Is there any point trading longer term (say 6-12 months) on leverage?
If a spread bet company charges 2 pips and you make 100-200pips from the trade then that is around 1-2% in commissions, which is not so bad.
However, longer term traders will be charged a carry over per day, which is typically 50% of the initial spread so 1 pip per day in this case.
If we take EU as an example and you went short AUgust last year and are still short now, that's around 2000 pips profit but you will have paid almost 365pips in commissions during that time (1 pip x 365 days), that's around 18% commissions (most of it hidden as you don;t realise the daily effect). Of course, it depends on actual targets but many long term traders might only be looking for 1 or 2 big figure movements.
How else do you get the leverage to trade long term without these massive daily rollovers? I've seen some FX futures contracts but most brokers do not offer them.
If a spread bet company charges 2 pips and you make 100-200pips from the trade then that is around 1-2% in commissions, which is not so bad.
However, longer term traders will be charged a carry over per day, which is typically 50% of the initial spread so 1 pip per day in this case.
If we take EU as an example and you went short AUgust last year and are still short now, that's around 2000 pips profit but you will have paid almost 365pips in commissions during that time (1 pip x 365 days), that's around 18% commissions (most of it hidden as you don;t realise the daily effect). Of course, it depends on actual targets but many long term traders might only be looking for 1 or 2 big figure movements.
How else do you get the leverage to trade long term without these massive daily rollovers? I've seen some FX futures contracts but most brokers do not offer them.
