[US OIL]

2 hours ago, Crush1884 said:

Sounds good but one word of caution. You will currently have quite high overnight hold costs. These are basically the costs you incur from IG for holding a long position in a commodity (oil). No point getting into the intricacies as to why but this is cost is real and when you login on the morning to check your trade you will see your balance is lower.

This makes holding commodities for the long term difficult whilst spread betting. There is a way of getting around this overnight cost as it is calculated at 10pm every night (when the Oil market temporarily closes). If you close you position at 9.59pm and re-open when the market re-opens you wont miss much price move and will avoid cost. However you will have to do this everyday and you will have to pay the spread on each trade.

This is why every good trade/system doesn't just look at buy and sell points but factors in costs for holding the position. The current overnight charge is high relative to normal levels because the difference between the June and July futures contract is extremely high because of the short term worry about demand. This is what calculates the overnight charge and as this normalises over time the overnight charge will reduce.

All head spinning for a newbie but important to consider nonetheless. Don't worry if there are anymore questions.

This is very useful information. Thanks for sharing.

Are you able to give an estimate of how much an overnight cost could be per £/pt?

What would be the best way to have a position on oil at these current historic lows to hold until it recovers?