Market Information

1. Understanding the Basics

This guide provides an overview of key concepts you'll encounter while trading with ScoreCM. Familiarizing yourself with these terms is crucial before placing any trades.

1.1 Market Terms

• Tick Value: The smallest price movement for a specific market. ScoreCM uses tick values to calculate changes in your account balance (profit/loss and margin).
• Trade Size: The amount of an underlying asset you're trading. Trade sizes vary based on market conditions, your account equity, and the specific market. ScoreCM provides details on minimum and maximum trade sizes, as well as standard lot sizes for each product. Micro lot trading might be available on specific accounts (check with ScoreCM).
• Spreads: The difference between the buy and sell price of an asset. ScoreCM strives to offer competitive spreads, aiming to achieve the targets mentioned in their information sheets. However, spreads can fluctuate due to market liquidity.

2. Financing & Commissions

2.1 Overnight Costs

Holding positions overnight (after the 23:00 CET closing time, including weekends and holidays) incurs a financing cost that may debit or credit your trading account.

2.2 Contracts for Difference (CFDs)

• Long Positions (Buying): You typically pay the financing cost, resulting in a debit to your account.
• Short Positions (Selling): You typically earn the financing cost, resulting in a credit to your account.

2.3 Forex CFDs

The financing cost depends on the interest rates of the two currencies in the FX pair.

• Long Position in Higher Interest Rate Currency: Account credited.
• Short Position in Higher Interest Rate Currency: Account debited.

2.4 Cost Calculation Examples

Swap rates are based on 1-day interest rate differentials for the currencies in an FX pair.

Example: Long 500,000 EUR/USD on a EUR-based account

Cost = 500,000 x (-0.000015) x (-1) = $7.50 (explanation of negative sign and swap rate can be added in a footnote)

2.5 Commissions on CFDs

A commission fee is applied to CFD trades based on the trade size (round trip - opening and closing the position).

Commission = Number of Contracts x Commission Rate

Example: Opening 10 Long UKOIL contracts with a $10 commission per round trip per contract

Commission = 10 x $10 = $100

3. Margin Trading

Margin trading in CFDs allows you to leverage your trades by only depositing a percentage of the total position value. This magnifies potential profits and losses compared to investing the full amount.

• Margin: The initial deposit required by ScoreCM before opening a trade. Maintaining additional margin is recommended to cover potential losses.
• Margin Risk Management: Margin limits the risk for both you and ScoreCM, ensuring participants fulfill their trade obligations.

3.1 ScoreCM Margin Requirements:

Minimum margin requirements vary by product type. Refer to ScoreCM's website under "Our Competitive Spreads" for details.

3.2 Margin Calls & Stop Outs

ScoreCM monitors CFD trades in real-time.

• Margin Call: You will receive a "Margin Call" if your account equity falls to 100% of the margin used for open positions. This prompts you to add more funds to maintain the minimum margin requirement.
• Stop Out: If your equity falls to 50% or less of the used margin, ScoreCM may execute a "Stop Out," automatically liquidating a portion or all of your open positions to minimize losses.

Example: Understanding Margin Calls

Margin requirements depend on the leverage used (e.g., 1:30 or 1:100) and the position's USD value.

Example:

Buying a standard lot (100,000 units) of AUD/USD at 1.1000 would require:

100,000 x 1.1000 = USD 110,000

With a 3.33% margin requirement (1:30 leverage), the opening cost is USD 3,666.66.

Equity Increase (AUD strengthens): 

Profit = USD 1,000 (increased value - initial value)

Equity Decrease (AUD weakens): 

Loss = USD 1,000 (decreased value - initial value)

4. Important Considerations

• Trading on margin involves substantial risk. CFDs are speculative and can result in significant losses. Leverage can amplify both profits and losses due to market fluctuations.
• Before You Trade:
  • Define your risk tolerance: Carefully assess your financial situation and risk tolerance before using leverage. Margin trading can magnify losses quickly, so ensure you have sufficient capital to withstand potential losses.
  • Develop a trading plan: Establish a clear trading strategy that includes entry and exit points, risk management techniques (stop-loss orders), and position sizing based on your risk tolerance.
  • Practice with a demo account: ScoreCM may offer a demo account allowing you to practice trading with simulated funds in a risk-free environment. This helps you gain experience and test your strategies before risking real capital.
• Monitoring and Managing Risk:
  • Regularly monitor your positions: Actively monitor your open positions and account equity to assess potential risks and make adjustments to your strategy as needed.
  • Utilize stop-loss orders: Stop-loss orders automatically exit your positions when the price reaches a predetermined level, helping to limit potential losses.
  • Maintain sufficient margin: Ensure your account equity stays above the minimum margin requirement to avoid margin calls and potential stop-outs. Consider adding additional funds if your equity falls significantly.
• Consult with a qualified financial advisor:** Consider seeking guidance from a qualified financial advisor who can assess your individual circumstances and suitability for margin trading.Consult with a qualified financial advisor:** Consider seeking guidance from a qualified financial advisor who can assess your individual circumstances and suitability for margin trading.

5. Deposits & Withdrawals

ScoreCM prioritizes your convenience and offers a variety of deposit and withdrawal options designed to be hassle-free.

• Client Fund Segregation: Your deposited funds are held securely in separate bank accounts, entirely segregated from ScoreCM's own funds. This ensures your money is solely used for your trading activity.
• Financial Audits: ScoreCM's financial reports (interim and annual) are audited by Price Waterhouse Coopers, a globally recognized financial auditor. This reinforces their commitment to transparency and the highest operational standards.

6. Additional Notes:

• Remember: Trading on margin involves significant risk. Carefully assess your financial situation and risk tolerance before using leverage.
• CFD Education: Before using CFDs, thoroughly understand the associated risks and ensure you've reviewed and grasped ScoreCM's terms and conditions. Consider additional educational resources offered by ScoreCM or independent financial institutions.

7. Further Resources:

• ScoreCM Help Center: visit ScoreCM help center
• Glossary of Trading Terms: visit ScoreCM Glossary