Rookie Question

[sak07]

I've been trading virtually on capital spreads and tradindex with their virtual accounts. Yesterday I placed two trades that in theory should have locked in profit on an abirtrage position.

I bought the daily FTSE at 4417, at the same time I sold for 4423, at £10 a point this should have locked in £60 profit. Both prices were confirmed. However, I made £60 on my sell position at 4423 as this was closed at a price of 4417 by the SB, but the buy at 4417 came back with a £100 loss as the SB closed it at a price of 4407. How can two SB's close at such different prices and why didn't I make my £60 profit? What did I do wrong? Any help or advice greatly appreciated!

Thanks

 

[FetteredChinos]

hmm not sure.

capital spreads closing price is the official market close as far as i am aware, so im guessing the problem is with the tradindex closing price.. 4417 seems a little steep, and you may want a word with them to see why they closed so far from the official level.

FC

 

[sidinuk]

To be honest I wouldn't waste your time trying to arb on two virtual accounts. The prices are probably not exactly the same as you would get in the real 'market'. There is very little profit and a lot of risk in trying to arb the sb companies in reality - it just isn't worth the effort.

 

[smallpotatos]

sak07

did you trade the daily ftse future with Trad Index ... the difference at the moment is about minus 10 on the cash against the futures so the closing level has the look of a daily future.

 

[stevet]

sak07

arbs only work when you have an full and deep understanding of the relationship between the two contracts and also trading

you now have more understanding than you did before!

and remember the spread - your analysis of even the opening position - is ignoring the spread on each of those positions

 

[sak07]

Small potatoes,

What then is the difference between tradindex daily future price compared to a capital spreads daily cash ftse price? I have noted anumber of SB's offer two spread prices, ie a ftse daily future and a ftse daily cash, and wondered why they do this. If anyone could explain it would be much appreciated.

 

[stevet]

sak07

spreadbetting and associated type companies, hedge their exposed positions in the futures market , so all their prices are based on the futures price - but as a marketing gimmick - they offer what they call a daily cash price - but in reality - it too is based on the futures price, but maybe a fixed number of points from the futures price