Swing trading and spreadbet charges

[u0362565]

Hi all, I assume many traders hold positions for days/weeks/months. That being the case overnight charges are tolerated and trades are still worth placing? It's just that DFB's seem like they were really designed for day trading but I imagine a lot have a longer timeframe view.

Thanks for any input.

 

[Bopperz]

If you want to hold a position for a week or more, try and use a futures contract. You wont be charged a daily fee, other fees still apply though.

 

[u0362565]

Thanks for the comment. I've steered clear of futures so far basically because I felt there was plenty to learn about trading without introducing futures as well. From what I have quickly read in terms of the "process" of placing a trade it looks very similar to other spread bets it's just there is a defined expiry. The fees weren't obvious other than it said you dont pay the overnight fee but the spreads are a little bigger. As it's a DFB there shouldn't be tax paid either, what am missing?

[u0362565]

Ah I see I see now that the larger spread accounts for the no overnight fee.

[jlz]

Hi @u0362565 , I was looking into how the DFB value is exactly calculated and landed on this link:

https://www.ig.com/uk/help-and-support/spread-betting-and-cfds/fees-and-charges/why-is-overnight-funding-charged-and-how-is-it-calculated-

Looking at the current spread for the UK index:

FTSE 100 : 2

FTSE 100 Futures : 4

The nightly DFB amount would be close to the initial size per point being a bit cheaper of that would cost initially.

Looking at the spread, that is about the double in this market, you would be able to hold a position in the cash market for about 3-4 days in order to match what would cost to bet in the futures markets.

Betting on the futures market is not really free until you reach those number of days. After that your bet would be cheaper with the downside of an ending date. Now, the question is what would happen when we reach the end date. Does the bet carry on the next future market or does it get closed? 

 

 

[jlz]

Kodiak answered the question a while ago.

https://community.ig.com/forums/topic/8056-closing-a-position-after-a-futures-expiry-date/

 

[u0362565]

Right ok thanks for the input guys.