cost of spread bets

[roughbert]

I don't spreadbet yet, but I may do so. This depends upon whether my proposed method can be successfully backtested. I'm close to being able to run tests, but I don't know how to estimate the broker's charges. I'm guessing that a flat percentage will have to do, while suspicious that the actual percentage will vary between brokers and possibly also on the volume traded.

Presuming that most spreadbetters plan their trades, what sort of cost/charge/commission do you allow for?

I'm starting testing with the FTSE100 constituents and some big ETFs, if that helps.

 

[AlexGreen]

Take the difference between the bid-offer spread. It's as simple as that.

Plus any slippage.

 

[Weighbridge]

A flat percentage is a decent enough approximation for spreadbet costs, although watch out for the spread widening at certain times of the day.

As for what that percentage should be.... it varies by instrument unfortunately. Most FTSE100 daily spreads should be roughly 0.3%. Stick a bit more on to be sure.

 

[Hoggums]

Take the difference between the bid-offer spread. It's as simple as that.

Plus any slippage.

Plus any leverage interest charges if you are holding overnight.

 

[brendansvest]

Depending on what sort of volume/size you are trding you may be better off with CFDs. Spreads do change throughout the day on the SB quotes but with CFDs you have a fixed charge/commission so it is easier to factor in to any system. If you are trading decent size/volume it may be an idea to look at Pretium Securities. They offer a rebate system where you can reduce commission to 0.05%.

Good luck.

 

[roughbert]

Plus any leverage interest charges if you are holding overnight.

Oh. I think that would probably screw my plan as some of my positions are quite long-term. Time to brush up seriously on SB I spose.

brendans - Thanks, but CFD profits are subject to CGT I think - which is why I wanted to use SB.

 

[montmorencyt2w]

Oh. I think that would probably screw my plan as some of my positions are quite long-term. Time to brush up seriously on SB I spose.

Not necessarily. For "rolling daily" type positions, the overnight financing can be in your favour depending on exactly what it is and whether you are buying or selling. Even if not it might not be all that high.

If your position is in a "futures" version of the instrument then until the contract expires there should not be any overnight charge. If you roll it at the end of the normal contract period, I'm not sure then if there is a charge or not - quite possibly.

 

[Stargunner]

You can take out long term positions in spread betting. Providing your risk and money management is sound, a quarterly or even end of year futures position will suit your needs well. Most firms let you rollover these positions for a very modest fee, usually around half the spread.

Best use of these is to take out small, but long term index positions. I.e, buying/shorting the S&P500 annual future. It's like buying an etf on margin, without paying tax and without massive commissions.

 

[lucas_king]

I don't spreadbet yet, but I may do so. This depends upon whether my proposed method can be successfully backtested. I'm close to being able to run tests, but I don't know how to estimate the broker's charges. I'm guessing that a flat percentage will have to do, while suspicious that the actual percentage will vary between brokers and possibly also on the volume traded.

Presuming that most spreadbetters plan their trades, what sort of cost/charge/commission do you allow for?

I'm starting testing with the FTSE100 constituents and some big ETFs, if that helps.

Most spread betting firms will incorporate a charge of roughly 0.1% (which is built into the spread).

You might find spread betting a bit of a pain in terms of being re-quoted and not getting good fills.

You might want to consider CFDs (contracts for difference). In particular, a provider that gives you direct market access onto the stock exchange. That way you’ll get the best fills and good liquidity

 

[phoenix25140]

So which of the markets out of the 3 in the attached picture would you pay overnight charges?

I never use the longer spread markets but would I not pay overnight financing?

 

[lancenicolase]

You'd be paying overnight charges on the daily funded trade (DFT).
The other two are futures so they are adjusted for financing charges (so you don't have to pay overnight financing).

 

[luckystrike23]