, boerse-express
Daeubner: Why I need to switch to CMC Markets
My trading system, Siddharta-3, is very capital intensive. Two fresh trades every day with an average holding period of 5-10 trading days leads to around 10-20 open positions at once, once the system is fully up and running.
I calculate my position size by the stop I put in place. Right now, the four trades I have would add up to almost 60.000 Dollars in market value. Take the amount times 5 (2o positions) and you end up needing 300 thousand dollars just to sustain a couple of trades.
This is where margin trading comes in handy. Siddharta-3 trades S&P500 stocks, meaning if I were to use IG Markets for active trading I would have to have a downpayment of 30.000-50.000 dollars.
CMC Markets has a flat margin rate of 5% of the total portfolio value on S&P500 stocks. Meaning, that for every 100.000 dollars you need 5 grand as a downpayment. 20 positions will therefore tie up 15.000 dollars in margin. (considerably less than with IG Markets).
The next problem is that IG Markets doesn´t use marked-to-market boooking techniques. With IG you can only use your profits once the position is closed out. CMC does use future-booking techniques.
The hitrate of my system is quite high and so is its expectancy. Trading marked-to-market is absolutley essential to me. The lower margin rates are also absolutley mandatory for such an active system.
(2 trades a day and you feel the pinch! I wonder how active heavy traders are…)
True, CMC Markets isn´t famous for good and precise clearing, but when you position- rather than daytrade, slippage isn´t such a big factor of the equation.
I calculate my position size by the stop I put in place. Right now, the four trades I have would add up to almost 60.000 Dollars in market value. Take the amount times 5 (2o positions) and you end up needing 300 thousand dollars just to sustain a couple of trades.
This is where margin trading comes in handy. Siddharta-3 trades S&P500 stocks, meaning if I were to use IG Markets for active trading I would have to have a downpayment of 30.000-50.000 dollars.
CMC Markets has a flat margin rate of 5% of the total portfolio value on S&P500 stocks. Meaning, that for every 100.000 dollars you need 5 grand as a downpayment. 20 positions will therefore tie up 15.000 dollars in margin. (considerably less than with IG Markets).
The next problem is that IG Markets doesn´t use marked-to-market boooking techniques. With IG you can only use your profits once the position is closed out. CMC does use future-booking techniques.
The hitrate of my system is quite high and so is its expectancy. Trading marked-to-market is absolutley essential to me. The lower margin rates are also absolutley mandatory for such an active system.
(2 trades a day and you feel the pinch! I wonder how active heavy traders are…)
True, CMC Markets isn´t famous for good and precise clearing, but when you position- rather than daytrade, slippage isn´t such a big factor of the equation.