Ignite your portfolio. Ten HOT strategies

Transcription

1 Ignite your portfolio Ten HOT strategies the pros use to outperform the market

2 CONTENTS 1 Ready to power-up your portfolio? 2 CFDs and FX Your online trading advantage 3 Your portfolio wake-up call 4 Ten hot strategies the pros use 8 CFD explained 10 FX explained 13 Take a no-risk, no-cost test drive 14 Opening your free CFD/FX demo account 15 Setting up your trading desktop 17 Trading Going Long 18 Trading Going Short 18 Are you ready to ignite your portfolio? 20 CMC Markets a global leader in online trading This booklet is intended for Accredited Investors. The information contained in this booklet does not constitute personal financial product advice. CMC Markets will not give you personal financial product advice. CMC Markets will only give you general financial product advice because it cannot take into account your objectives, financial situation or needs. Accordingly, before applying to trade in CMC Markets Products, you must consider your objectives, financial situation and needs and the significant risks of loss that accompany the prospects of profit associated with dealing in CMC Markets Products and form the opinion that dealing in CMC Markets Products is suitable for your purposes. This booklet does not constitute a recommendation or opinion that CMC Markets derivative products are appropriate for you. CMC Markets derivative products are only for the experienced investor. Investing in derivatives carries a high level of risk, and due to the potential volatility and fluctuation in value, investors may not get back the amount of their original investment. In certain circumstances an investor may be liable to pay a far greater sum, with losses being higher than an initial stake. For these reasons, CMC Markets products are not suitable for all investors, and it is advisable to seek independent advice. * Example used for illustrative purposes only and not to be misunderstood as a recommendation. Real market conditions will vary the results. ** CMC Markets is remunerated for its services from the spread between the bid and ask prices. *** Forex market operates over-the-counter from Sunday 5pm EST - Friday 5pm EST

3 01 Ready to power up your portfolio? What makes some traders wildly successful, and others not? The difference lies in the way they think, the tools they use and the strategies they employ. It is time to shake up your investing assumptions and introduce you to a whole new world of trading secrets that, up until now, have largely been within the exclusive domain of the pros. If you are serious about outperforming the market, then you need to think like a pro and trade like a pro. We will show you how!

4 CFDs and FX Your online trading advantage. CFDs Explained Formerly available only to professional traders, CFDs and FX offer a number of advantages over traditional trading products. As a result, active traders who want more control over their investing outcome are harnessing the power of CFDs and FX to strengthen their traditional portfolios. What are CFDs? CFD stands for Contract For Difference. CFDs are an international asset class new to Canada, which trades over $1 billion each day, driven by online individual and institutional investors worldwide. All the benefits of shares, indices, commodities and treasuries without having to own them. A CFD mirrors the performance of a traditional exchange-traded share, index, commodity or treasury. For illustrative purposes, suppose you buy one share CFD in Royal Bank. While your share CFD price reflects the underlying market price of a Royal Bank share, you do not have to own the actual Royal Bank share. CFDs can be traded on margin and, like actual shares, your profit or loss is determined by the difference between your buy price and your sell price. Originally used by large institutions to cost effectively attain their equity exposures, the flexibility and control offered by CFDs is now available in Canada from CMC Markets, among the world s first and the leading CFD providers. FX Explained Foreign Exchange (also known as FX, forex or foreign currency) trading is the simultaneous buying of one currency and selling of another. There are four major currency pairs: the EUR/USD (Euro), GBP/USD (British Pound), USD/CHF (Swiss Franc), and the USD/JPY (Japanese Yen). Also popularly traded are the commodity currency pairs such as the AUD/USD (Australian Dollar), NZD/USD (New Zealand Dollar), and the USD/CAD (Canadian Dollar). All currencies are traded as pairs and many are quoted in terms of the US Dollar (USD), for example, AUD/USD. Cross pairs are currency pairs that are quoted in currencies other than the US Dollar (USD). The AUD/EUR would be for an example a cross pair. The FX market is active 24 hours a day, 5 days a week*** and is the most heavily traded financial instrument in the world, with a daily average turnover of over USD$2 trillion. CMC Markets was the world pioneer of online margin FX trading. We executed the very first online margin FX trade in 1996 and were the driving force behind individual investors accessing global currency trading on inter-bank spreads previously only available to major institutions. Now you can leverage the power of CFDs to turbo-charge your portfolio using the ten strategies outlined in the booklet. Ignite your portfolio *** Forex market operates over-the-counter from Sunday 5pm EST - Friday 5pm EST

5 02.03 Your portfolio wake-up call This is not your traditional trading how-to. This is a powerful new means of potentially improving your existing portfolio with tools you may never have heard about! We will show you 10 strategies of the pros that demonstrate how CFDs and FX may give you better control, better information and more trading efficiency than you ever thought possible!

6 Better Control Ten hot strategies the pros use 1. Use leverage When an investor is well capitalized and successful in trading, leverage is the most effective means of magnifying investment returns. At CMC Markets, you can trade $10,000 worth of index, commodity and treasury CFDs or foreign currency, for as little as $100, providing you up to 100:1 leverage. The margin requirement on share CFDs is 5% (20:1 leverage). Less well-capitalized investors should be careful not to risk too high a percentage of their capital per trade, as margin trading magnifies downside risk as well (see example trades* on pages 8, 9, 10 and 11). 2. Optimize portfolio diversification Diversification can take shape through exposure to domestic and global stocks, value and growth stocks, different sectors and indices, as well as different asset classes such as commodities, treasuries and foreign exchange. These different assets tend to move in dissimilar patterns, lowering overall portfolio risk. CMC Markets gives you the means to access multiple asset classes over 1,600 CFDs and FX pairs across 20 global equity markets with one-click efficiency. If you think it makes sense tomorrow to reduce your portfolio risk by hedging your existing Canadian investments, one-click (and no paperwork) can set you up in a countervailing market like Asia. CMC Markets gives you access to global share, index, commodity and treasury CFDs, all on one platform. 3. Take advantage of all market movements The market moves up and down as a matter of course. If you can only profit from upward movements, you are trading with one arm tied behind your back. Short selling can be used to not only make money in a bear market, but to also hedge long positions. CFDs allow you to trade long or short with one-click. Shorting in the traditional share market is often difficult. With CFDs, you can go short as easily as you go long, giving you the ability to profit no matter how the market is moving. 4. Use FX (foreign exchange) tactically The FX (foreign exchange, forex and foreign currency) market is the largest, most liquid and efficient financial market in the world, making it an ideal part of an active trader s portfolio. In trading FX, you may have a trading advantage over fund managers and banks. You can be more nimble than they are, trading on news with a click often ahead of the committees that govern the big investors. As with the equity markets, technical and fundamental analysis are the two basic approaches to FX trading. Unlike equity markets, FX trades 24 hours a day, 5 days a week***. The best way to learn to trade FX is to open up a demo account and try it out. CMC Markets was the first in the world to offer online foreign exchange trading, and today gives you access to FX trading through the same platform that you trade CFDs on. The market moves up and down as a matter of course. If you can only profit from upward movements, you are trading with one arm behind your back. Ignite your portfolio * Example used for illustrative purposes only and not to be misunderstood as a recommendation. Real market conditions will vary the results. *** Forex market operates over-the-counter from Sunday 5pm EST - Friday 5pm EST

7 Apply risk management tools In its simplest form, risk management is a two step process you determine what risks exist in an investment and then if acceptable, you determine how to handle those risks in a manner best-suited to your investment objectives. You can limit your risk by trading most CFDs through Guaranteed Stop-Losses. This means that your position will be closed at a level pre-selected by you with no slippage, in spite of dramatic market movements, effectively limiting your losses. Guaranteed Stops cost a small premium, and are offered on most share, index, commodity and treasury CFDs. 6. Aggressively manage commissions Commission charges are important when you trade. The less commission you pay, the more profit you keep. CMC Markets is committed to offering the most cost-effective CFD/FX trading service in Canada, with the lowest CFD commission charges in the country (0.1% per trade, with a minimum commission of CAD$7.50 and a maximum of CAD$40, regardless of the number of shares transacted). In addition, major index, commodity and treasury CFDs and foreign exchange trade commission-free**. Order types accepted online without charge include: Limit, Stop, If-Dones and OCOs (One Cancels Other). Occasionally in fast markets, where prices gap, some slippage may occur on Stop Orders. ** CMC Markets is remunerated for its services from the spread between the bid and ask prices.

8 Better Information More Trading Efficiency Ten hot strategies the pros use 7. Get more timely information In trading, the trader with the best information most often wins. The best information lets you act more quickly than other traders, and it increases the likelihood of a positive outcome. CMC Markets award-winning Marketmaker trading software lets you customize your desktop to view live, transparent, two-way prices on more than 1600 global products. What s more, indicative Level II Depth of Market data is available on select CFDs, enabling you to see the CMC Market CFD order book, gauge market sentiment and observe market order flow. The integrated charting and professional analytics tool includes 42 different indicators and overlays, the ability to create your own indicators, a full range of charting styles including Histogram and Mountain, as well as Market Highs, Lows and Open information for each bar or candlestick. You also have one-click access to Reuters company fundamentals, giving you the highest quality financial information on companies worldwide, and real-time Dow Jones news feeds with access to a combined total of more than 3,650 reporters and editors in more than 230 news bureaus around the globe. 8. Use the best trading platform Your platform is one of the key weapons in your arsenal. That is why aggressive traders choose CMC s award-winning Marketmaker software. Marketmaker is the world s first online FX trading platform, and one of the world s first CFD trading systems, equipping you with live dealing prices, breaking news feeds, charting, market fundamentals and analysis. In addition to over a thousand global stocks, Marketmaker also gives you one-stop access to index, commodity and treasury CFDs, and foreign exchange. CMC Markets has invested over $60 million in Marketmaker to give you access to the trading advantages that the pros have. This may very well be the most efficient trading control you will ever find anywhere, all in one place. Ignite your portfolio

9 Increase market responsiveness Your ability to react quickly to market movements often determines the profit you take. The Marketmaker platform is price-driven rather than quote-driven, which means on-line trade execution is extremely fast. Furthermore, because CMC Markets CFD prices are derived from the underlying market, you get access to the underlying market liquidity. When it comes to foreign exchange, CMC Markets spreads are among the tightest offered in the FX market, regardless of trade size. 10. Make it easier on yourself CFDs allow you to manage your trades without managing paperwork. If you need to go international, it just takes a click. If you want to short a stock, it just takes one-click and you do not have to worry about uptick rules, borrowing stock, or onerous margin requirements. Because there is no minimum deal size when trading equity/index CFDs, you can choose how much exposure you want to have in the market. Commodity and treasury CFD contract sizes are smaller than their underlying futures contract sizes, while FX trades have a minimum trade size of USD 10,000. Because the money you invest with CMC Markets stays in Canada within a trust account with CIBC, your investments are always more accessible. Our award-winning Marketmaker is the world s first online FX trading platform, and one of the world s first CFD trading systems, equipping you with live dealing prices, breaking news feeds, charting, market fundamentals and analysis.

10 How CFD Trading Works CFDs are Contracts For Difference. A CFD mirrors the performance of a share, index, commodity or treasury and offers the benefits of trading shares without having to actually own them. It is traded on margin, and just like actual shares your profit or loss is determined by the difference between your buy price and your sell price. Share CFDs give you the ability to trade on 5% margin, letting you use leverage to your advantage. CMC Markets share CFD clients, can trade over a thousand global shares on all major markets from a single account. The example* below highlights how trading CFDs can reduce your trading costs, increase your profits, and increase your ROI when compared to conventional share trading. It shows ATI Technologies trading at $22. You want to buy 1,000 CFDs at $22 with the view that the share price will rise. CFD explained CORRECT PREDICTION* CMC Markets Day 1: Buy 1,000 actual shares of ATI Buy price $22 Book value $22,000 Required outlay $1,100 (5% margin) Commission $22 (0.1% of Book value. Min $7.50/max $40) Total initial outlay $1,122 Bank Owned Discount Broker Day 1: Buy 1,000 actual shares of ATI Buy price $22 Book value $22,000 Required outlay $6,600 (30% margin) Commission $29 (Typical commission on 1000 shares) Total initial outlay $6,629 Day 2: Price of ATI rises to $23 Sell price $23 Market value $23,000 Day 2: Price of ATI rises to $23 Sell price $23 Market value $23,000 Mark to market value $23 (Day 1 s closing price) Mark to market value (Day 1 s closing price) n/a Financing $4.63 (overnight interest + 3%) (Oct 13 06: overnight: 4.25%) 7.25% x Mark to market value /360 days) Commission $23 (0.1% of Market value) Gross Profit $1,000 Total Transaction Costs $49.63 (Buy commission + financing + sell commission) Net Profit $ ROI 86.4% (Net Profit/Initial Margin Requirement) Financing $3.10 (7.25% x Amount borrowed /360) Commission $29 (Typical commission on 1,000 shares) Gross Profit $1,000 Total Transaction Costs $61.10 (Buy commission + sell commission) Net Profit $ ROI 14.2% (Net Profit/Initial Margin Requirement) Ignite your portfolio

11 08.09 INCORRECT PREDICTION* CMC Markets Bank Owned Discount Broker Day 1: Buy 1,000 actual shares of ATI Buy price $22 Book value $22,000 Required outlay $1,100 (5% margin) Commission $22 (0.1% of Book value. Min $7.50/max $40) Total initial outlay $1,122 Day 1: Buy 1,000 actual shares of ATI Buy price $22 Book value $22,000 Required outlay $6,600 (30% margin) Commission $29 (Typical commission on 1000 shares) Total initial outlay $6,629 Day 2: Price of ATI falls to $21 Sell price $21 Market value $21,000 Day 2: Price of ATI falls to $21 Sell price $21 Market value $21,000 Mark to market value $21 (Day 1 s closing price) Mark to market value (Day 1 s closing price) n/a Financing $4.23 (overnight interest + 3%) (Oct 13 06: overnight: 4.25%) 7.25% x Mark to market value /360 days) Commission $21 (0.1% of Market value) Gross Loss ($1,000) Total Transaction Costs $47.23 (Buy commission + financing + sell commission) Net Loss ($1,047.23) ROI (95.2%) (Net Loss/Initial Margin Requirement) Financing $3.10 (7.25% x Amount borrowed /360) Commission $29 (Typical commission on 1,000 shares) Gross Loss ($1,000) Total Transaction Costs $61.10 (Buy commission + sell commission) Net Loss ($1,061.10) ROI (16.1%) (Net Loss/Initial Margin Requirement) * Example used for illustrative purposes only and not to be misunderstood as a recommendation. Real market conditions will vary the results.

12 FX explained How FX Trading Works Foreign Exchange (also known as FX, forex or foreign currency) trading is the simultaneous buying of one currency and selling of another. There are four major currency pairs: the EUR/USD (Euro), GBP/USD (British Pound), USD/CHF (Swiss Franc), and the USD/JPY (Japanese Yen). Also popularly traded are the commodity currency pairs such as the AUD/USD (Australian Dollar), NZD/USD (New Zealand Dollar), and the USD/CAD (Canadian Dollar). All currencies are traded as pairs and many are quoted in terms of the US Dollar (USD), for example, AUD/USD. Cross pairs are currency pairs that are quoted in currencies other than the US Dollar (USD). The AUD/ EUR would be for an example a cross pair. The FX market is active 24 hours a day, 5 days a week (Sunday 5pm EST Friday 5pm EST) and is the most heavily traded financial instrument in the world, with a daily average turnover of over USD$2 trillion. CMC Markets was the world pioneer of online margin FX trading. We executed the very first online margin FX trade in 1996 and were the driving force behind individual investors accessing global currency trading on inter-bank spreads previously only available to major institutions. Margin FX Trading Example* The Spread Imagine the USD/JPY rate is quoted at /03. This quote represents the bid/offer for USD vs. JPY. The Offer The offer rate of is the rate at which the FX trader can exchange their JPY for USD or, in other words, purchase USD with JPY, or BUY USD and SELL JPY. The Bid The bid rate of is the rate at which the FX trader can SELL USD to BUY JPY. Ignite your portfolio

13 Example*: Going Long In this example the FX trader believes that the US Dollar will strengthen against the Japanese Yen, and decides to BUY or go long (the offer price). Opening Buy Customer BUYS Quote (bid/offer) /03 Buy price Trade size USD$500,000 Initial outlay (using 1% margin) USD$5,000 Correct Prediction Later The FX trader s prediction is correct and the US Dollar appreciates against the Japanese Yen. The quote on USD/JPY is now /68. To close the position, the trader decides to SELL (the bid price). Incorrect Prediction Later The FX trader s prediction is incorrect and the US Dollar depreciates against the Japanese Yen. The quote on USD/JPY is now /44. To close the position, the trader decides to SELL (the bid price). Closing Sell Customer SELLS Quote (bid/offer) /68 Sell price Trade size USD$500,000 Profit/loss JPY310,000 profit Closing Sell Customer SELLS Quote (bid/offer) /44 Sell price Trade size USD$500,000 Profit/loss JPY310,000 loss Profit/loss Calculation Size of trade x (sell price buy price) = profit & loss in JPY 500,000 x ( ) = JPY310,000 profit Profit/loss Calculation Size of trade x (sell price buy price) = profit & loss in JPY 500,000 x ( ) = JPY310,000 loss Or, converting the JPY310,000 back to USD at a rate of (Profit/loss USD rate) = profit & loss USD (310, ) = USD$2, profit Or, converting the JPY310,000 back to USD at a rate of (Profit/loss USD rate) = profit & loss USD (310, ) = USD$2, loss By closing the position, the trader realizes a gross profit of USD$2, Note: had the FX trader s view been incorrect and the USD depreciated against the Yen this trade would have resulted in a loss rather than a profit. By closing the position, the trader realizes a gross loss of USD$2, Note: had the FX trader s view been correct and the USD appreciated against the Yen this trade would have resulted in a profit rather than a loss. * Example used for illustrative purposes only and not to be misunderstood as a recommendation. Real market conditions will vary the results.

14 nine things you need to ask your FX broker or provider 1. HOW TIGHT ARE MY TRADING SPREADS? 5. HOW RELIABLE IS MY TRADING SOFTWARE? FX explained CMC Markets now offers 2 pip spreads on EUR/USD and AUD/USD while maintaining average spreads of 3-4 pips on the other major pairs. Other providers will typically charge at least 1 pip more in spread. 2. DO THE SPREADS WIDEN DURING fast-moving MARKET CONDITIONS? When you trade with us, you will find that our spreads do not vary during fast-moving market conditions, such as when economic figures are released. 3. WILL MY FX PRICES BE QUOTED OR PRICE-DRIVEN? We offer a price-driven service, which means you can trade on displayed prices without first requesting a quotation. The price-driven service delivers price transparency, ensuring the dealers do not read, shade or quote prices based on the client s position. We do not manipulate our prices to chase your orders. 4. WILL I BE PAID ROLLOVER INTEREST? We pay you the appropriate interest rate differential at 5pm EST everyday regardless of account size or trade size. Some foreign exchange providers will debit the interest on both your long and short positions if your account is heavily leveraged. In 1996, we introduced the Marketmaker software, the first online margin FX trading system in the world. The award-winning software is the longest running online trading platform in the world and is used in over 100 countries around the globe. 6. WILL I BE CHARGED COMMISSION TO TRADE FX? There are no commission charges** on margin FX with us, but some providers charge clients to trade FX. 7. WILL MY ACCOUNT FUNDS BE HELD IN CANADA? A trust fund has been created at CIBC to hold all clients funds. Some local providers of margin FX will hold your funds offshore. 8. WHAT IS THE MINIMUM FX TRADE SIZE? The minimum trade size is as low as CAD$10,000 (or first currency equivalent). 9. CAN I TRADE CURRENCY FORWARDS AND OPTIONS? In addition to spot FX and forward FX, foreign exchange options can also be traded. Ignite your portfolio ** CMC Markets is remunerated for its services from the spread between the bid and ask prices.

15 12.13 Take a no-risk, no-cost test drive! Why not try our Marketmaker platform to find out for yourself why trading CFDs and FX is so exciting to so many. We ll give you a demo stake of $10,000 to start. Buy Canadian or global equities. Go long. Go short. Trade foreign exchange. Trade indices. Trade commodities, or even treasuries. Discover the control CFDs give you, and then see your outcome with real-time, real-market data. Have fun! Please note: Marketmaker software will only run on the Windows-PC platform or its equivalent.

16 Follow these steps to open your demo CFD/FX account: Opening your free demo account 1 Go to 2 Click on Contracts For Difference Trading or Foreign Exchange Trading. 3 Near the bottom left, click on Open a Free Demo Account. 4 Enter your address in the box, and press Click to Submit. 5 On the next page, if you are presented with a form, complete the form and check off the Open a Free Demo Account box at the bottom of the page. Press Click to Submit. 6 An will be sent to you immediately with further instructions. If you don t receive it, check your junk folders. If you don t receive it after fifteen minutes, call (Chinese ). 7 Open the and click on the link contained within it ( click here to activate your account ). 8 You will be taken to a web page containing your user ID, your user name, and your password. Please print this page out for future reference. 9 Press on Click Here ( Click here to download the Marketmaker trading platform ) and save the file to a location on your hard drive that you can easily locate once the download is complete. 10 When the file has downloaded, click the Run button if a dialogue box pops up, or locate the downloaded file on your hard drive ( MM5_en_CA_Installer.exe ), and double-click it. 11 A small dialogue box will pop-up. Choose your preferred language, and click OK. 12 Follow the instructions to install Marketmaker on your computer. Click Done when the installation has completed. 13 Go to your desktop and double-click on the CFD-FX Canadian Client icon. When the password box pops up, enter the login information from your received in step 6, and click Logon. 14 Click if you have read and accepted the end user license agreement, and you re all set to trade! Peter Cruddas Chief Executive and founder of CMC Markets TRIM *Do Not Print Ignite your portfolio

17 Follow these steps to set-up your trading desktop. This set-up is intended to familiarize you with some of the features of Marketmaker. You may, of course, customize your desktop to suit your trading style. TRIM *Do Not Print Setting up your trading desktop 1 You should now have your Marketmaker application launched and open. Along the top of the screen you will see some of the menus and shortcuts we will be using to customize your desktop. 2 On the left of the screen, you see a lighter-blue column called the Instrument Tree that contains two folders: CFD and Foreign Exchange. This is where you will find all of the instruments you can trade on Marketmaker. If the Instrument Tree ever disappears, you may retrieve it by going to the horizontal menu that runs along the top of the screen and selecting View / Instrument Tree. 3 The darker-blue area that occupies most of your screen will be where you set-up your custom trading windows, which we will do in a moment. 4 Start by clicking on green folder icon Client Position Keeping on the toolbar at the top left-side of your screen. This will open up your Client Positions window, which shows you how much money you have in your trading account, as well as a summary of your positions. For the purposes of this demo, you will see that you have $10,000 of free equity. 5 Size the Client Positions window to fit the bottom one-third of your darker-blue desktop. Then click on the Cash Positions tab within this window for a more detailed view. 6 Next, on the toolbar at the top of your screen, click on the small blue-screen-with-the-clock icon All Orders. This will open a Blotter Request dialogue box which gives you several options. Click on Ok. This produces your All Orders window, which will show you a summary of all your transactions. Size this window to fit the middle one-third of your main screen. 7 In the Instrument Tree to the left, click on the small dot to the left of the CFD folder. Folders for CFDs from markets around the world will appear. 8 Now click on the small dot to the left of the CFD - Canada folder. Click on the CFD Canada Shares folder to see the Canadian shares you are able to trade. 9 By way of example*, right mouse-click on Nortel Networks Corp and then select Add Instrument to Favourites/Favourites. Do the same for Cdn Imperial Bk of Commerce (CIBC). Next, click on the Favourites tab at the top of the Instrument Tree box. Right mouse-click on either of the two stocks in your Favourites folder, and select Group Price window. Size this window to fit the top one-third of your main screen. This will allow you to easily track the quotes (buy/sell or bid/offer price) of selected shares. 10 You can now go back to your Instrument Tree and add other shares, indices, commodities, treasury and even FX (foreign exchange) to your Favourites window for close tracking. 11 Return to your Favourites tab in the Instrument Tree and right mouse-click on Nortel Networks. Select Single Price window. You ll see an enlarged, Real-time Price window for that share appear on your desktop. Do the same for any other instruments in your Favourites folder that you would like to track more closely. Arrange the new price windows anywhere on your desktop that you choose. 12 Right mouse-click on Nortel Networks one more time, and this time select Single Instrument window. This gives you the ability to examine the real-time price, bid chart and news stories on a particular instrument. Double-click on a news story to read it. You may choose to keep these sorts of windows open on your desktop as required, or close them. Ignite your portfolio * Example used for illustrative purposes only and not to be misunderstood as a recommendation. Real market conditions will vary the results.

18 Right mouse-click on Nortel Networks and select Create Price Alert. The New Price Alert dialogue box opens, allowing you to set up an alert so that the system tells you when a certain share has moved up or down a specified amount. Select Offer is Higher than $2.50. The system will alert you visually, audibly and/or through once Nortel s price hits your specification, giving you the ability to better manage your trading outcomes. Those are the basic elements of your trading desktop. Feel free to experiment with everything you see, to create the trading environment that is ideal for you. You cannot break anything, and the money in your Demo Account is there to be spent (in a virtual way). Next we will look at making some trades with your virtual dollars. 14 Finally, to save the desktop layout you ve created, go to the top navigation menu, select File/Save Layout, enter a name for this desktop layout, and click Ok. You may create and save any number of desktop layouts in this fashion. Once you ve saved your desktop layout, you ll notice that a drop box appears at the far right of your top navigation menu, allowing you to switch between saved desktop layouts, as required.

19 Trading Going Long* Going long is taking a position in a share CFD with the belief that the price will rise over a period of time. By way of example*, let us look at buying a US share CFD, Bank of America, from within a CMC Markets Marketmaker demo trading account. 1 Click on the Instruments tab at the top of the Instrument Tree box. Click on the CFD folder, and then on the CFD - US folder. Now click on the CFD US Shares - Financial folder. 2 Within this last folder, right mouse-click on Bank of America Corp. and select the top item from the menu that appears, New Strategy Order. 3 In the New Order dialogue box, make sure the blue Buy box is selected. Review the current price of Bank of America in light grey, to the right of the Total Value amount. Then place the number of shares you want to buy in the Quantity box. Let us enter 1,000 in this box. If the current price for Bank of America were $42.02, the total value of the transaction would display as $42, But wait a minute. You only have $10,000 in your Demo Account, right? That s where trading on margin kicks in. You can buy CFD shares on Marketmaker on 5% margin, with, in this case, for $2,101 of the required $42,020 position ($2,101=5% x $42,020). 5 When you re ready, click Place Order in the lower right corner of the New Strategy Order dialogue box. You will see the box turn yellow as the order is being placed, and then green when the order is confirmed. 6 If you review your Client Positions window in the bottom one-third of your screen, and click on the newly generated CFD Positions tab, you can review the status, including the real-time profit or loss (P/L), of your investment. 7 When you want to sell your shares, right mouse-click on Bank of America anywhere it shows on your screen, and select New Strategy Order from the top of the menu box that appears. Alternatively, you can highlight Bank of America on your Client Positions window, right mouse-click, and select Close-out Position from the menu that appears. 8 Follow the same procedure you used to buy the shares, except this time make sure the red Sell box is selected. Select the quantity you want to sell, and click Place Order.

20 17.18 Trading Going Short* You would generally short a stock which you believe has a high probability of a strong move down. With CFDs from CMC Markets, it is as easy to short a stock as it is to go long. 1 In this illustrative example, let us suppose we want to short the Nortel share CFD. In your favourites folder in the Instrument Tree box, right mouse-click on Nortel Networks. Select New Strategy Order from the menu that appears. 2 Because we are short selling, make sure the red Sell box is selected in the New Order dialogue box. Next select the quantity of shares you want to Sell ; in this case let us use 10,000. If Nortel were trading at $2.20, we would have a $22,000 position. Because we are trading on 5% margin, we are only required to put up $1, Click on Place Order in the lower right of the New Order dialogue box, and then watch Nortel s price movement. 4 If Nortel drops sufficiently (say to $2.00), and you want to close out your position, right mouse-click Nortel anywhere it appears on your screen, and select New Strategy Order. This time make sure the blue Buy box is selected, and enter 10,000 in the quantity box. Click Place Order and you will have made yourself $2,000 gross profit a gross ROI of 182%! Are you ready to ignite your portfolio? Let us show you the way. Want to know more about trading CFDs? Register for our free trading seminar on CFDs and foreign exchange at Our trading specialists will show you how to better control your investment outcome and potentially magnify your ROI! TRIM *Do Not Print * Example used for illustrative purposes only and not to be misunderstood as a recommendation. Real market conditions will vary the results.

21 TRIM *Do Not Print

22 CMC Markets a global leader in online trading When CMC Markets was established in 1989, the vision was to create an institutional-styled trading service that was accessible to all a vision that became a reality in 1996 when CMC Markets released the world s first online foreign exchange trading platform. While CMC Markets has expanded and now offers share, index, commodity and treasury CFDs, the commitment and faithfulness to the original vision remains rock-solid. Our commitment to offering a cost-effective trading service has helped CMC Markets become one of the world s leading players in online trading, attracting customers from 100 countries worldwide and transacting an average of over $1 billion USD every day globally, across all our product ranges. CMC Markets success can be attributed to a company-wide goal: the creation of advantage for our customers through product and technical innovation. We sincerely look forward to bringing this trading advantage to your investments. The success of CMC Markets, in my mind, has been down to having a single company-wide goal to create advantage for our customers through product and technical innovation. Peter Cruddas, Chief Executive and founder of CMC Markets Ignite your portfolio

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24 CMC Markets 130 Adelaide Street West, Suite 1800 Toronto, Ontario, Canada M5H 3P5 Telephone: Toll-Free: Toll-Free (Chinese): Hour Trading (clients only): Hour Technical Support: Fax: info@cmcmarkets.ca Risk Warning Investing in Derivatives, Foreign Exchange and other leveraged instruments carries a high degree of risk to the investor due to fluctuations in valuation. The investor may not get back the amount of their original investment, and in certain circumstances be liable to pay a far greater sum. The inherent concept of Derivatives and Foreign Exchange means that it is not suitable for all investors; CFDs and Foreign Exchange are only offered by CMC Markets to Accredited Investors. Refer to the application form and Offering Memorandum for a definition of Accredited Investor, and a full explanation of the risks involved with CFDs and Foreign Exchange trading. It is advisable to seek independent financial advice if necessary. You should remember that past performance is no guarantee of future performance CMC Markets