SNP, swap over to DOW

[SanMiguel]

You assume the currency risk when trading a contract in another currency. I don't think any broker would hedge this for you. With the currency spread, you are getting spot market rather than Thomas Cook rates though

If you're in for only 2pts (max 30mins), it would be some move that moved it 10c though and I think if the currency pair moved that fast that quick, that you'd probably have your stop hit on ES anyway.

Yeah, it's not the move while in the trade, it's the fact that my account would be in USD and say I traded the ES for 1 year, that's open to currency fluctuations.
Speaking of which, is there a DMA for the FTSE futures?

Hi SM

have a look at pro spreads,theres a (thread on this forum) same 0.5 spread but DMA.
theres a decent discussion on that thread wether its worth going from SB to futures and the tax implications.

Thanks, I'll have a look.
Same thing implied though, paying 0.5 spread is fairly hefty considering what the US traders get and I might be better simply trading an instrument with lower spreads like the FTSE or DOW.

 

[chris1976]

SM

we need to find out how to scalp the SPY,lol

Is the spy not available on the CFD platform obviously the 9 point spread on the SB platforms good for nothing

 

[robster970]

Speaking of which, is there a DMA for the FTSE futures?

I have no idea man. I'm a bit of a one trick pony, the pony being ES. Creature of habit and all that.

 

[SanMiguel]

SM

we need to find out how to scalp the SPY,lol

Is the spy not available on the CFD platform obviously the 9 point spread on the SB platforms good for nothing

Forget the SPY, the margin is too high to trade it.
You can tie up the SPY support and resistance with the SPX cash or even the futures set to US hours if you need to.

 

[chris1976]

Forget the SPY, the margin is too high to trade it.
You can tie up the SPY support and resistance with the SPX cash or even the futures set to US hours if you need to.

really!so it is on the cfd platform then?whats the spread and margin?

got a guy from IG hassleing me to open an account but cant decide wether to bother or not?

 

[arabianights]

Maybe, but seems to have been working for the last 6 months or more. They are all support and resistance scalps. That said, 0.5 spread going for 2pts (2.5 total) is a lot to pay. Hence why it might be better to trade the DOW in the same way.

If you can really do it you will make double the profits going dma and working the orders.

PS yes there is a FTSE future, it's on LIFFE.

 

[SanMiguel]

If you can really do it you will make double the profits going dma and working the orders.

PS yes there is a FTSE future, it's on LIFFE.

"Working the orders" - you mean watching level 2?
So you reckon DMA is cheaper than SB or CFD even with the CGT? Commissions obviously are very low.
Speaking of which, what are commissions for FTSE futures?

 

[arabianights]

"Working the orders" - you mean watching level 2?
So you reckon DMA is cheaper than SB or CFD even with the CGT? Commissions obviously are very low.
Speaking of which, what are commissions for FTSE futures?

I mean sticking the orders in as limit orders so you're earning rather than paying the spread.

For short term trading, DMA is absolutely far cheaper than SB, whatever tax included (and cgt is unlikely)

comissions on FTSE futures, off the top of my head, are (per round trip) about 40p at LIFFE, 6p to LCH, and then whatever clearer/broker charges on top. So if you're doing decent volume well under a quid a round trip. 1 lot is £10pp fwiw.

 

[SanMiguel]

You assume the currency risk when trading a contract in another currency. I don't think any broker would hedge this for you. With the currency spread, you are getting spot market rather than Thomas Cook rates though

If you're in for only 2pts (max 30mins), it would be some move that moved it 10c though and I think if the currency pair moved that fast that quick, that you'd probably have your stop hit on ES anyway.

s

So, I presume most of the ES brokers are in the states anyway.
Will they hold your account in GBP for you and do an instant currency exchange to USD and then back when you close your trade? Most of the US brokers I've seen so far don't give you spot...they don't give you Thomas Cook rates either but somewhere in between so it's still a consideration.

I mean sticking the orders in as limit orders so you're earning rather than paying the spread.
For short term trading, DMA is absolutely far cheaper than SB, whatever tax included (and cgt is unlikely)
comissions on FTSE futures, off the top of my head, are (per round trip) about 40p at LIFFE, 6p to LCH, and then whatever clearer/broker charges on top. So if you're doing decent volume well under a quid a round trip. 1 lot is £10pp fwiw.

If we assumed that I was only scalping and was paying 0.5 spread for 2.0 pts on a SB broker, that's a 25% "tax" that's effectively hidden.
So, CGT is around 20%. I could reduce the CGT by talking to an accountant. Commissions seem neglible compared to the trade size so may as well be somewhere in the region of 0%-1% depending on trade size. Income tax is the other but presumably if you have any other kind of income, then all the trading earnings would be taken as CGT?

I would guess the scalp trades would have a higher win ratio trading inside the spread with limit orders as I wouldn't have to overcome the spread first. Presumably on the bigger order sizes the MM won't always fill your entire order though?
Any recommended UK brokers to have a look at for FTSE futures? The ES I can check out as above but still not too sure about the currency exposure.

With the FTSE, it's a little different as it's only a 1pt spread maybe going for something like 20pts, which is only a 5% "tax".

Might be overthinking it but I think it's important to consider the different implications as a different type might suit each market. Seems like SB would be worth it for FTSE trading and FX but DMA for the ES...

 

[arabianights]

Your calculations are predicated on you winning every trade.

Once you're doing a reasonably size (I dunno what yet but say 10k r/ts a month) we can be your FTSE brokers... Be good for you cause you know I wouldn't be afraid to be abrasive if you're ****

 

[SanMiguel]

Your calculations are predicated on you winning every trade.

Heheh - true.
Might be overthinking it but I think it's important to consider the different implications as a different type might suit each market. Seems like
- SB would be worth it for FX trading
- FTSE maybe DMA
- ES...definitely DMA

 

[arabianights]

Heheh - true.
Might be overthinking it but I think it's important to consider the different implications as a different type might suit each market. Seems like
- SB would be worth it for FX trading
- FTSE maybe DMA
- ES...definitely DMA

It ain't per product that clearly... you need to look at average winning/losing/scratch traders, and the prevelance of each... then compare them to the spread.

It would be incredibly rare for spread betting to be cost effective.

My experience on spread betting is limited and mostly useless though. Actually one called me yesterday saying they'll give me a free trade. Might call em up tomorrow and arb it... let's see...

 

[SanMiguel]

So, 1 contract on the ES would be $50, = position size of around $50k (50x1000) - the DMA brokers probably only give a 2:1 leverage?

Any recommended FTSE futures providers? I had a quick look at IB, seems round trades were around £3.70. DMA providers have platform fees on top?

 

[SanMiguel]

Why don't you go DMA SM? Then you only have slippage and commissions?

Is slippage much of an issue on DMA?

 

[robster970]

Hey man, sorry I haven't been answering. Off on hol tomorrow too for a couple of weeks.

So I trade 1 contract per $10k. I originally saw this bandied around on some other older threads and then read it in John Carters 'Mastering the Trade'. I'm happy with this level of leverage per contract, suits my relatively conservative nature. I think you can get down to $5k per contract with some brokers but personally that would be too much for me. It might suit you though. You're best calling Velocity/IB/Infinity and finding out what you can and can't get away with as I think it varies.

As for slippage I get a little every now and again (0.25pts) when it's moving fast but it's infrequent enough and small enough to end up smaller than a constant 0.5pt spread with both my intraday with it's 4pt target and largely irrelevant with the swing trading off the H4.

Why don't you give a few brokerages a call and ask them? Get a feel for it all. Also if Arabian says you should go DMA then it must be the law.

IB do a demo platform you can mess around with. Give that a go, you'll get a sense of what DMA feels like. I think some of the other older, wartier traders can probably give you greater guidance than I can too.

 

[SanMiguel]

Your calculations are predicated on you winning every trade.

Once you're doing a reasonably size (I dunno what yet but say 10k r/ts a month) we can be your FTSE brokers... Be good for you cause you know I wouldn't be afraid to be abrasive if you're ****

0.5pt spread 2pt target = 25% commissions ES
FTSE not so bad 1pt for 20pts = 5% commissions.
DMA would be less but 20% CGT.
If I factor in losing trades then the spread is alreday taken in it.
Example, I scalp for 20pts, the target is 20pts+spread but on a losing trade the loss is 20pts including the spread so does it count in terms of comparing tax free to CGT?

 

[SanMiguel]

I've just been having a look at the futures on some IB contracts and it appears they have a spread so what's the point in trading their DMA platforms? Yes, you can work the orders to eliminate the spread but you can do that on CFDs also.
If you ever wanted to enter a market order, then you would have to pay the spread actually making it more expensive than spread betting as there are commissions on top, no?

 

[Shakone]

I don't think you should be equating the CGT with the spread. The CGT is only going to come into effect for your overall profit if you have one. Whereas the spread and commissions is coming into every single trade, and if you're scalping that will be quite a lot. Forget the CGT, and concentrate on the commissions, spread and execution when deciding.

I also wouldn't worry too much about currency exposure. We're all at risk of currency exposure whether the money is held in dollars or pounds, and the exposure could just as easily be beneficial to you rather than detrimental.

But, yes I think switching to the Dow is a good idea.

 

[SanMiguel]

I mean sticking the orders in as limit orders so you're earning rather than paying the spread.

For short term trading, DMA is absolutely far cheaper than SB, whatever tax included (and cgt is unlikely)

comissions on FTSE futures, off the top of my head, are (per round trip) about 40p at LIFFE, 6p to LCH, and then whatever clearer/broker charges on top. So if you're doing decent volume well under a quid a round trip. 1 lot is £10pp fwiw.

cgt unlikely? Anyone trading for a living should be looking to make more than 10k a year so cgt appplies after that.

 

[arabianights]

no it doesn't