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Overnight charges in US crude


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12 minutes ago, Danius said:

Another question where can we find all this futures information? According to IG formula of (P3 – P2) ÷ (T2 – T1) where can we find this P3, P2 and T1, T2 information? That would be useful as I can calculate the charges myself then.

example here;


1) The formula for calculating the Overnight Basis Adjustment is as follows: 

Overnight Basis = (P3 – P2)/ (T2 – T1) 

T1 = Expiry date of the previous front future 
T2 = Expiry date of the front future 
P2 = Price of front future 
P3 = Price of next future 

For the below explanation we will call the undated futures contract price 'P'. 

This formula therefore takes the difference between prices of the two futures contracts used and divides this by the number of days between the expiry dates of both futures contracts. 

If the slope of the futures curve is upwards sloping you would see a negative overnight funding adjustment posted to your account. If it were downward sloping, you'd expect to see a positive one. 

In this case, the US Crude futures curve is upwards sloping. 

The best way to think about why this is a negative adjustment when you have a long position is by splitting the difference in the price of the futures contracts into individual days. This is done by using the above formula. As the undated contract moves up the futures curve from P2 towards P2, you'd expect P to rise by the same number of points as the daily basis adjustment, all things equal. 

For instance, at the time of writing the current price difference between the MAR-15 and APR-15 US Light Crude contracts is around 62 points and the time difference is 31 days. As such the basis adjustment will be: 

(2930 - 2868) / 31 = 62 / 31 = 2 points per day. 

As such, you'd expect P to rise by this amount each day, all things equal. On the flipside, if you had a short position on this market you'd see a positive adjustment on your account to compensate for price P's movement up the futures curve from P2 to P3.

2) The formula for calculating the IG Annualised Cost is as follows: 

This cost forms part of the adjustment if you are holding the undated contract through 22:00 UK time and has an IG admin fee of 2.5%.

The formula for this is: 

Price x 2.5 % / 365 

Where P again represents the price of the undated contracts at 22:00 UK time. For instance: 

For example 2930 x 2.5 % / 365 = 0.2

3) These two points adjustments are added together.

In the above example, adding these together gives a value of around 2.2 which is the rough charge for the position. You then do 2.2 x Bet Size. There will be a larger value paid on Friday due to the weekend. These adjustments are variable so if you wish to confirm the exact values each day please give us a call.

If you are looking to hold an exposure to US Oil over the longer term you may want to consider holding one of our futures contracts as there is no basis adjustment or IG admin fee posted to the account each night. 

 
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Another question where can we find all this futures information? According to IG formula of (P3 – P2) ÷ (T2 – T1) where can we find this P3, P2 and T1, T2 information? That would be useful as I can calculate the charges myself then.

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Same problem, charge is unaffordable with 1 size almost 10 pounds everyday. pondering about how to change the trade platform.any recommendation?

 

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2 minutes ago, VK said:

I was advised by some traders to cut some losses and reopen the positions in other provider with lower overnight funding. The margin required is lower and actually paid for longing the crude now (as exposed to paying interest to keep them going).

not sure how that works, the margin requirement is set by the regulator which in Europe and the UK is esma so not set by IG. If you are keeping the trade open then with futures there is no overnight funding at all. Overnight funding is set at end of each day so is different day by day so difficult to compare with other brokers unless you have same concurrent trades running.

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On 02/04/2020 at 11:09, CharlotteIG said:

The overnight fee is charged if you hold the position through 22:00pm GMT. 

You can close the positions at 21:59 and reopen at 22:01 then you can and will not be charged.

 

Where does one find these  carry over charge rates ... this information should be readily accessible to clients.

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On 27/03/2020 at 13:13, noon said:

Why IG charged me £10.74 for overnight charges in £1.10 long in US Crude?  Should not be £1.074?

It is not like this before, it is increased from last monday, i also feel they have problems in their system or calculation. But they did not replied me emails and call.

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1 minute ago, SHAOQING said:

It was not so hight before, i found it increased from about last Monday, and it looks like being increasing daily.  Do you think there are mistakes in their system now?

never seen anyone show it before, a key part of the calc is the libor short term interest rate that is not known until the end of the day plus there are the references to the futures market in the calc  and that also changes daily.

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1 hour ago, LudicrouslyLeo said:

I’ve been charged £157.89 for £4.5 position size in wti over weekend. Never ever have I seen that. Will work out what should have been but is definitely not correct as ai can see it. 
 

any advice please?

Same but for the day, nearly £10 for £1 bet. Emailed several times but no answer.

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Higher charges due to much wider difference between next 2 month's futures US Crude prices. Better either to close it everyday and review it  next day or pay .

Thanks for the replies

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Hello all,

Same here. I hold 9 points and the overnight payment went from £18 10 days ago to £106 for the last night. And it seems it keeps growing everyday which does not make any sense. Even if the futures difference is quite wide I still don't see why it's increasing everyday. I will loose more money by just holding the positions rather than loosing on stocks.

Tried call IG but the lady hang-up on me when I started to ask these questions. Something shady going on here and I need to see if I can get any legal advice as this does not look right. I held 5 points last year for about 3 months and was charged no more than £6 per night.

If anyone knows a better answer than the formula on IG website please share as the way is going it's really hard to plan anything.

 

Kindest Regards

 

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1 hour ago, HxnZee said:

IG is being shady here and I think it is about time to move accounts to a better and reputable broker.

I've no idea how u think IG are being shady, it's been clearly explained above why the difference... I mean oil's had an unprecedented move, is it inconceivable to think o/n charges might be impacted 

There's so many new traders on this forum of late, its worrying some of the q's being asked. 

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I agreed with everyone, I have to paid over A$800~A$900 per week for Crude Oil interest. Spoke to IG rep and he said it's calculated correctly and they have no control over it.

It's hard to bear this interest for anyone...and they won't do anything to help.

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3 hours ago, VK said:

I agreed with everyone, I have to paid over A$800~A$900 per week for Crude Oil interest. Spoke to IG rep and he said it's calculated correctly and they have no control over it.

It's hard to bear this interest for anyone...and they won't do anything to help.

Why are you using the cash market at all? For holding trades open longer than a week you should be using the cfd futures market instead, no overnight interest charges just a slightly higher spread repaid every 3 months on rollover if keeping the position open for the very long term.

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5 minutes ago, Danius said:

Thanks for the advice Caseynotes. When you say "cash market" what do you mean by that? And buying futures on spreadbet and cfd is the same or there are some difference in charges?

No problem, go to the normal chart which is the cash aka spot market chart, click on the down arrow next to the name and select Futures (called Forwards for FX) and click to bring up the futures chart. Note the spread is wider but for that there are no overnight funding charges.

These are on both the spread bet and cfd platforms.

1461399308_acash1.png.a8dbbdba21951e582d0fe3b60576cc98.png

1992724046_acash2.png.1cc44e845a16d92cd8d6a38f8d57117d.png

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Thanks once again for all your advice. Just switched my trades to futures and hopefully I can save at least on overnight charges. I wish I asked these questions before as I lost at least 1K in the last week only on holding the positions.

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7 hours ago, Caseynotes said:

Why are you using the cash market at all? For holding trades open longer than a week you should be using the cfd futures market instead, no overnight interest charges just a slightly higher spread repaid every 3 months on rollover if keeping the position open for the very long term.

What are the charges for rollover for every quarter for 1 contract?

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12 hours ago, Caseynotes said:

No problem, go to the normal chart which is the cash aka spot market chart, click on the down arrow next to the name and select Futures (called Forwards for FX) and click to bring up the futures chart. Note the spread is wider but for that there are no overnight funding charges.

These are on both the spread bet and cfd platforms.

1461399308_acash1.png.a8dbbdba21951e582d0fe3b60576cc98.png

1992724046_acash2.png.1cc44e845a16d92cd8d6a38f8d57117d.png

Do both CFD and spread bet futures not have overnight chages?

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I was advised by some traders to cut some losses and reopen the positions in other provider with lower overnight funding. The margin required is lower and actually paid for longing the crude now (as exposed to paying interest to keep them going).

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In my humble opinion, could IG see the issue from the view of the client. I am not the only trader whom has issues with the overnight funding...telling us to do Futures (A$5 per pip which is more than my usual A$1 per pip with a min 2 contracts requirement) doesn’t really help our situation. It’s too late to realise that...doesn’t help client feel nice that We choose the wrong instruments.

It’s forcing us to cut loss or continue to fund for the daily overnight interest which increase tremendously during the last 3 weeks.

IG can justify the overnight interest, but the amount is too much to bear...hence the client is raising this as an issue.

We want a solution as to how IG can help relieve some of our stress of paying the interest. That’s a fair request if more than one client has the same issue.

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