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Trying to understand CMC CFD pricing

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tothemax6

Joined
25 October 2010
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Hi all,
I am trying to understand exactly how this CFD is priced:

No. 1
Ticker JAPAN225
Name Japan225 Index CFD
CMC CFD Margin Requirement % 0.50%
Shorting Long&Short
Equity Sector OR Product Trade Hours 9:45 - 13:30, 16:30 - 06:15
Member of CMC Sector (na)
Minimum Stop Loss Order Distance 2 x Spread plus 1
CMC tick movement Per 1 CFD YEN ¥1

What does "CMC tick movement Per 1 CFD" mean? Suppose I buy 1 CFD, and the index rises from 9000yen to 10000yen, what would my gain be?

Cheers!
Minimum Trade Size 1
 

The index is not 9000 yen. It's just 9000. Each point is worth 1 yen, so if you have 1 CFD, you bought a 9000 yen position. If it goes up to 10,000 points, you position is worth 10,000 yen, and you've made profit of 1000 yen minus entry/exit spreads.

There are good information about various CFD providers on this forum - if you haven't committed to CMC already.
 
I don't understand, the index is currently on yahoo as being 9,768.08. Does that not indicate that the tick size is 1/100?
 
One cfd one ¥en.
Index cfd's with CMC. I'd rather trade regulated futures product. Take SKC's advice and use the search facility.
 
tothemax6 said:
Explains nothing to me.

The question posed by this thread is not 'should I trade this or that'.

Does anyone have an answer to my question, it would be much appreciated...
Click to expand...

One tic is one yen. That's how it's priced. Like blurb says.
Have fun with your synthetic product
 
tothemax6,

Have you tried calling and nailing down CMC support on your question?

What does "CMC tick movement Per 1 CFD" mean? Suppose I buy 1 CFD, and the index rises from 9000yen to 10000yen, what would my gain be?
Click to expand...
The answer is in the question. This is an index not a currency, but in relation to your question 9000 points to 10,000 points, your gain would be whatever CMC sees fit to make their tick movement. If CMC clearly stated "1 CMC tick equals 1 CFD" then you could nail it down, but any market maker will not list clear concise numbers as these are their own variables, just like their own spread.

CMC's tick movement, or any market makers 'tick movement' will not exactly mirror the underlying market, they make money out of approximately replicating the underlying market, (synthetic).

The easiest way to 'approximate' your gain and answer your question, is to place the order with the market maker and check price movement change per tick. Each market maker will vary. There are also variable margins, so when you go into loss your margin requirement may increase which skewes your tick value also. Many variables but placing a quick position with whoever you use is the easiest way to find out.
 
Alpha_Bet said:
One tic is one yen. That's how it's priced. Like blurb says.
Have fun with your synthetic product
Click to expand...
But the index (or its 'ticks') is not priced in yen - its just an index.
Regarding the synthetic product, if you can think of a better way get a position in the nikkei225 or japanese stocks, I'm all ears.
 
tothemax6 said:
I don't understand, the index is currently on yahoo as being 9,768.08. Does that not indicate that the tick size is 1/100?
Click to expand...

Like many have said the CFD product is synthetic (made up) and it is meant to follow the underlying index, but not exactly. You will be trading CFDs, not the index itself. The CFD product may or may not have decimal points.

If their tick size turned out to be 1/10 of an index point, then a 1000 index point movement will make you 10,000 yen.

If their tick size is 1/100 of an index point, then 1000 index point movement = 100,000 yen.

The best way to make sure is to get it from the horses mouth.
 
tothemax6 said:
But the index (or its 'ticks') is not priced in yen - its just an index.
Regarding the synthetic product, if you can think of a better way get a position in the nikkei225 or japanese stocks, I'm all ears.
Click to expand...

Futures.

If you can trade, avoid a market maker.
 
Alpha_Bet said:
Futures.

If you can trade, avoid a market maker.
Click to expand...

And how shall i buy these futures, and japanese stocks without using a market maker, and without a massive commision charge? To put my funds into perspective a 10k position is 'very large'.
 
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