should have been reversed once they discovered that I had phoned immediately to make payment and was delayed by THEM.

 

[dreamer628]

dreamer628,

you clearly need to get to the bottom of this, especially with the amounts involved.

what you need to do is:
+ clarify exactly what positions you took, the entry price, and the margin required for each position.
+ do their charts show the price going against you to the extent they say?
+ can you show that accounting for the price moves, your account had sufficient funds?
+ you should have the margin-call email with date-stamp, and you should be able to correlate this with your phone-log of contacting them, to prove you responded immediately.
+ can you find the relevant part of your terms and conditions that state the time-frames you are allowed within which to respond to a margin-call?

sorry to hear of this, and hope you get it sorted.
keep us posted.

Thank you very much for your advice, I will take note of the factors that you list when pursuing the issue.

 

[dreamer628]

What do you mean by "a sell of 500 on the ftse 100 and 2500 on the S&P 500"?

You don't mean £500 a point and £2,500 apoint do you?

No, this isn't spread betting but contracts for difference. These are priced in the local currency.

 

[dreamer628]

CMC are a**holes but still you opened ridiculous positions.

lets say FTSE @ 4000 and S&P @ 1000

500 FTSE x 4000 = £2M
1000 S&P X 1000 = $1M = £600,000

£2.6M of positions.

I smell troll.

They are only ridiculous if you are trading with a small amount of capital and are uncertain of short term (1-3 days) market movements.

 

[keano]

Those who think I am mad and gambling should bear in mind that I began trading 1 year ago with £5000, and in that time have made several million.

That's nothing compared to my boyfriend, Spanish89....
Although you should probably be on a few magazine covers with those sorts of returns.

 

[tommac]

Originally Posted by dreamer628
Those who think I am mad and gambling should bear in mind that I began trading 1 year ago with £5000, and in that time have made several million.

Then why are you asking our advice -go call a lawyer--dreamer

 

[dreamer628]

The OP should've posted this on a Gambling thread.

FTSE @ £500/point is equivalent to a £2.5m position in the underlying. An insane example of over (gambling)/trading.

I posted this quote on another thread earlier this week.
“A very successful hedge fund manager recently told me that his project for the next six months was to increase his trading size. He never risked more than 0.5% equity on a trade – and was going to teach himself to risk 1%. Good traders tend to stay well below the 2% limit” Alexander Elder

Also, I can't understand with a £30k pot, why trade OTC CFDs when you can trade DMA CFDs or the futures contracts.

As above it is only insane if you are undercapitalised and uncertain of short to medium term market movements. Staying below 2% is useful for those who are uncertain of what they are doing as it is likely to result in smaller losses. After all 90% of traders consistently make losses and hedgies have shown themselves no different. Fundamentally however this remains an educated gambling technique that is focused on attempting to make slightly more profit than loss, whilst I never trade unless I have a high degree of confidence in my projections, using a system that I devised BEFORE I began trading. After being made redundent just over a year ago and having no success in job hunting I commited myself to studying charts to see if there genuinely was a way to forecast with a high degree of probability what was going to come next. When I concluded that I formulated a successful method based upon historical back-testing I put it into practise using the £5000 that I still had left in savings. As I mention above, over the last year I have turned this into several million using cfds and sb, and as this is all I know I have continued to use the same providers. Perhaps it is time that I apply for one of those those courses that train you to trade with company funds, so that I can learn about more widely used platforms such as those you mention. Thank you for your advice.

 

[dreamer628]

Then why are you asking our advice -go call a lawyer--dreamer

Good point, I was just wondering whether it is worth using the financial ombudsman's service as this would force them to reevaluate their procedures. But I was wondering whether they tend to get involved with cfd disputes or are more likely to just turn a blind eye and focus on 'more important' issues, ie those affecting a lot more people. Cmc are officially regulated by them, so I was wondering whether anyone knows of the finomb ever getting involved with such disputes, ie those between traders and their brokers.

 

[djgandy]

They are only ridiculous if you are trading with a small amount of capital and are uncertain of short term (1-3 days) market movements.

No they are ridiculous full stop. With £2.5M of shares a 1% movement would eat all your capital. Margin is reserved as with £2.5M @ 200:1 with £30k you only have £15k free. That's less than 1% movement! You obviously have more money than brains though (or maybe none of either). CMC have not screwed you over. If the market fell 10% which is perfectly normal these days you owed them £250k. If you don't cough up who pays eh?

You already said you had profit and didn't take it. What were you waiting for?

Tell you what, why don't we all get £10M together. We'll use the 200:1 leverage CMC give and buy £2B of shares then whine when they close us out as soon as we even get near a margin call.

Anyone using more than 10:1 leverage is playing dangerous games and I'm not surprised they closed your positions. My brother spoke to a CMC rep the other day and they said they stopped doing demo's because it encouraged recklessness. You are a fine example of recklessness. If you can predict the market so well you can throw 90:1 leverage at it, why not throw 9:1 and win every day? ~200 trading days a year @ 0.5% profit is a lot of money.

90:1 leverage, leave that to the CDS markets.

 

[dreamer628]

No they are ridiculous full stop. With £2.5M of shares a 1% movement would eat all your capital. Margin is reserved as with £2.5M @ 200:1 with £30k you only have £15k free. That's less than 1% movement! You obviously have more money than brains though (or maybe none of either). CMC have not screwed you over. If the market fell 10% which is perfectly normal these days you owed them £250k. If you don't cough up who pays eh?

You already said you had profit and didn't take it. What were you waiting for?

Tell you what, why don't we all get £10M together. We'll use the 200:1 leverage CMC give and buy £2B of shares then whine when they close us out as soon as we even get near a margin call.

Anyone using more than 10:1 leverage is playing dangerous games and I'm not surprised they closed your positions. My brother spoke to a CMC rep the other day and they said they stopped doing demo's because it encouraged recklessness. You are a fine example of recklessness. If you can predict the market so well you can throw 90:1 leverage at it, why not throw 9:1 and win every day? ~200 trading days a year @ 0.5% profit is a lot of money.

90:1 leverage, leave that to the CDS markets.

Wow there are some thickos out there. I only hope you can count:

1. A 100% movement would not eat up all of my capital.
2. To the contrary, I only have money now as a result of my brain, which at 153 is in no shortage of any nature. The points that you make demonstrate an incontrovertible lack of either.
3. Actually if the market fell 10% I would have made £250k at £2.5m.
4. The market fell more than 10%, so I would have made more than £250k, which I did today (£438k and counting) despite cmc by using Ig.
5. Why not take a >30k profit when I saw it? I was not trading for five minutes for a £30k profit. I was - and still am - trading on a 1 week scale for a £2m profit.
6. Sorry but I'd need a psychotic break before I let my capital/trades anywhere near your control.
7. If the leverage provided is not to be used it shouldn't be provided. Obviously you have no experience of cfd/spread trading with Ig/City/Spreadex/likely everyone else.
8. As explained previously - if for the benefit of the literate - I only trade when I have a high degree of confidence in the market's movements over several days. Making several thousand per trade several times on an intraday basis is whole different kettle of fish, and in any event would be more effort than it is worth for me. For those who successfully trade in that manner, full credits to them.
9. Why not use 9:1 leverage? By the same logic why not use 5:1 leverage. Why not use 1:1 leverage. Indeed why not use 0.00001:1 leverage, that would help protect my capital! So as to increase the rewards. So as to grow capital at a faster rate. Of course someone who cannot understand why anyone would not take a 30+k profit when obviously in the very short term movements can occur in the opposite direction will not be capable of understanding the concept of conviction trading. But then with this mindset you would be better occupied baking bread for a living and using your capital to buy gilts. Not a bad idea either. After all, as mentioned previously over 90% of traders consistently lose money.

If you aren't confident you can make it and are unwilling to take risk - or 'too much' risk then you are logically better off staying out altogether. This way your capital will all be very safe. But then it won't grow either. Personally I have no intention of dying in the single millions. Of course if anyone doesn't employ any risk management whatsoever they are almost certain to go broke. But then I do.

So I will continue using leverage for as long as it is provided on a significant scale relative to my overall capital.

And frankly if that displeases you I couldn't give two hoots.

 

[djgandy]

So you're going to be pedantic. By fell it was obvious I meant the market moving against you by 10%. Since you obviously make so much money why did you not add extra cash to your account in the first place so you didn't get margin calls.

Why not use 90:1 leverage when leverage is 200:1? Because it leaves no room for error. That's why. 10:1 leaves huge margin for error.

You are confusing risk with mindless betting. At the end of the day I'm not the "smart ass" that lost my money.

 

[dreamer628]

So you're going to be pedantic. By fell it was obvious I meant the market moving against you by 10%. Since you obviously make so much money why did you not add extra cash to your account in the first place so you didn't get margin calls.

Why not use 90:1 leverage when leverage is 200:1? Because it leaves no room for error. That's why. 10:1 leaves huge margin for error.

You are confusing risk with mindless betting. At the end of the day I'm not the "smart ass" that lost my money.

As I wrote in my second post on page 1 I would have been perfectly happy to credit the account with the necessary funds to cover any short-term movements against me or given them authorisation to automatically bill my debit card with any amounts necessary to preserve my positions had there been any indication in their t&c that they will liquidate positions within two minutes of overrunning margin whilst not answering the phone to take payment for over twenty minutes making it impossible to deposit sufficient additional funds following a margin call before closing positions. But to the contrary the standard practise amongst other providers and their own t&c provide an extended period for making the necessary payments following a margin call.

As all my previous (and current) providers give anywhere between several hours to 3 working days to make payment they are providing one with room for short-term error even when full leverage is used. Having assumed that their procedures would operate in the same manner as their competitors, and indeed their own t&c state that they normally do give up to 3 working days following margin calls I reasonably expected that the position would not be immediately closed once the margin trigger was encroached without allowing sufficient time for me to top up. If this was not standard industry practise then of course you would be right, it would be insanity to take so heavily leveraged a position with so little margin for short-term error.

Again I do not take a position of any size whatsoever if I am not thoroughly confident in the position moving significantly in my favour over the subsequent days. If I did not see a predictable enough pattern forming I would never risk another penny until I did. I am actually far more concerned with getting my trades right than with making regular profits. I only need a few 'big ones' every now and then to keep doubling my capital.

 

[north5]

I think one of your problems here was that if you had moved to CMC as a new customer with no history then they have no idea of your ability to meet the margin calls - and at the end of the day they have the option to keep your position or close it when this happens. With no history to go on then it looked like a big gamble that wasn't backed properly - so of course they closed it.

 

[A Dashing Blade]

. . . But to the contrary the standard practise amongst other providers and their own t&c provide an extended period for making the necessary payments following a margin call. . . .

But what does the small print say?

As all my previous (and current) providers give anywhere between several hours to 3 working days to make payment they are providing one with room for short-term error even when full leverage is used..

I would never be a customer of a CFD provider that gave clients 3 working days to meet margin calls. One day that company WILL be blown out of the market.

Having assumed that their procedures would operate in the same manner as their competitors, and indeed their own t&c state that they normally do give up to 3 working days following margin calls . . .

. . . I reasonably expected that the position would not be immediately closed once the margin trigger was encroached without allowing sufficient time for me to top up.

In these markets? Rubbish. It would be absolutely UNreasonable for yiou to assume that.

If this was not standard industry practise then of course you would be right, it would be insanity to take so heavily leveraged a position with so little margin for short-term error.

Nope. It's insanity to ever take so highly a leveraged position

 

[keano]

Check out elitetrader. Everyone there is a millionaire/billionaire just like you.....

 

[arabianights]

Also, I can't understand with a £30k pot, why trade OTC CFDs when you can trade DMA CFDs or the futures contracts.

Because this guy would blow half his account through slippage when his (non existant) stops were hit in the current environment

 

[dreamer628]

I think one of your problems here was that if you had moved to CMC as a new customer with no history then they have no idea of your ability to meet the margin calls - and at the end of the day they have the option to keep your position or close it when this happens. With no history to go on then it looked like a big gamble that wasn't backed properly - so of course they closed it.

Fair enough, but once I had reached the payments desk and made them aware that I had been kept on hold for over twenty minutes, having responded immediately to the request for payment they should have taken the extra funds and reopened my positions as I had evidently NOT failed to meet the request for margin.

 

[chilltrader]

did you dream this up?