FAST FACTS
• Fees: Spread cost; Extra fee for guaranteed stops; Commissions; Overnight financing expenses; Inactivity fees
• Best Overall Forex Broker and Offerings Variety
Spread bets and CFDs are complicated instruments that carry a high risk of fast financial loss due to leverage. 80% of retail investor accounts with this supplier lose money while spread betting and/or trading CFDs. Consider whether you comprehend how spread bets and CFDs operate and whether you can afford the high risk of losing money.
CMC Markets (CMC), formed in 1989, is a well-established, publicly traded, and well regarded U.K.-based financial services company. A forex broker that has successfully adapted to the dynamic internet brokerage environment. CMCX is the ticker symbol on the London Stock Exchange (LSE) where the company is listed. CMC, like many other forex brokers, does not accept U.S. clients.
This, along with the ubiquitous MT4 (downloadable) platform and a working mobile application, constitutes the entirety of CMC’s online offerings to consumers. CMC gives traders with access to a vast array of CFDs and spread betting options across multiple asset classes. In addition to a larger-than-usual selection of forex, commodities, indices, and individual stocks, the product roster also includes a comprehensive listing of government bonds and 14 cryptocurrency offerings (12 cryptos + 2 indices), providing an overwhelming number of potential trading opportunities for all types of traders. In addition, the broker offers dynamic, competitive spreads that expand or shrink based on trade size, and client accounts are protected against negative balance conditions.
Dedicated sites for professionals and institutions demonstrate CMC’s increased dedication to competent traders, but higher-level incentives, including as rebates and a free API interface, are only available to those who qualify as “professional” traders. Nonetheless, all account holders have access to guaranteed stop-loss orders (GSLO), free bank wire withdrawals, and other advantageous features. CMC Markets is the Best Overall Forex Broker for 2020, as determined by Investopedia’s rating algorithm, which took into account this broker’s wide product offerings and top-tier placement in multiple review categories.
KEY TAKEAWAYS
• Recognized as the Best Overall Forex Broker and Best for Offerings Variety.
• CMC Markets is a great fit for all types of traders because to its extensive product offering and user-friendly, feature-rich platform (Next Generation).
• CMC Markets focuses on customer service, research facilities, and educational materials.
Who is CMC Markets for?
CMC Markets is suitable for all types of traders, from rookie retail traders looking to dip their toes into the online trading arenas of forex, CFDs, and spread betting to seasoned veterans seeking exposure to a wide range of products. The firm’s fees are among the most competitive in the industry, and it rates well on several of our lists. The organization is selected as Investopedia’s Best Overall Forex Broker for 2020 and Best Forex Broker for Offerings Selection.
Pros
• Extensive selection of products
• Governed by FCA (U.K.)
• Emphasis on customer service and education
• Research facilities are the best in the business
• Provides security for client accounts
Cons
• Does not accept U.S. clients
• Differences between MT4 and Next Generation
• Exorbitant CFD spreads on particular indices
• No capabilities for backtesting or automated trading
The Pros Described
• CMC Markets has one of the most extensive product libraries in the online forex brokerage industry. As described on its website, clients can trade up to 10,000 instruments, which creates several new options, particularly for portfolio managers with longer-term horizons.
• CMC Markets is regulated by the Financial Conduct Authority (FCA #173730), which is one of the most prominent regulatory authorities in the UK and is highly regarded internationally for ensuring that market activities are fair for individuals and businesses alike. A firm’s legitimacy is significantly enhanced by the fact that it is governed by a respectable government-backed organization. Traders understand the inherent risk of markets, but they would also like the piece of mind that their funds are not exposed to risks other than those they are assuming, such as counter-party risk. Moreover, segregated customer money are stored in a variety of U.K. and European banks in order to better diversify risk.
• CMC Markets prioritizes customer care, which includes 24-hour telephone support, live broker access, and a chat facility. Together with their educational programs, this propelled them up the ranks. The ability to easily contact a broker is essential for everyone involved in online trading.
• It is commendable that CMC Markets is dedicated to providing clients with superior research. Comparable to the finest online FX brokerages available.
• CMC Markets provides “negative balance protection,” a feature that has grown more significant among online brokers. The 15 January 2015 SNB event was most likely the impetus that shook the markets, notably the heavily leveraged retail FX market. Furthermore, CMC offers guaranteed stop losses.
Cons Explanation
• Due to regulatory restrictions, CMC Markets does not accept U.S. clients, preventing it from being deemed a worldwide broker. This would be a red warning if the company were not controlled by the FCA, which, along with U.S. regulatory authorities (NFA, CFTC), is usually regarded as the foremost regulatory agency.
• Spreads, commissions, and product offerings are distinct between CMC Markets’ “Next Generation” platform and its MT4 platform. CMC’s web-based platform is the company’s de facto flagship product and offers significantly more capability than MT4 white-label. This issue would not be as significant if MT4 were not the only downloading option.
• CMC Markets’ S&P 500 spread for CFDs and spread bets is 5 points more than average, which stood out in the index cost disclosures.
• CMC’s Next Generation lacks backtesting and automated trading capabilities, leaving algorithmic traders with only MT4 as an option.
Costs
The majority of CMC Markets’ trading costs are incurred through the spread, which is competitive within the sector. The spread is also how CMC generates revenue, specifically through customer transactions that “cross” the bid/ask spread. Guaranteed stop losses (GSLO) are exclusive to Next Generation and are offered for an additional fee. In the event that the GSLO is not activated, this expense is repaid. When trading individual stocks or ETFs, a commission fee is applicable. Depending on whether the account is designated as a CFD or spread betting account, this may be charged straight to the account upon order execution or added to either side of the spread.
Disclosure comments imply that larger investments are subject to higher spreads, although platform-specific features obscure transparency. Advertised minimum spreads on widely traded main FX pairings range from 0.7 pips (EUR/USD, USD/JPY, AUD/USD) to 0.9 pips (GBP/USD) to 1.0 pips (USD/CHF), however the fine print discloses tiny holding cost variances that may have a material influence on bottom lines. Additionally, legal disclosures acknowledge that the two platforms may report different spreads for identical instruments. The margin and overnight holding fees are competitive to average.
On the index cost disclosures, a significantly higher-than-average five-point S&P 500 spread for CFDs and spread bets popped out like a sore thumb. This spread is paid throughout the whole trading day, including U.S. local time, making it an unattractive trading tool for the majority of account holders. In comparison, the Nasdaq spread of 1 point and the DJIA spread of 1.6 points are closer to the industry norm.
CMC does not have a minimum deposit requirement for consumers opening a live account, however logic suggests that this amount will be subject to the margin requirements of the customer’s smallest trade size. Clients with large account balances are entitled for premium services including increased trading leverage, a personal account manager, perks (rebates and prizes), priority access to new products, and segregated accounts.
CMC does not impose any non-trading-related fees except from an inactivity cost of £10 (or its equivalent in the account’s base currency) per month for each live account with no trading activity in the previous 12 months and a market data fee for some CFD shares.
Trade Experience
The unique Next Generation trading platform for web, tablet, and mobile will satisfy technically savvy clients who wish to upgrade from MetaTrader 4, which is also available. However, navigating is not as intuitive as on other platforms, which may be a result of the interface’s abundance of functionality. Cryptocurrency CFD trading and spread betting are frictionless, requiring no specific interface or exchange, although typical spreads that are relatively high may diminish client interest.
The software offers comprehensive charting with 115 indicators/overlays, 12 chart types, and 35 drawing tools, as well as fully customisable watchlists, client sentiment, and a streaming Reuters feed. In order to construct and optimize complex desktop layouts, charts can be popped out. On major instruments, clients who wish to examine long-term patterns will find price histories dating back 20 years. In addition to price forecast and pattern detection tools, the platform features an integrated connection to a client-based trader’s community.
Next Generation has three fundamental order types with the possibility to add “take profit” and/or “stop loss” orders. In addition, the trader can establish an initial stop loss for market orders at the time of execution and subsequently change it to a guaranteed stop loss after execution. Prior to execution, the trader can select guaranteed and/or trailing options for pending orders while filling up the order ticket.
• Market – The simplest order in which a trader requests that their trade be completed at the current market rate.
• Limit – A pending order in which the entry price is either below or above the current market price, depending on whether the order is to buy or sell. The trader also has the option of choosing the order’s expiration time.
• Stop – A pending order in which the entry price is at a predefined level above or below the current market price, depending on whether the order is to buy or sell. The trader also has the option of choosing the order’s expiration time.
Next-Generation System.
When selecting a mobile platform, clients can choose between Next Generation and MetaTrader 4 for iOS and Android. The homegrown software outperforms MT4 in practically every way, but has fewer functionality than the web-based version. Moreover, chart optimization has been highlighted. Customers can create complex orders and receive personalized alerts via push notification or email. This valuable function is not part of a two-factor authentication system. MetaTrader 4 is available as an add-on or as a separate account option, however it is restricted to CFDs and has no capacity for stocks.
Next Generation lacks backtesting features, requiring some account holders to use MetaTrader 4, which is inferior to Next Generation in other respects. CMC also does not offer direct VPS service. The same holds true for an API interface that enables the usage of advanced trading platforms that offer algorithmic and automated trading procedures. The incorporated client positioning data within the proprietary software is an amazing feature that may have been expanded by the addition of social or copy trading.
Next Generation Desktop.
Variety of Services
CMC Markets provides clients with one of the widest product selections among online FX brokerages. According to the company’s website, clients can trade up to 10,000 instruments, which creates several new options, particularly for portfolio managers with longer-term horizons. These consist of:
• 330+ FX pairings
• Over 90 Indices
• 12 Cryptocurrencies
• Over 9000 Stocks and ETFs
• Over 110 Commodities
• 50+ Treasuries
All financial instruments, with the exception of individual shares, have fixed margin percentages, and spreads are competitively low. CMC’s margin rates on shares begin at 20% for U.K. and U.S. shares, but different margin costs apply for big position sizes based on the position size tier.
Customer Support
In this day and age, an online broker that does not prioritize efficiently and satisfactorily meeting the needs of its customers may be destined to failure. CMC Markets is aware of this fact. Contact options include email for existing and prospective clients, local phone assistance 24 hours a day, seven days a week, and extensive FAQ and help libraries. Additionally, live chat may be initiated from the Next Generation platform, which is incredibly useful. The FAQs are quite comprehensive and organized effectively. During multiple contact attempts, chat wait times averaged 30 to 40 seconds. Additionally, the broker operates thirteen satellite offices on four continents to assist licensed activities in other venues. Twitter and Facebook profiles were packed with current remarks and active client engagement.
Education
The teaching tools provided by CMC are superior than those offered by competitors. Although the technical and fundamental courses are beginner-level and lack advanced teaching, an enormous trader’s library will help less-skilled clients become proficient rapidly. Given Next Generation’s plethora of functionality, a major portion of educational resources are devoted purely to platform and software instruction, which is highly valuable.
In addition to a segment containing films devoted to trading methods, there are also available introductory guidelines for trading the vast array of supplied items and a video section devoted to trading techniques. Through a partnership with Trade With Precision, a robust roster of online webinars addresses the demand for advanced topics, but there is no archive of past programs.
The lack of a search tool makes it difficult to locate less popular topics and gives the impression that this section is poorly arranged. The glossary is sufficient.
Portfolio Analysis
The Next Generation’s order interface is, at best, subpar. The order ticket can only be used to place basic market and pending orders, while pending orders give the added protection of GSLO. CMC does not offer either a trading log nor tax accounting features on the platform.
The client selects the “pip value,” and the “trade value” and “estimated margin” complete the order ticket (only for market orders). Traders can also specify “stop loss” and “take profit” levels by entering the rate, setting the number of pip increments, or selecting the amount to risk or gain.
Next Generation, unlike some of its competitors’ systems, does not have a tool for analyzing trade activities. Given all the features already featured on this platform, it may be too much to expect them to add this as well, but their failure to do so relegated them to the bottom tier in this category. Beyond basic measures, the ability to dive deeper into one’s trading activities can be invaluable for all traders.
Investigate Amenities
With substantial research and analysis from in-house analysts and third-party materials, such as Morningstar quantitative equities research reports, CMC Markets excels in this category (live accounts only). This feature alone could convince a serious trader to establish a live trading account with CMC Markets. Numerous materials are readily accessible via the website, and news sources can be categorized by area and asset class. Additionally, the website includes a conventional economic calendar. If there is a single complaint, it would be the absence of a specialized search feature or well-organized archive, which makes it difficult to locate numerous topics.
The research and news integration between the website and trading platforms should be enhanced, as a few resources require the client to leave the platform and visit a web page. Nonetheless, Next Generation provides clients with access to Reuters News (only for live accounts), fundamental (OPTO Magazine) and technical (pattern recognition software embedded in the platform and chart forum) market analysis, as well as the highly useful CMC TV service, which offers regular video market commentary via a platform link to YouTube.
Security
The Financial Conduct Authority (FCA) regulates CMC Markets under registration number 173730. The broker also takes precautions to ensure that client funds are not mixed with company funds, as required by U.K. law. FCA’s client money rules. By storing client monies in separate accounts at regulated banks, this ensures that customer assets are protected in the unlikely event that CMC goes insolvent. Additionally, these monies are stored in a variety of U.K. and European banks in order to better diversify risk.
Clients have further asset protection of up to £85,000 through the Financial Services Compensation Scheme (FSCS), but there are no private insurance layers, which is a glaring omission considering CMC’s huge industry footprint. Under ESMA guidelines that entered into effect in 2018, negative balance protection is now required. The dealing desk of the broker operates as the initial counter-party on all CFD trades and spread bets, but pricing is automated through the platforms, decreasing the potential for conflicts of interest.
Software security at CMC conforms to the highest standards in the industry. In addition to two-factor and biometric authentication, there is a timer that logs the user out of the mobile application if it has not been used for a predetermined amount of time.
Verdict
CMC Markets is a fantastic fit for all sorts of traders due to its extensive product offering, user-friendly, feature-rich platform (Next Generation), multitude of research amenities, wealth of instructional materials, and focus on customer support.
FCA regulation and the extent to which CMC promotes account security offer credibility. Negative balance protection provides clients with peace of mind, and the fee for assured stop loss execution is appropriate in light of the account-saving risk management it offers under volatile market conditions. There are no obnoxious fees, and free wire transfer withdrawals are a wonderful feature.
Due to their inability to access active trader rebates and the API interface, it is more difficult to suggest the broker to clients with intermediate and advanced accounts. With a few exceptions, such as the high spread costs for some instruments (S&P 500), professionals and institutions will find the feature sets to be generally appealing and the service to be a good fit, with the exception of the high spread costs for certain instruments.
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Methodology
Investopedia is committed to provide investors with objective, in-depth ratings and reviews of online brokers. Our reviews are based on a six-month evaluation of all areas of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, pricing and fees, security, the mobile experience, and customer support. We built a rating scale based on our criteria and incorporated over 3,000 data points into our star-ranking system.
In addition, each broker we surveyed was required to complete a 320-point questionnaire regarding all areas of their platform that we evaluated. Many of the online brokers we investigated gave us in-office demonstrations of their platforms.
Our team of industry experts, lead by Theresa W. Carey, conducted our research and created this best-in-industry methodology for grading online investment platforms for all levels of investors. Click here for our complete methodology.
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