Spot verses futures

[Jason101]

Hi, to the good people of T2W,
I SB with IG.
The Futures spreads are so much more expensive than the spots. With daily roll over in place is there any benefit of paying the extra for the futures spread on for example Forex?
Kind Regards
Jason

 

[Jason101]

I should add I am trading daily charts.
Any thoughts on this from anyone please, I would be grateful
Kind Regards
Jason

 

[Adamus]

I always thought it was actually futures which were better. Happy to be wrong though. Give me an example of what a trade will cost you in SB then.

In futures (not cash forex) if you buy one lot of the Euro futures, you need about $6K margin, you pay about $1.75 commission, you get taken for about 0.0001 on the spread. That's $12.50.

And you can get robbed for about 5 ticks on slippage probably. That's $62.50.

Your average daily range in dollars is about $1200.

 

[Jason101]

Hi Adam,

That is really interesting to see how it works. I have not looked at that before, I have only Spread bet. The spreads for spots and futures in spread betting can fluctuate depending on market conditions.

To give you an idea on spread betting fees the spread for a USD/JPY pair is as I write:

Spot: buy 9539 / 9542 sell
Near quarter: buy 9531 / 9543 sell
Far quarter: buy 9516 / 9528 sell

With a roll over in place the spot trade account is settled at the end of the day but the trade
is re-opened immediately at the close price.
With this in mind I could see the benefit of paying the extra spread?
Kind Regards
Jason

 

[Tenapenny]

Just need to do the math Jason. It obviously depends how long you keep your positions open. Try some examples of previous trades you've done and go from there. Is it just forex that you're trading?

 

[arabianights]

Futures are spot ± the cost of carry to institutional folk. You can't get institutional rates.

So in other words the futures are better for longer term trades when said cost of carry will be over the price of the spread

 

[Jason101]

What a dumb a*se I am.

What a dumb a*se I am

Having a daft moment, thanks for patients in your replies, arabianights and Tenapenny.
Completely forgot you pay for the spread again the next day on a rollover.

More sleep less screen time, may be the order of the day:whistling

Kind Regards
Jason