Reasons to switch

Key questions you should be asking your index provider

---

1) Are your index provider’s headline spreads typical 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 index providers should be more transparent by publishing their daily typical spreads as well as their minimum spreads. Consistent typical spreads are a reflection of pricing consistency throughout the day. Click here to see two tables showing typical spreads for CMC Markets’ most popular indices, over the last week. If your index provider does not show this information you should ask them why.

2) Who executes your trades?

With CMC Markets, all trade executions are 100% automated on our Next Generation platform, which means no dealer intervention and much faster processing times. With multiple price streams from top-tier institutions and 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) Are you receiving fractional pip pricing?

Indices are usually quoted to just 1 decimal place (two decimals when trading the SPX500). However, the underlying market offers additional precision within their price quotes, meaning many brokers round these to the nearest pip, widening the spread in the process. CMC Markets offers precision pricing and quotes an additional decimal place on all our indices enabling us to offer tighter spreads.

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

4) Have you got access to fractional trading?

Traditionally, the minimum trade size for any index trade is 1 CFD contract. With CMC Markets’ Next Generation CFD trading accounts you can now trade from as little as one 10,000th of a pip on indices, using our fractional trading feature. For new traders, this gives you the ability to trade indices with smaller trade sizes so you can get used to this exciting market before placing larger trades.

5) Has your index 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 the next level, offering some of the tightest spreads to the retail index 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 index trading is performed. We pass on this benefit to our customers in the form of some of the tightest spreads in the market.

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

Many index traders are forced to use fixed leverage, often with expensive overnight financing rates to pay. With CMC Markets you have ultimate flexibility in that you can choose your index margin requirements and only pay overnight financing on what you borrow, rather than on the full value of the position, as with traditional providers. You can even choose to put forward the whole value of the position yourself, thereby gaining exposure to global indices with minimal costs, even for long term investments.

7) Can you trade foreign markets using your local currency?

CMC Markets has introduced a whole new level of control when trading index CFDs, through our fractional trading feature. You can now trade companies in foreign markets, such as the US or Europe, using round amounts in pound sterling (£). Our Next Generation technology will automatically convert your pound trade into a number of units using our live spot rates. Your profit and loss will always be reflected in pounds giving you greater transparency on how your position is fairing.

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) What risk management tools does your provider offer?

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

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 constantly reminds you that stop losses can help to enhance your index trading and can help to limit the downside risk associated with a trade. There are order types to enter the market, including Limit and Market orders, as well as Trailing Stops and Take Profit orders to exit. CMC Markets offers a full range of order execution tools.

We have also built in two risk notification levels:

The first notifies you when your account value falls to 50% of your margin requirement and suggests that you deposit additional funds or close out of some of your trades.

The second notification occurs at the close-out level, at which the platform may liquidate your position to protect both you and CMC Markets, as no one wants your account to drop into a debit balance. Despite these notifications, please remember that it’s up to you to monitor your positions. To prevent the liquidation of your positions, make sure you’ve deposited enough funds to keep your account value above the close-out level. If your trade doesn’t go as you expect, you may be required to deposit additional funds with CMC Markets in order to hold your position.

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.