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CMC Spreadbet

  • Post #1
  • Quote
  • First Post: Oct 5, 2005 5:58pm Oct 5, 2005 5:58pm
Hello everyone

I am considering opening a spreadbet account with CMC Markets (Deal4Free) to day trade GBP/USD (3 pip spread).

Could someone know if it is the same to bet £10 or £300 per pip with them regarding execution, limits/stops being filled, etc? Could they 'rob' me in any way?

If I bet £500/pip on cable, and put a stop 30 pips away, would they 'know' the stop was there and run the price through it?? Would this leverage call attention? What is their maximum leverage anyway?

I thank you for your comments
Quoting cableguy
Hello everyone

I am considering opening a spreadbet account with CMC Markets (Deal4Free) to day trade GBP/USD (3 pip spread).

Could someone know if it is the same to bet £10 or £300 per pip with them regarding execution, limits/stops being filled, etc? Could they 'rob' me in any way?

If I bet £500/pip on cable, and put a stop 30 pips away, would they 'know' the stop was there and run the price through it?? Would this leverage call attention? What is their maximum leverage anyway?

I thank you for your comments
I don't know about limit of £ per pip, it's best to check with them direct. I know that capital spreads have some limits.

I "guess" they wouldn't necessarily run your stop, but if you place your stop where other people place theirs on the FX market, the FX Market Maker may go for those stops and CMC would follow !

Also I think as spreadbetters, they would have even more scope for 'moving' prices than MM.

From memory, I think I once worked out the leverage as equivalent to 50:1 ish but that was quite a while ago so double check the conditions of how much margin you need to keep to execute the trade.

Best regards
Alan
  • Post #3
  • Quote
  • Edited 5:22am Oct 6, 2005 5:12am | Edited 5:22am
If U R British spread betting (CMC or any other SB company) is tax free. There is an argument to suggest that if this is your only income that you might be taxed. This might depend on your local tax office.

I don't think most SB companies will open accounts for American citizens, as betting over the net / telephone is illigal / huge grey area.

It is likely that if you trade at 300 pounds a point, if that is not above their max, that you will be place on a carefull manual execution and might experience less ease with fills.

There is not much difference between the UK SB's and retail FX brokers. If you trade through FXCM, AC Markets or Saxo you are still only trading within their system, not the "real" market.

At 300 pounds a point there are cheaper ways of paying to trade, other than a 3 pip spread (900 pounds). Take a look at Interactive Brokers.

Re your question about a stop and CMC running your stop. Best to have a mental stop (where you will manually exit) and a hard stop (automated) 10 to 20 pips away.


Quoting Isotonic
Have you read their dealing guide? You should be able to get it here. Head for section 6 on forex.

i agree with Alan their leverage is around 2% though with spreadbets they called it Notional Trading Requirement (NTR) as an initial margin which is 150 for cable.

That basically means for the example you quoted £500/pip you would have to stump up 500 * 150 = £75 grand up front before you can trade.

Also I agree that you have to be careful with SB firms since they make their own prices up with regard to the underlying market so are open to more manipulation.

My advice is go for an automated trading desk broker that pass your orders straight to inter-bank instead.
Thanks for the responses!

Another question regardind tax consequences: I am a European citizen that will open an account with a US broker, and thus I will not pay tax on my profits.

Could I get away with simply wiring the funds to my bank account and not declaring the profits? What sort of control is there over this issue?

Thanks
  • Post #5
  • Quote
  • Edited 10:40am Oct 7, 2005 10:32am | Edited 10:40am
Most brokers will only wire funds to a bank account which is verified and in the same jurisdiction that you gave them on account opening (your home address).

Where are you based / working from ?

In most countries, there is income tax. Usually this needs to be paid even if you are working from your base, though earning the income elsewhere.

There is a tax concept in most countries known as "Mind And Management". So if "Joe" is sitting in London and running a business overseas (giving orders from London). The tax man in the UK will expect to receive from Joe (income tax) and the company (corporation taxes +VAT). So I am sure that this would apply to trading too..................

You could avoid (possibly illigal) paying tax in your jurisdiction, by opening an account with a broker, using a residence and bank account in another country. Both the broker and bank account could be in a company name, for better protection. Unless you are well connected you might find it expensive and difficult, for obvious reasons, to do this, especially after post 9/11 money laundering rules changes.

It depends alot on where you are based.

The only things in life that are for sure are death and tax.............not the FX market !










Quoting cableguy
Thanks for the responses!

Another question regardind tax consequences: I am a European citizen that will open an account with a US broker, and thus I will not pay tax on my profits.

Could I get away with simply wiring the funds to my bank account and not declaring the profits? What sort of control is there over this issue?

Thanks
I am based in Madrid, but I could be based in London, Frankfurt, doesnt really matter where. The broker I am considering opening an account works with JP Morgan in London, and because I have a UK account, there is no problem of wiring the funds from 2 banks in London (I have checked with them).

After the funds are in my bank account, I can simply wire them to my spanish account, or spend the money directly from my UK bank account.

Will the UK tax man come after me in the future?

We are talking about everyday occurrences, which are funds being wired from different banks, and since the funds are already in the 'system' with JP Morgan, I dont know how this can be controlled.

The US broker does not care where I send my funds, they told me it was my responsibility to declare the funds (which I or anybody wont do).

So will they come after me??
Why would you not want to pay tax, if you want to have the benefits of living in a certain country surely you should contribute to that countries economy to make life better for you and everyone else.

Greed is part of the forex market, it doesn't have to be part of your whole life.
  • Post #8
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  • Edited 8:54am Oct 9, 2005 8:52am | Edited 8:54am
Best if you seek serious tax advice, from an account, in the jurisdiction you are living in.

If you want to avoid paying tax then the last thing you would do, in the jurisdiction where you are living, is transfer fund through a bank account, as that is a paper trail.

If you are able to move, why not consider moving to a tax free jurisdiction such as Monte Carlo ? This must be more relaxed than sitting somewhere and avoiding an issue, which is crossing into the illegal.
  • Post #9
  • Quote
  • Edited 9:05am Oct 9, 2005 8:59am | Edited 9:05am
1) Fly to Bangkok on a "holiday"
2) Open account with Bangkok Bank or other bank, depending. Generally no problem on a tourist visa. If there is, move to next bank/branch, or fly down to Phuket.
3) Link a Visa Electron card to that account
4) Fund FX account from the Thai account
5) Use the Visa in your home country to pay your way.
  • Post #10
  • Quote
  • Last Post: Oct 10, 2005 6:16am Oct 10, 2005 6:16am
Thanks guys!

I think that I will spreadbet for a while (tax free), but when I really start leveraging my positions (more than 100 pounds/pip) THEN I will require a proper broker and set myself up somewhere like Thailand or Monte Carlo. I bet most big players do this, nobody really wants to pay tax...

cheers
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