Hello Panther,
CMC is using contracts as display of how much you are investing. Not direct money deposits like other brokers (who are oriented mostly towards currency exchanged and offering CFD’s onl) are doing.
CMC creates contract types which you can buy or sell (that is the reason why you are asked to enter contracts number and not $€-Number of amount you like to invest) these contracts have different values than the underlying security because they are a spread bet.
At first it seems hard to understand but once you done the math that is required you will like the system more than others as it gives a lot of flexibility and adjusting your risks and your leverage.
The issues you need to find out is:
how muhc is one contract yielding and what is the contracts base value. or in other words: you must find out how much impact one contract has on your account equity and then calculate how many contracts you need to have the wanted result.
example:
1 contract - change of underlaying security is 1:1
then you buy one contract in gold which is worth 1280$
the change of 10$ in worth of gold price will change your account by 10$ aswell.
1 contract - change of underlaying security is copied by 1:10
you buy 1 contract and you invested theoreticaly the sum of 12800$
a move of 10$ in gold will change your account balance by 100$
1 contract - change of underlaying security is copied 1:100
you bought one contract and it reflects the worh of 128.000$ in gold
gold changes in price of 10$ and your account balance by 1.000$
The margin used for this contracts is similar to CFD brokers. around 5-10% of the contract size (1280, 12.800 and 128.000) are beeing asked as margin and displayed to you how much money you must have on your account to keep the trade open.once the margin is at 0 your trades get closed.
So find out what 1 contract reflects in the base security and you will know how much you must invest.
CMC offers different contract. micr mini basic and full.
they wary from 1:1 to 1:500
Mini contracts are penny contracts which keep you with little sums in the market and therefore require small ammounts of margin. this enables you to trade with a account of as little as $100.
with the contract system CMC aswell makes it possible to place trades on other things than only currencies, indexes and some commodities.
you can trade littleraly on everything, soy beans, orange juice, stocks and retty much all half way important markets.
if you wantto trade forex only i would suggest you to change to a pure forex broker like FXCM or thelike. their system is much easier to understand and involes little to basicly no math knowledge and no knowledge of any type.
