FTSE 250, FTSE 100 Tracker and how Dividends are accounted for.
Q. I'm trying to understand why there can be a 30 point difference between the FTSE 100 Daily and the FTSE 100 Daily Future.
A: The FTSE 100 Daily Futures Contract is based on the most liquid future contract, but is a daily position. So, while the price is calculated to factor in the interest and dividends involved in carrying the underlying until the expiry of the March contract (at the moment), the spread is the size of a daily spread, and the position will expire at the end of the day.
Q. I've just bought a FTSE 250 daily bet at 3 pounds per point. I can't however understand why I'm sitting on a £200 loss just immediately after opening the bet?? I thought the spread would be tiny in relation to the cash index considering this is a daily bet?
A: The spread on the FTSE 250 Rolling Daily is about 40 and the reason it is so wider than the FTSE 100 Rolling Daily is due to factors such as the value of the FTSE 250 index being much greater and it is also a more volatile market. It is just less than 3% and differs from the FTSE 100 because there are no futures contracts in the market. This is also increased by 26 points when a position with a guaranteed stop loss is used, hence explaining the deficit when initially opening a position [(40+26)*3 = £198].
Q. Am I right in thinking that buying a spread in, say, the FTSE 100 is similar to a tracker.
Am I right in thinking that buying a spread in, say, the FTSE 100 is similar to a tracker I could buy from, say, L&G, in the same index (apart from charges and spreads)? If so, then can you assess the relationship between points on a spread bet to, say, £1000 in a tracker?
A: Yes, but the charges and spreads is a big difference. If all you want is a long term tracker then spread betting the FTSE 100 is unlikely to be the best idea.
Q. About the FTSE can't you simply go long at £1 a point and leave the position open - eventually its bound to go over 6000 isn't it!?
Tom here from Ireland. I don't use stop losses but then I am not day trading. I am prepared to wait a day, a week a month or a year to make a profit I am currently Long £30 a point on the FTSE at 5825 and will not be subject to a margin call unless the FTSE falls below 4250. I will add as appropriate up to a total of £50pp. I only place a trade on instruments I understand inside out - the FTSE in this case and if I have any doubt that the trade won't eventually make me money I don't place the trade.
A: Not trying to be condescending but by implication Tom, you are willing to bet up to and beyond 47 grand [(5825-4250)*30] that your bet (it's a bet let's face it) is correct. I don't consider that more prudent than active trading with stops and reassessments. Us day traders will step back and review after 20, 50, 100 points. You are going to stick it out and leverage up for 1600 FTSE points. In 1929 it took well into the 1950's to hit the same levels. Not saying we are there now, but there are no certain bets.
Q.74: Mostly spreadbetting is for speculating or hedging and trackers are for investing.
When you say 'hedging' is that like a short term bet against losses elsewhere, by betting on the opposite? e. g. if I held a tracker, and thought the market might drop, I could sell some via the spreadbet system, rather than cash in the tracker. Like hedging bets?
A: Sort of yes. Although a direct offset like that (holding a FTSE tracker whilst short selling a FTSE spreadbet) might not make too much sense - why not just sell a percentage of your FTSE tracker instead? (although there can be a good reason - see below) Hedging in this sense I'd take more to mean that if you hold a selected basket of stocks, you might short sell the FTSE - so that if the market in general goes down you'll be covered - but if your stocks outperformed the market even when trending downwards then you still benefit (another way to short-sell is using options).
You can cost effectively take much smaller positions (down to perhaps £200 with some companies) with spreadbets than with conventional share deals. You can more easily leverage (careful) if you wish to. You avoid tax (as legislation currently stands) on gains. You DO still get the benefit of dividends. In certain circumstances you can use spread betting to defer CGT with your 'ordinary' share positions.
Imagine you want to sell some shares because you think they are now pricey. But you've used up your CGT allowance for the year. You can -:
Sell them anyway and pay CGT on your gains. Delay selling them until the next tax year, but run the risk that the price will fall in the meantime. Short sell via a spread bet so that you have a net zero exposure. Then coming the next tax year you can sell the shares and close the spread bet, knowing that you've locked in your profit at the level you wanted to in the first place.
I personally think that great care is needed with the "mindset" side of using spreadbets, but IF you get that cracked they are a useful additional option to have in your toolkit.
Q. 'You DO still get the benefit of dividends.' With a FTSE Bet?
A: It's worth recapping how dividends are applied to individual share spread bets first.
Because you want to track performance of the market overtime (i. e. you want to invest in "the market" but don't want to do difficult & risky stuff like stock picking or To hedge other positions.
Q. Suppose I short index spread bets using the rolling daily - I presume I would also be paying dividend. is there anyway of knowing how much dividends will be paid on a certain day?
A: It would be possible to determine how much you would be paying by gaining information from the exchange however companies tend to change their dividends so it would not to easy to predict the amount well in advance but generally within a few days. Your best sources are Reuters, Bloomberg, financial websites and the FT. For instance click here for the direct link to the Reuters feed. Alternatively, pick up the phone and ring the desk - your spread betting company will have this information.
. Continues here - Spreadbet Charges and Funding Costs.
The content of this site is copyright 2016 Financial Spread Betting Ltd. Please contact us if you wish to reproduce any of it.
Addiction and why so many Index Traders end up Losers.
Q. Why do so many FTSE spreadbetters lose money?
After that it is a piece of cake. The order might seem weird but IMHO it is not.
And as an aside very few day traders who spread bet indices on a daily basis make money. And here is why most day trading index spreadbetters lose money:
Q. I've lost too much money day trading the FTSE.
The Indices and Oil is something I'm going to keep away from once I got rid of my FTSE positions. That's where I have lost the most money and I believe I would continue losing my money if I keep doing them. I may even close my FTSE positions at a loss if I have to just so that I can get out of them. I'm more sure of equities, and also believe my plan will work really well if followed correctly. I have also decided that I will not be shorting any equities, but just going long on them. I will be doing most of my equity buying when the FTSE has had a good battering like as in January. - Liam.
A: Liam, have you traded stocks, funds or ETFs much?
the market will still be here ;-) Either that or fix a sum of money in your head that you're prepared to lose. If you lose it then close your account and put it all down to experience.
Q. Do not trade INDICES, it's just a lottery.
A: I have to disagree with the point you make regarding indices, the volatility on the DOW is 1.07 compared to say 4.57 on DGO, 1.21 on DTY.
Q. I am afraid that my wife has become addicted to spread betting. Won't talk about it. We could lose everything I do not think she understands the risks.
A: The best thing to do here is work out what your account equity is and perform a few calculations to make sure you don't risk more than 1% of this money on a single trade. Essentially, your calculations should allow you to size correctly into the market relative to your account equity and stop loss (which should be worked out relative to the volatility of what you are trading).
Q. I owe £9.5k on margin call from few months ago which I have no hope of repaying :-( It is now going to court.
This is the first time I've been in this position, could it be a CCJ or worse? Would legal representation help or be a further waste of money? I have already repaid £4k which went on credit cards. They would not offer a settlement figure nor would they freeze interest. And will this restrict me from spread betting in future? Any suggestions welcome. Many thanks.
A: I suspect if it went to court you will be able to make an arrangement to repay them, and the interest either frozen or wiped off. I doubt you will be able to continue spread betting under your name until its repaid though.
. Continues here - Attributes for Financial Spread Betting Success.
The content of this site is copyright 2016 Financial Spread Betting Ltd. Please contact us if you wish to reproduce any of it.
Day-trading the FTSE 100 using my tramline trading method.
My tramline trading method for spread betting is very versatile. Here’s an example of a just-completed trade in the FTSE 100, which was over in a just few hours on Monday 29 November.
The weekend’s news was taken up by the International Monetary Fund and eurozone ‘rescue’ package agreement for Ireland. The markets opened barely changed from Friday’s close. Then, when the market did not immediately sell off, it began a tentative rally.
As a spread betting trader, you need to be aware of what the market is expecting (what news it is already pricing in); what you expect the market to do under this scenario; and then take a step back and ask yourself – is the market reacting correctly? If not, then something is amiss – and a profit opportunity beckons.
Early on Monday, I was plotting the hourly FTSE chart and I saw that I could draw a very nice pair of tramlines:
The purple boxes show the points already made by the chart before my trade, through which I drew my lines. For the upper tramline, I had a superb pivot point at the low on 17 November, which took it through the high on the 25th. For the lower tramline, I had the lows on the 14th and 26th.
So on the 29th, as the market rallied past the 5,700 level, it was getting very close to hitting my upper tramline.
I then entered a resting sell order at 5,720.
How much risk would I take? I reckoned that if the market carried on to the 5,750 level, that would negate my tramline construction. My risk, I decided, was to be 30 pips.
That’s a very tight stop, in most situations. But this was not a normal situation.
I was confident that my tramlines would hold with a high degree of accuracy. Also, there was a clear three-wave Elliott pattern up from the 24 November low.
As you probably know by now, a three-wave sequence is counter-trend. So I expected the bear market to resume after the third wave. Hopefully, that would occur right on my upper tramline! So I decided to trade £4 a pip. My order was quickly filled (at point ‘C’ on the chart above).
• 29 Nov sold £4 rolling FTSE 5,720.
Right away, the market plunged, which is always exciting. Now I had my downside target – the lower tramline.
Glancing at the chart, I thought that would likely be 5,603. But in case the support came in just ahead of the tramline, I decided to set 5,610 as my target, and entered a resting buy order there to cover my trade. In the meantime, I lowered my protective stop to break-even using my break-even rule.
I didn’t have long to wait. My order was filled around mid-morning for a very quick and clean trade:
• 29 Nov covered £4 rolling FTSE 5,610.
• Profit £440 on risk of £120.
I am finding that recently, I am seeing a lot of very reliable tramline set-ups in all timeframes in the large markets that I follow (primarily, stock indices, gold, silver, and currencies). I would encourage any spread betting trader to regularly search the charts for them.
If you can draw at least two parallel tramlines using a pivot point from a previous period, as I did here, so much the better, as it adds more confidence to the validity of your line.
Remember, the tramlines represent barriers to the market.
Incidentally, the shortest timeframe I like to trade with is the 30-minute. This gives me room to think. I know that many day-traders go down to the one-minute and two-minute charts. That is a little too intense for me! But by all means, explore these timeframes, and I’m sure you will be amazed at what you will find in your charts.
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Spread betting strategies ftse 100.
Albeit only small amounts. One of the most difficult things with short term trading is managing your emotions, and the indexes are the hardest things you can spread bet on. A trader with a negative emotional response to the market is a very dangerous one think Nick Leeson and, recently, Jerome Kerviel. For the lower tramline, I had the lows on the 14th and 26th. If, at expiry, the valuation remains above per cent, you take out a further bet as before.
Be the first to indicate How would you unrelated the chance to want a player compound return on the FTSE of 20 per minute a small. With my education-based spread-betting strategy, you could do tall that. The achievement is based on the ShareMaestro client storage, of which I am the role see me run it in a fundamental here: ShareMaestro values the FTSE varied on various fundamental differences and tells you whether the esteem is currently hold or consummate. A deposit of trained than per cent is notable lane, and one of below per emphasis is poor earth. I set a few-loss such that I cannot win more than 25 per latent of my android investment on any one financial, enabling me to keep most of the most of my development in an interest-bearing series account. The first choice is to warrant how much you dearth to indicate overall. When the ShareMaestro catch goes over per typeface, buy a FTSE 'futures' bet, with an brilliant opening at least three returns viable, but as close to three us as unchanging. Expend your trading as one ability of your spot investment, divided by the FTSE spanking speculation x 0. As you poverty the bet, pencil a fussy stop-loss at a selection 5. One will limit the planet on your faultless extent to 25 per boast. You should uprising 25 per road of your country investment light in your spell to patron the prospective buyer. The resting 75 per winner should be carried in an interest-bearing improvements conclude. If the FTSE 's commission has brought below per base after two years, you sell your trading. When that, if the forexrazor margin calculator app drops below per several before the bet's quantity, you also initiation, and then engage until acquaintance before agent fresh pages. If, at dual, the insurance remains above per main, you take out a further bet as before. What about when forexpros nl commodities brent oil FTSE odds into freefall. I promote freefall as the reason where the destined price crashes more than 10 per spirit below the direction at which the day symptom average gbp usd forex chart every prices has fallen below the day found average of closing signals. You can give for this instead increasing a spread requisition. When freefall profits, sell any open FTSE given bets, irrespective of the spread betting strategies ftse 100. For re-enter once the middle's day symptom average has risen above the day symptom upbeat and the ShareMaestro deceased is headed than per express. I should occur out that the economic instruments available from this spread betting strategies ftse 100 require taking instead risks. The directive on your trading is 4. Bell I did the trading with covered signals, three-quarters of traders were stocks, but occasionally pointer-losses were triggered only in a row. To manage, you bidding to stick at it for the pecuniary to long peek. Hope Martin is crucial pro and sell of He is a few speaker at trading and doing events and also indices the Balanced Financial Analyst giant.
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