Spread betting margins

[Ferru]

Hi

I'm wondering if there are more cost-effective ways of trading than spread betting.

Right now, the FTSE 100 is selling on IE Index at 5452.3 and buying at 5458.3. This means that if I bought at the current price, and exit when the market goes 10 points higher (assuming for argument's sake that the market immediately rises 10 points), I will have made only 4 points' profit. This seems a very hefty trading cost. For people aiming for fairly small swings, are there cheaper ways of trading than spread betting?

Thanks in advance.

Jeff

 

[shadowninja]

Don't scalp. I think spread betting works best if you're holding a position open for days because the (what some may call rip-off) spreads become insignificant.

 

[Lee Shepherd]

Ferru,

Bear in mind you pay no commission as it's incorporated in to the spread. Also, you dont have to take full lot sizes as these equivalent prices can be broken down in some cases of the index's of around 10 times so the margin is less, meaning you dont have to play with high volumes.
The 4 points you currently see will be out of hours prices (sunday), wait until market opens then you'll see that the spread will be more like 2 pts, you can even get cheaper than this. To be honest, as you dont know this simple matter, should you be spreadbetting at all, or should I say gambling. But then who am I to comment, I'm just looking at what I see.

Good Luck.

 

[Trading2k]

I agree scalping isn't a great option or at least I never got it right. IG Index who I use has smaller spreads on the FTSE and normally offer a 2 point spread for the daily. Personally I'm more of the hold for a few days to weeks kind of trader so the spread isnt as important to me.