Where do SB companies get index prices at night?

[MrBrilliant]

Spread betting companies offer trading on indices such as the Dow, FTSE, etc. 24-hours a day, which begs the question: Where do they get these numbers at night?

They seem to get the overnight price matching the open price of the next day fairly well, so it doesn't look like they're making it up.. so where do the number come from? Is it from a futures exchange somewhere?

 

[Liquid validity]

Based on but not exactly the same as the futures price.
Price level is rarely the same, but look broadly similar on a chart.

Compare your SB chart to futures chart:
http://www.barchart.com/commodityfutures/All

 

[MrBrilliant]

Based on but not exactly the same as the futures price.
Price level is rarely the same, but look broadly similar on a chart.

Compare your SB chart to futures chart:
http://www.barchart.com/commodityfutures/All

Thanks for that. If I wanted to do the same sort of trading outside of the SB platform, what would I have to do in order to trade these futures?

Thanks

 

[Hate2Lose]

Spread betting companies offer trading on indices such as the Dow, FTSE, etc. 24-hours a day, which begs the question: Where do they get these numbers at night?

They seem to get the overnight price matching the open price of the next day fairly well, so it doesn't look like they're making it up.. so where do the number come from? Is it from a futures exchange somewhere?

You are correct, these 24 hour prices are taken from the futures exchange. The prices on the futures exchange are derived from indices around the world. When one index closes, the futures price for that index starts following the prices on the next index.

As a general rule of thumb, this is how each index follows the other…

European Indices (UK/DAX etc) > US Indices (Dow Jones/S&P etc) > Asian Indices (Nikkei/Hang Seng)

So when the FTSE 100 closes at 4:30pm London time for example, the FTSE futures price will then start following the Dow Jones. When the Dow closes at 9pm London time, the Dow Jones futures price starts following the Asian indices.

Hope this makes sense!

 

[MrBrilliant]

You are correct, these 24 hour prices are taken from the futures exchange. The prices on the futures exchange are derived from indices around the world. When one index closes, the futures price for that index starts following the prices on the next index.

As a general rule of thumb, this is how each index follows the other…

European Indices (UK/DAX etc) > US Indices (Dow Jones/S&P etc) > Asian Indices (Nikkei/Hang Seng)

So when the FTSE 100 closes at 4:30pm London time for example, the FTSE futures price will then start following the Dow Jones. When the Dow closes at 9pm London time, the Dow Jones futures price starts following the Asian indices.

Hope this makes sense!

Hi,

Thanks for that.

I have noticed that the Dow Jones and FTSE tend to both go up and down at the same time (even when one is closed). What I don't understand is: how are the actual numbers calculated? e.g. if FTSE goes up by 10 points, Dow Jones should go up, but by how much?

 

[wackypete2]

Hi,

Thanks for that.

I have noticed that the Dow Jones and FTSE tend to both go up and down at the same time (even when one is closed). What I don't understand is: how are the actual numbers calculated? e.g. if FTSE goes up by 10 points, Dow Jones should go up, but by how much?

Why??
For your own sake don't try to spreadbet an index price from a bucketshop on an index that is CLOSED. In off hours there is ZERO rhyme or reason why the spreadbet prices move in any direction. For example the Dow Jones index is closed and there is no trading on all 30 stocks that make up the index. Why then would you want to try to trade on some extrapolated probability of what the index should be? INSANE.
There ARE easier ways to profit.

Peter

 

[Liquid validity]

Why??
For your own sake don't try to spreadbet an index price from a bucketshop on an index that is CLOSED. In off hours there is ZERO rhyme or reason why the spreadbet prices move in any direction. For example the Dow Jones index is closed and there is no trading on all 30 stocks that make up the index. Why then would you want to try to trade on some extrapolated probability of what the index should be? INSANE.
There ARE easier ways to profit.

Peter

^^^ this.
SB prices may be loosely based on futures, but the price only loosely tracks them.
Its not a real market as pete says.
TBH its not a good idea to even trade futures out of normal hours,
unless swing trading.

 

[MrBrilliant]

Thanks for your concern guys

Actually I'm not trying to figure out how to do more spread-betting; I'm trying to figure out what the spread-betting is based on so I can trade in the actual underlying market instead of the bucket shop. (So basically, I want to know if there's an actual market where I can buy and sell Dow contracts and Dow options at night)

 

[yellowfloyd]

Hi,

Thanks for that.

I have noticed that the Dow Jones and FTSE tend to both go up and down at the same time (even when one is closed). What I don't understand is: how are the actual numbers calculated? e.g. if FTSE goes up by 10 points, Dow Jones should go up, but by how much?

In normal circumstances markets will tend to follow each other i.e. the FTSE will take its lead from Asian which in turn takes its lead from the States and that will be a ‘normal’ trend as markets across the globe trade virtually 24 hrs a day. In answer to your question the FTSE 100 for example will move based on the 100 companies that make it up, if the major companies (heavyweights) are up the market should be positive and vice versa if they are down. These stocks will move on their own merit based on global factors that affect their sector (for example mining stocks could be influenced by the price of their underlying commodity or the strength/weakness of the USD).

The markets will also have a ‘futures’ value that will usually take its lead from a market that is currently open, so for example when the UK market closes at 4:30pm the US markets are still open so the UK market ‘futures’ price will tend to track the movement of the US markets and then this will continue over night into the Asian exchanges. Therefore giving us an opening level the following morning.

Hope that’s clear!

 

[CityMasterTrader]

FTSE 100 futures are traded on LIFFE/Euronext. Other index futures can be found on other derivatives exchanges, for example Chicago Merc (I think).

Companies like iDealing.com do DMA to these futures exchanges. Never used them though, so can't comment. It's something i'd like to dabble with in future, so please let us know who you use, and how you get on!

 

[Liquid validity]

No one should really be trying to actively trade ETH (extended trading hrs - futures or SB derivative)
The only purpose of ETH is to allow swing traders to exit due to market shock
at a hard stop instead of getting gapped at open.
Other than that, global desks may use it for re-balancing a position if they really need to.
ETH is not something you should deliberately set out to trade.
Stick to regular trading hrs.