Day trading trading penny stocks.......

[Final1001]

Hi

I day trade penny stocks buying shares directly from my broker, I use iii share dealing.

What am I am wondering is it worth me switching and day trading stocks using CFDs, or does anyone else day penny stocks or low cap stocks using CFDs and would they reccomend it or is sharedealing the better option (also I will not be shorting).

The things I dont like is that CFD inquire a rollover charge for holding overnight but im not sure how much the charge actually is, I am also unsure of the execution on CFDs regarding penny stocks. Is buying a CFD similar to sharedealing??

(I will be using IG)

Help on this would be amazing and very much appreciated

:idea:

 

[tar]

What you trade US or UK shares ?

 

[Final1001]

UK shares

 

[tar]

UK shares

OK , so as an advantage for CFDs you don't pay stamp duty on UK shares , and you get leverage , here are their charges :

http://www.ig.com/uk/spread-betting-cfds-charges

If you want to trade CFDs its better IMO to choose "shares DMA" , take a look :

http://www.ig.com/uk/shares-dma

 

[dojistar]

How can you realistically Daytrade Penny Shares. What sort of spread do these stocks have. I want to daytrade stocks were the spread is no greater than 3 cents, ideally a 1 cent spread.

 

[Final1001]

Thanks tar I recently opened a DMA account with IG and will add a bit of practice money to it, to test it and get used to it. From what I have read about DMA is that your buying straight into liquidity so any shares available on the level 2 order book you will get, which is perfect for I want to do.

Occasionally I might keep the CFD longer than the 1 day, do you know how much is costs to rollover each night, say £1000 worth of shares??

Doji when I day trade through share dealing I trade breakouts and news and will always keep an eye on the spread and how liquid the stock is. If the spread is ridiculous it usually means that no body is buying anyway.

 

[tar]

Thanks tar I recently opened a DMA account with IG and will add a bit of practice money to it, to test it and get used to it. From what I have read about DMA is that your buying straight into liquidity so any shares available on the level 2 order book you will get, which is perfect for I want to do.

Occasionally I might keep the CFD longer than the 1 day, do you know how much is costs to rollover each night, say £1000 worth of shares??

Doji when I day trade through share dealing I trade breakouts and news and will always keep an eye on the spread and how liquid the stock is. If the spread is ridiculous it usually means that no body is buying anyway.

Hi ,

As you can see in the link i gave you , they charge 2.5% above Libor rate "Based on LIBOR one month overnight rate" , then they divide that by 365 days for UK shares = Daily Rollover , so for long 1K worth of UK shares that would be around 30 pounds annually .
If you trade shares DMA with IG , you are technically trading and buying real shares in the name of IG , they charge you 0.1% /side with a 10 quids minimum .

Dont know which AIM shares you're trading , but thats what they offer : "We offer all shares in the FTSE 350 index, and normally all other UK-listed shares with a market capitalisation of over £10 million."

Shares list :
http://www.marketdatasystems.com/content/files/Current Stock Deal Settings.pdf?

 

[dojistar]

iLeeman on average what size are the spreads ?

 

[Final1001]

Yea thanks again tar. I just found that overnight charge for CFDs and funnily enough also calculated £1000 worth of shares and it comes to £25 for 365 days, so like 0.07p a day,which is nothing and thats fine for me, I can live with that thought it was alot more for some reason lol

 

[Final1001]

doji I will generally not buy if the spread is over 5% and will only buy if there is momentum and other people are buying so the spread is normally below 5%.

 

[tar]

Anyway you can post bids and offers with IG DMA ...

 

[malaguti]

Yea thanks again tar. I just found that overnight charge for CFDs and funnily enough also calculated £1000 worth of shares and it comes to £25 for 365 days, so like 0.07p a day,which is nothing and thats fine for me, I can live with that thought it was alot more for some reason lol

don't forget the commission charge on top, which is £10 each way, so thats £45 for 365 days. a lot more than your iii share dealing
iweb charges only £5 each way, and you get true market prices

 

[Final1001]

Yea good point malaguti, but dont forget no stamp duty and I think there are tax benefits for CFDs.

Looked into IG in more depth and seems they are not really good on AIM companies, so I will probably have to stick to sharedealing but I will most likely still use their CFD/spread betting service for mid-cap companies.

 

[malaguti]

Yea good point malaguti, but dont forget no stamp duty and I think there are tax benefits for CFDs.

Looked into IG in more depth and seems they are not really good on AIM companies, so I will probably have to stick to sharedealing but I will most likely still use their CFD/spread betting service for mid-cap companies.

there are no tax benefits on CFDs afaik, but obviously if you use an ISA, its tax free.
stamp duty, yep I know but it still won't come to anything close what you could be paying via CFD on IG
iii are charging £10 unless you are trading 10 per month so if you are day trading then you will obviously qualify..you know this already though. But consider shopping around is my main point

 

[tar]

there are no tax benefits on CFDs afaik, but obviously if you use an ISA, its tax free.
stamp duty, yep I know but it still won't come to anything close what you could be paying via CFD on IG
iii are charging £10 unless you are trading 10 per month so if you are day trading then you will obviously qualify..you know this already though. But consider shopping around is my main point

Stamp duty is 0.5% , plus you have to pay the regular commissions per trade , however with IG you pay 0.1%/side .

 

[malaguti]

Stamp duty is 0.5% , plus you have to pay the regular commissions per trade , however with IG you pay 0.1%/side .

with a minimum commission charge of £10

 

[tar]

with a minimum commission charge of £10

yes , if he trades through a broker there is a minimum charge as well ...

 

[malaguti]

yes , if he trades through a broker there is a minimum charge as well ...

I know mate, I've highlighted those already. I was comparing those minimum charges just pointing out that IG may not necessarily be a better option.
this of course comes down to how often he trades in a month, and how many shares he purchases each time.

 

[tar]

Looked into IG in more depth and seems they are not really good on AIM companies, so I will probably have to stick to sharedealing but I will most likely still use their CFD/spread betting service for mid-cap companies.

You can check Spreadex "Spreadbetting" they offer more AIM shares ...

 

[Final1001]

Yea I looked into spreadex they offer a wide range but I dont want to pay the spreads, as even spreads are widely manipulated on the AIM market from my experience anyway.