Jump to content
Sign in to follow this  

Spot vs Futures - Help Needed

Recommended Posts

Hi,

I have a cfd account and I'm new to trading commodities and wondered if it's better to trade Palladium June contract with a 2 point spread or Palladium Spot with a 7 point spread but no expiry? I like the idea of no expiry but am worried that I'm not seeing all the pros and cons due to my trading inexperience. 

 

 

Share this post


Link to post

Hi @Tigerflow,  it sounds like you've got that round the wrong way. The spot market should have the tighter spread while the futures contract should have the larger spread. The reason being is the the spot market will charge overnight funding to go long each day whereas this charge is built into the futures spread. So if you are expecting to hold the trade open for a considerable length of time the futures contract is the more cost effective but for a trade of short duration the spot contract is more cost effective.

Share this post


Link to post

Hi Caseynotes,

Thanks for your reply but my IG Platform shows Spot Palladium as 1540.5-1547.5. Seven point spread.

And my June Palladium as 1503-1505. Two point spread.

Am I missing something? 

 

Share this post


Link to post

HI @Tigerflow,  ok, just looking and see the March contract which is about to rollover has been taken off so the next is June 19, I'm not familiar with the palladium market but the June price seems a very long way from the spot price so I'm presuming that has something to do with it. Check out some of the other spot vs futures prices and see what I mean.

Also, have a look at the video on this linked page comparing spot (dfb)  and futures.

https://www.ig.com/uk/glossary-trading-terms/futures-contract-definition

  • Like 1

Share this post


Link to post

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Member Statistics

    • Total Topics
      7,424
    • Total Posts
      37,732
    • Total Members
      47,701
    Newest Member
    SanthuDiya
    Joined 18/09/19 13:51
  • Posts

    • yes they will be on less charts but I understand your point about the size of the moves in ftse, no harm in trialing them though you might find marking out the immediate prior high and low has more relevance.  
    • Yeah, I keep an eye on volume, that's why it's showing at the bottom of my chart However, I haven't been able to discover a strong relation between volume spikes and trend direction. Sometimes I see orders of the magnitude of 10-20k and the chart doesn't do anything special. Other times you see just average volume and the chart does huge turnarounds. For example what happened at 8.30 with that spike down and then going straight back up and making new highs vs previous candle? All happened on low volume
    • @jameswalker1 my recommendation is trade the demo account to get a better understanding of the costs associated. I traded demo for nearly 2 years before placing my first real trade. It will save you in the long run to get a better understanding of the costs involved.
×
×