Reasons to switch providers

Key questions you should be asking your commodity broker

With so many commodity providers out there it can be hard to find the right one that suits your trading requirements. Are you currently with a provider that can tick all these boxes?

1) Are your commodity providers headline spreads tight and transparent?

Whilst minimum spreads can grab the headlines, they don't tell the whole story. Markets can be volatile and the underlying market spreads can fluctuate and widen throughout the day. At CMC Markets we believe it is important that commodity providers should be more transparent and that they should highlight the available spreads more clearly. Consistently tight spreads are a reflection of our pricing consistency throughout the day. All of our quote panels through our web platform have the current spread clearly visible allowing you to see what the dealing costs are, even in volatile markets. If your commodity provider does not show this information you should ask them why.

2) Who executes your trades?

With CMC Markets, all of our trades are 100% automated on our Next Generation platform, which means no dealer intervention and fast processing. With multiple price streams from multiple commodity exchanges, we offer highly competitive prices and with our 100% automated execution, you have none of the hassles or restrictions that come when trying to trade quickly on news events or economic announcements.

3) Can you customise margins with your provider and trade commodities long term, cost effectively?

Many commodity traders are forced to use fixed margin (leverage) often with expensive financing rates built-in to the price, with CMC Markets you have the flexibility to be able to choose your commodity margin requirements and only pay financing on what you borrow rather than on the entirety of the position, as with traditional providers. You can even choose to put forward the full value of the position yourself and gain exposure to commodities with minimal cost even for long term investment.

4) Are you receiving fractional pip pricing?

Other spread bet and CFD commodity providers often quote to just one decimal place (two decimals when trading crude oil). The underlying market however offers additional precision within price quotes, meaning many brokers round these to the nearest decimal (pip), widening the spread in the process. CMC Markets offers precision pricing and quotes an additional decimal place on all our commodities enabling us to offer tighter spreads.

Precision pricing can increase your trading opportunities, prevent unnecessary stop loss execution and help you save money.

5) Have you got access to fractional trading?

Traditionally, the minimum trade size for any commodity trade is 1 CFD contract. With CMC Markets’ Next Generation CFD trading accounts you can now trade from as little as a 1000th of a CFD with our fractional trading feature.

For new traders this gives you the ability to trade commodities with smaller trade sizes so you can get used to this exciting market before placing larger trades.

6) Has your provider got a strong history in trading?

CMC Markets started as a broker back in 1989 with an ambition to offer wholesale trading to the retail market. In 1996 we developed the world’s first online retail foreign exchange trading platform and have been one of the market leaders ever since. With our new lower spreads and margins we believe we now take this evolution to another level, offering some of the tightest spreads to the retail commodities market.

As one of the bigger and more established providers, we have access to some of the best prices and execution from the large institutions that deal directly on the exchanges where the majority of commodity trading is performed. We pass on this benefit to our customers in the form of some of the tightest spreads in the market.

7) Does your spread bet or CFD provider offer carry trades?

With our cash commodity spread bet and CFD offering, unlike futures, you can take advantage of what is known as a carry trade. This is a strategy in which a trader sells (or buys when the cash price is above the futures price) a certain commodity with a relatively high carrying cost, in an attempt to profit from receiving this payment.

The trader would believe that the carrying cost is going to be greater than any price appreciation and interest expense (if any) in taking out the position. These carrying costs can often be substantial, depending on the instrument you are trading, Energy commodities, in particular; Natural Gas and Heating Oil, are known for having highly volatile carrying costs due to storage constraints, seasonality factors, weather and politics. Please click here for more detailed information on commodities.

8) Are you able to access support 24 hours a day?

We are available 24 hours a day from Sunday 9pm through to Friday 10pm, and Saturday 9am to 5pm GMT/BST.

We take great pride in our standards of service, yet we are constantly working to improve them to make sure they match your expectations and reflect a world-class offering.

9) Does your provider offer up to 20 years of price history on commodity charts?

Many commodity traders use technical analysis to help them make trading decisions and with up to 20 years of price history available on our cash commodities, it’s never been easier to spot significant support and resistance levels. Combine this with our technical pattern recognition technology, we offer our clients a significant advantage over the 3 months’ worth of price history which many other traditional futures providers offer.

10) What risk management tools does your spread bet or CFD provider offer?

Trading commodities on low margins can be risky in volatile markets and you could lose more than your initial deposit more rapidly. To help you manage some of these risks CMC Markets offers a wide range of risk management initiatives.

Our order tickets automatically suggest a stop loss equal to your margin requirement for each trade (this feature can be turned off in the preferences section). This feature is known as Transaction Based Stop Loss and it can help to limit the downside risk associated with a trade. There are order types to enter the market, including Limit and Market order, as well as Trailing Stops and Take Profit orders that can be used to exit. CMC Markets offers a full range of order execution tools.

We have also built in as a courtesy two risk notification levels:

Please remember that this notification is only provided as a courtesy and you must not rely on it as it is your obligation to monitor your account.