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Trading Costs - Beginniner


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Hi community,

I'm trying to understand the cost.

If say I buy the ST Index at say 2600 the bid/ask is 2599 2601, does that mean that the cost of the index contract is $2 x 1 = $2 for 1 mini contract?

At the same time if I buy the sti ETF at 2.70 then my brokerage is 0.1% minimum of $10. So for smaller accounts best to go with the index right?

Is it better buy the index or the ETF?

 

 

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Anything you buy has a spread. If no separate commission is charged then your only effective transaction cost  would be the spread unless you hold the position overnight.

A futures bet doesn't have any more costs, but of course the price itself could have a built-in premium that erodes over time (with interest rates so low this premium would normally be small). Some futures trade at a discount to the near month depending on expected delivery issues/supplies.

A daily-funded bet has a daily rate of interest charged to your account.

A "spot" DFB is artificially composed of a time-varying mix of the nearest two futures contracts so there is a daily adjustment depending on the varying ratio of the two constituent contracts and on the variation in the premiums of the near and further month. In oil for example the delivery month and later month can show quite a difference. The spread is normally wider for the spot markets offered. If a second futures month isn't readily available these markets can also become "closing only".

 

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