How Did CMC Markets Take My Money?

By James Cohen @http://www.flickr.com/photos/jcohen97/7176803424

22 Aug How Did CMC Markets Take My Money?

I had two misfortunes with CMC Markets. Misfortunes for me but fortunes for them. Let me share my story with the following two trades.

Ameriprise Financials (AMP)

I placed a buy stop order at $90.78, which means I only wanted to buy if the stock price goes above $90.78. My buy stop order was filled at $90.81 on 14 Aug 13. However, the highest transacted price on 14 Aug 13 was $90.68. The difference between CMC market making price ($90.81) and the actual highest transacted price ($90.68) was $0.13. Since I bought 100 shares, the cost of the spread to me was 100 x $0.13 = $13 (or S$16.51). On top of this, CMC charged me a commission of S$12.74. The total buy cost was S$29.25. This isn’t cheap when compared to our local brokers. We need to know the true cost of our trades when using these CFD brokers.

Remember the buy stop was $90.78 and the price never gone above that. So this was a trade that I would not have got in in the first place. I wrote to CMC and asked them to cancel the position and this was their reply:

Your Stop Entry Buy Order set at 90.78 to buy Ameriprise Financial, Inc. will be executed when the Buy Price for the Level 1 Price is equal to or higher than the Target Price, and will be executed at the first available Buy Price available.

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Kindly refer to the 5-min charts for the counter and select Chart Type>>Buy Chart. The Buy price hit a high of 90.83. At the moment that the Buy price hit 90.78 or higher, the order was executed at the best available price of 90.81.

We are unable to make any compensation for your trading losses as the execution was correct. Should you want to avoid being filled based on the bid/ask, you may select a custom stop triggering under User Preferences>>Orders>>Custom Stop Order Triggering. Kindly note that there will be higher slippage as the triggered price will be different to the buy/sell as there is the spread.

What kind of solution is offered in the last paragraph? You may select a custom stop, but kindly note that the price is different because of the spread. So, no solution? Hello?

The answer is that I have to suck it up for a position that I should not have got in. CMC has taken S$303.36 from me with this one. Nice move.

Huntington Ingalls (HII)

For this counter, the issue was with the stop loss order that I have placed. I have a position of 130 shares in HII and I placed a sell stop order at $62.89, which means the order will be executed if the price goes below $62.89. On 15 Aug 13, the lowest exchange price for the day was $62.96. CMC triggered my order and sold at $62.84. So the spread cost me $15.60 or S$19.81. Commission + spread cost will be S$32.58.

Again, this trade should not be triggered in the first place and I should still be in position. Let’s hope this stock goes down from here, otherwise CMC has denied me of potential profits.

Data Charges

The other thing that I do not understand is that if they are using their own prices, why do they charge data feeds? The payment is usually made to the exchange for providing the price feeds. Since CMC is quoiting their own prices, why should I pay them for it? CMC does not even allow you to trade if you do not pay for the data.

Use CMC or Not?

I have similar problems with Cityindex but they will always reinstate my positions upon request. No questions asked. I also have no problem with POEMS CFDs and IGMarkets.

It might be a case that these counters are less active and hence the spreads are larger. To be fair, CMC has good interface and features. But I cannot use a broker who jeopardises my trades due to wide spreads. For those who trade active stocks and forex, are the spreads fair and just to you? Do share with us your experience.

PS: CMC offered to refund my trades. Read more in this post.



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13 Comments
  • fat88trader
    Posted at 09:09h, 22 August Reply

    On of my student have a similar experience like yours in the FX market which is liquid, but their machine triggered the stop in a quiet down time frame. CMC’s machine is being programmed to trigger the stop, they pluck Durians when they are about to ripe.

    Change your broker !

  • 6y588
    Posted at 11:01h, 22 August Reply

    Vote with your feet, and run away from these type of brokers. Otherwise, make a report to the financial regulatory.

  • bigfatpursereader
    Posted at 13:34h, 22 August Reply

    I faced the same problem when trading Forex. Their spread is relatively wild and huge, compared to other brokers. this could easily take away any tight stop loss.

    I had withdraw all my money since then…

  • Joker
    Posted at 14:18h, 22 August Reply

    I forgot the term use for that, i believe it is call market maker? they will shift the pips or price or trade against you to earn your money. http://www.investopedia.com/articles/forex/06/ecnmarketmaker.asp i face this problem when i trade fx too. :)

  • n
    Posted at 15:12h, 22 August Reply

    I got screwed by CMC markets mutiple times too. they are quite unscrupulous, anyhow fill orders. I had limit buy orders working & the market gapped down over the weekend, but CMC markets fill me on my limit price rather than the opening buy price on their system. ridiculous! Beware of CMC!

  • Tom
    Posted at 16:16h, 22 August Reply

    Is Philips Capital CFD and City Index, IG Market a better choice?

    • Alvin Chow
      Posted at 18:55h, 22 August Reply

      So far I have no problem with Phillip CFD and IG. Cityindex has poor price too. But at least they will reinstate the position when questioned.

  • Alvin Chow
    Posted at 18:57h, 22 August Reply

    Most feedbacks have said that the wide spreads are present in CMC’s forex pricing.

  • Joo Leng
    Posted at 22:28h, 22 August Reply

    I had this problem before. Another way to bypass this issue is to look for brokers with direct market access (DMA).
    Anyway I have stopped using CMC since they like to cheat by hunting our stops.

  • Joker
    Posted at 21:59h, 23 August Reply

    They are market maker.. they earn commission for that.. :)

  • CMC Markets Refunds My Money
    Posted at 08:01h, 24 August Reply

    […] an earlier post, I complained about CMC executing my stop orders at bad prices. They have conducted an […]

  • Hengsoon
    Posted at 18:45h, 26 August Reply

    I experienced it trading SG stock last year, in fact the triggered day for my stoploss, from many brokerage house, stock charts etc, showed the stock never touch at such low price; I alerted CMC Markets, but they said they are marketmakers , they have their own price quotes, after many exchange of emails, I never get back my money.

    when my laptop sent for servicing, used PC but they blocked me to access, I call and email, the person reply that it is an isolated case, ask me to engage outside IT ppl to solved the problem, goodness what kind of silly answer given.

    Finally I went to the office to ask for withdraw the fund in my account. Such a bad service company to client.

  • Personal Finance Investment Seminar - From Bloggers with Love
    Posted at 11:55h, 18 January Reply

    […] Alvin shared his unhappy experience with another market maker CFD broker in a previous post. […]

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