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New Starter Account to Offer Limited Risk Trading

14th October 2008

New Starter Account to Offer Limited Risk Trading for Traders and Financial Planners

CMC Markets, New Zealand’s leading Contract for Difference (CFD) provider, has launched a new Shield Account, which will provide improved risk management.

Sargon Elias, general manager of CMC Markets NZ Limited, said the features on the new account will appeal to those who are slightly more risk averse, just starting out, or to financial planners who want to enhance portfolio returns by incorporating CFDs.

“This account can be used as risk management for those who have existing equity exposure. This will be ideal for long-term investors who want to protect their investment against short-term market volatility while gaining exposure to the long-term growth of their portfolio,” Elias said.

“It can also be used to enhance the returns from a physical portfolio, by using leverage to gain a larger exposure in the markets. The restrictions imposed by the account will ensure risk is minimised considerably.

“With the CFD market still in its infancy in New Zealand, we expect to see a number of new clients, who are perhaps less experienced in terms of trading the markets, look at this account for the high levels of risk protection it provides.”

The account will provide traders with a Guaranteed Stop Loss Order (GSLO) on every trade, which automatically exits the client from the trade at a predetermined price if markets gap against them. It will also guarantee that the trader will never lose more than they deposited in the account, a no deficit guarantee. Fees and commission will be slightly higher than the standard account to cover the increased levels of risk protection.

The Shield Account will help:

Limit your risk exposure when trading
Guaranteed Stop Losses, which protect you from major market movements, and focus on only the most liquid and popular trading products which will appeal to traders who are just starting out, or who are more risk-averse.

Protect your retirement portfolio against major market movements
The closer you get to retirement the more important it is to maintain the wealth that you’ve created. Hedging is a strategy that involves taking a position in CFDs opposite to that of your share portfolio. This will shield you against the risk of major market movements.

To successfully maintain a diversified portfolio, you need to regularly review and re-weight your investments. Re-weighting involves taking your investment portfolio back to its original distribution. Selling CFDs on stocks that have risen can reduce the volatility of your returns. It also reduces the temptation to hold onto your best performing asset classes without taking profits.

Enhance the growth of your long-term investment portfolio with leverage
Trading CFDs on leverage gives you greater market exposure for a lesser capital investment. Surplus capital is then free to make alternative trades, giving you the opportunity to increase or diversify your portfolio and subsequently increase your profit potential.

About CMC Markets


What is a CFD?

Contract for Difference (CFD) – An agreement between two parties to pay the difference in price when the contract was opened until the time it was closed. A CFD is a derivative financial instrument that mirrors the price of the underlying share, index, sector or currency pair.

CMC Markets offers more than 3,000 CFDs on various instruments including NZ and Australian shares, US shares and indices, UK shares and indices, Asian shares and indices, commodities and foreign currency pairs (FX).


About CMC Markets

CMC Markets NZ Limited, an online trading company, is the largest share, index, sector and margin FX CFD provider in New Zealand. CMC Markets has operations in New Zealand, Australia, Canada, China, Germany, Hong Kong, Singapore, Sweden the UK and the US with clients in over 70 countries worldwide. It aims to offer the most cost effective trading solutions to retail investors.

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