Spread Betting

[superfrank]

The thing you're missing is that it's not about individual trades but about your net profit over a period.

Transaction costs do tend to add up over time.

It also depends on your trading timeframes as to what might be the best value option. I use a mix - short term trades on futures (because there is no spread and the transaction costs are relatively low) but spread betting for 'longer' term trades (because the transaction cost is proportionally not so important - wins/losses bigger - and because my futures a/c does not have enough in it to trade too much overnight because of the overnight margin requirements).

Edit: Spreads tend to be tight for the popular instruments but widen significantly for others and I like to trade the non-popular stuff too e.g. 30-year US bonds ($31.25 tick size with a transaction cost of $3.26 per contract/trade on futures).

[andyfuller]

SF - can you explain what the costs would have been had the trade I describe above been done on Futures and probably give a better explanation of what you would have done using the info I posted.

TIA.

[andyfuller]

The thing you're missing is that it's not about individual trades but about your net profit over a period.

Transaction costs do tend to add up over time.

For simplification if the above trade was the only one we did all year are my calculations correct?

I am probably being stupid but when you say transaction costs add up over time, what is it you are talking about? For spread betting the Spread I guess? For Futures...?

[superfrank]

Your calculations are fine (except that for futures you have to buy/sell in contracts which are for fixed amounts).

Transactions costs obviously add up for all trading (including Betfair - the PC operates as more of a tax than a transaction cost but it's still a cost and adds up!).

Minimising transactions costs will have a big effect on your bottom line. PW always emphasises this.

[andyfuller]

Yup fully agree about minimising the transaction costs.

How about we try and compile a comprehensive list for the various trading methods which can then be used for reference? Add and/or remove where appropriate:

Betfair:

1. Commission on Winnings per market
2. Premium Charge weekly at either 20%, 40%, 50% or 60%
3. Data Charges
4. Transaction Charges


Spread Betting:

1. The Opening Spread
2. The Closing Spread
3.
4.


Futures:

1. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
2. Stamp Duty if you are actually buying the shares
3.
4.


Shares:

1. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
2. Stamp Duty (If the purchase is valued at or under £1,000 no SD is payable, over £1,000 it is 0.5% which is rounded to the nearest £5.
3.
4.

[superfrank]

Betfair:

1. Commission on Winnings
2. Premium Charge at either 20%, 40%, 50% or 60%
3. Data Charges
4. Transaction Charges

Spread Betting:

1. The Opening Spread
2. The Closing Spread
3.
4.

Futures:

1. Commission on Trades
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3.
4.

Shares:

1. Dealing Costs
2. Stamp Duty
3. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
4.

ETFs:

1. Dealing Costs
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3.
4.

[andyfuller]

Betfair:

1. Commission on Winnings
2. Premium Charge at either 20%, 40%, 50% or 60%
3. Data Charges
4. Transaction Charges


Spread Betting:

1. The Opening Spread
2. The Closing Spread
3.
4.


Futures:

1. Commission on Trades
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3.
4.

Shares:

1. Dealing Costs
2. Stamp Duty (If the purchase is valued at or under £1,000 no SD is payable, over £1,000 it is 0.5% which is rounded to the nearest £5.)
3. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
4.


Exchange Traded Funds (ETFs):

1. Dealing Costs
2. Capital Gains Tax (18% or 28% yearly allowance of £10,100)
3.
4.

[andyfuller]

I have started a new thread for these transaction costs rather than clog this one up. I thought there was Stamp Duty for Futures? What do you mean by dealing costs as well Frank?

[superfrank]

only commission for futures.

if you buy shares/ETFs the firm you buy from charge you a dealing cost - no that much (but it adds up!).

[andyfuller]

Just spent 40 mins listening in to the recording from today's weekly update done by IG Index. The first 15mins was spent looking back over the major markets for the previous week and then the rest of it was spent as a Q&A.

My knowledge of Spread Betting is pretty small (quite clearly) but I found this 40 mins quite interesting and learnt a good bit. One thing addressed in the Q&A was how they make money from you as a client.

The obviously do them weekly but not sure yet if you can get past weeks still but if you fancy a listen this is the link to today's (If you are on Twitter you can follow @DavidJones_IG and he seems to post reminders that the are about to start and then the link to access the recording):

https://www1.gotomeeting.com/register/677882849

You have to register for the Net Meeting and give an email address and phone number (which they say can be used to contact you for marketing).

Does anyone know of anything else like this done by other firms (Doesn't have to be on Spread Betting can be any of the forms of trading) - I am on an info hunt It is like being back in the early days of my Betfair Trading Career where I was a Sponge absorbing as much info as I can.

Have to say the fire in my belly has returned after PC3 put it out!

[andyfuller]

They obviously do them weekly but not sure yet if you can get past weeks still

Unfortunately you can't get previous weeks

[superfrank]

Luckily I get a Daily Technical Levels email from Mirus Futures telling me which way the major markets are going to go that day!!

e.g. today's crude and DAX...

btw City Index have a current offer where they give you £200 for placing 3 trades in Nov - they called me this morning to say that I could have it too despite being an existing client! You don't get that sort of service from BF!

http://www.cityindex.co.uk/

[Iron]

You are being ironic, I take it?

Did they predict that Panandreou would change his mind about resigning?

The markets are unpredictable. Trying to beat the market using this kind of analysis is like betting on a newspaper tipster's naps of the day!

Jeff

Luckily I get a Daily Technical Levels email from Mirus Futures telling me which way the major markets are going to go that day!!

[superfrank]

yes I was hence the !! but it's technical analysis and always worth knowing what others are thinking...

[Iron]

All the information you need is on the chart. Anything else just over-complicates things.

I'm of the school of thought that says that no amount of technical analysis and weird and wonderful indicators can beat a simple moving average crossover!

Less is more!

Jeff

but it's technical analysis and always worth knowing what others are thinking...