Overnight charges in US crude

[noon]

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

[Caseynotes]

5 minutes ago, VK said:

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.

As happened recently in the Gold market where spreads widen very suddenly in the spot and to such a degree that IG closed the spot market and directed clients to the futures market instead. IG was not responsible for the spread increase and had no control over it.

The solution is to understand what you are doing and use the appropriate market if any at all.

 

[CharlotteIG]

12 hours ago, DrJackD said:

Can someone tell me what time of the day is the overnight fee charged?  I need to know this so I can close my position before that time. 

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.

 

[Guest ROOKIE]

I have suffered these over night charges for a week.

Can't carry on this way, so thanks for your advice, futures for me!

Cheers.

[LudicrouslyLeo]

11 hours ago, 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.

 

Good idea, didn’t think of that. Only issue is when holding over the weekend as I did

[VK]

On 31/03/2020 at 03:44, 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?

Try looking around other platform (but make sure they are reputable), the margin required are much lower and some even pays you interest for holding long positions. I was able to net-off some of the losses and make some profit by partially switching. I have also TT those profit into the bank account.

[CharlotteIG]

This rate cannot be shown because it's calculated using the forward contracts at the time we take the overnight funding. You may find this feed useful: 

 

 

[CharlotteIG]

There's also a Spread betting and CFD example if you follow the link below: 

https://www.ig.com/uk/help-and-support/spread-betting-and-cfds/fees-and-charges/how-are-spot-commodities-priced--and-how-is-my-overnight-funding

[dmedin]

On 31/03/2020 at 09:19, Caseynotes said:

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. 

 

 

 

In other words it's so complicated retail clients would be advised to stay away from taking positions altogether.

IG can't be @rsed to calculate this formula for their clients and provide a simple column on the web platform to show estimated charges.  I wonder why.  Because they'd rather just take your money.

[Caseynotes]

10 minutes ago, dmedin said:

 

 

In other words it's so complicated retail clients would be advised to stay away from taking positions altogether.

IG can't be @rsed to calculate this formula for their clients and provide a simple column on the web platform to show estimated charges.  I wonder why.  Because they'd rather just take your money.

or you could just see that the main variable will be the difference between the price of the front future and the next future, so if as now there is a very large difference then the overnight funding will be high so consider trading the futures chart instead of the spot or closing your spot position before 10 pm and reopening after 10 pm, in either case avoid the fee altogether.

[dmedin]

10 minutes ago, Caseynotes said:

or you could just see that the main variable will be the difference between the price of the front future and the next future

We're playing the spread bet game, we're not real futures traders.

IG's IT department should get off their lazy @rseholes and implement this.  Simple Python calculation.

[Caseynotes]

1 minute ago, dmedin said:

We're playing the spread bet game, we're not real futures traders.

IG's IT department should get off their lazy @rseholes and implement this.  Simple Python calculation.

the prices are taken at the close, to guess what they might be during the day is to guarantee a continuous string of whingers complaining forever after, you know you would.

[Guest van]

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?

I was charged £15 as 1 day overnight charge for £1 on US crude 

This is utterly rediculous.

Tried calling them but no answer. why so much for overnight ?

 

 

[JARAL]

On 27/03/2020 at 17:13, noon said:

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

Same is happening with me, Is anyone from UAE? please contact 

[Caseynotes]

13 hours ago, Guest van said:

I was charged £15 as 1 day overnight charge for £1 on US crude 

This is utterly rediculous.

Tried calling them but no answer. why so much for overnight ?

 

 

Hi, which of the answers and explanations already given within the thread are you having trouble with?

[Guest Homer Enronride]

How much overnight charge for a Short position?

[NeilL]

Can you change your trades from cash to futures without closing positions? Caseynotes?

Thanks

Edited April 19, 2020 by NeilL

[NeilL]

On 17/04/2020 at 06:18, Caseynotes said:

Hi, which of the answers and explanations already given within the thread are you having trouble with?

Can you change your trades from cash to futures without closing positions? It’s not quite clear on the description,but I may have missed it.

Thanks Neil

[Caseynotes]

33 minutes ago, NeilL said:

Can you change your trades from cash to futures without closing positions? It’s not quite clear on the description,but I may have missed it.

Thanks Neil

Hi, afraid not as they are 2 different markets and also the spread is different, the futures spread is larger because there are no overnight fees. I think the May futures is closed to open now (expires on Monday) and you will be directed to the June chart.

[NeilL]

Thanks Caseynotes. Think I’ll take a hit on these then swap. Should come good in the end once the world starts moving again!

Edited April 19, 2020 by NeilL

[Caseynotes]

38 minutes ago, NeilL said:

Thanks Caseynotes. Think I’ll take a hit on these then swap. Should come good in the end once the world starts moving again!

👍

[NeilL]

What do you guys think short term is going to happen? I see the futures predict it dropping to around 1800 in the next month and rising again after. But obviously a lot can change with America looking to start moving again.

[Caseynotes]

1 hour ago, NeilL said:

What do you guys think short term is going to happen? I see the futures predict it dropping to around 1800 in the next month and rising again after. But obviously a lot can change with America looking to start moving again.

It's a difficult one as there is no real forecast as to how long everything will stay shut down, oil not being used, storage filling up, Russ and Saudi pumping to spite each other.

Asian countries are getting back to normal but EU and America lagging and may be shut down for another month yet at least.

 

[Guest JAM]

I have been trying to figure it out all last week

i have been charged around AUD$160 over night for 5 position ($1) of crude oil .

that equates to aprrox $56 k per annum.

How does that work??