Questions about Rollovers, Quarterlies and More...

Q.21: Can you close a quarterly spread bet any time you like?

A: Yes, anytime you like... I use quarterlies generally myself. You can also close out after market hours with the bigger companies and indices. Also, once your bet is coming up to expiry you can prolong it for another three months by rolling over.

So, if you bought say a December expiry bet on Monday you could close it out any time, on Tuesday if you want! Hope that answers it...

Q.22: Which are most cost effective – rollovers or next expiries?

I'm fairly new to spreadbetting with MF GLOBAL. They quote buy/sell prices for day (rollover), but also March prices, which are a bit higher. Which ones do you use?

A: Usually next expiry for normal medium term trades but sometimes rolling for shorter term ones. My rule of thumb is anything over 2 weeks and rolling becomes more expensive than next expiry!

Q.23: When you place a bet, can you keep it open indefinitely or will it be closed after a set number of days? Or does it vary from company to company?

A: Yes, spreadbetting does have expiry dates.

You can choose from Daily, Monthly or Quarterly expiries just as in Futures contracts except here you can also have Daily contracts that expire at the end of the actual trading day. But as soon as your bet is nearing expiry you can also prolong it for another three months by rolling over.

Of course there is the difference in spreads for each contract to consider and these vary just slightly from each spreadbetting company

Q.24: What is the difference between using 'Market' stop losses instead of stops based on 'Our Quote' {i.e. finspreads quotes}

A: What 'our quote' means, is when the Finspreads' quote hits the specified level.

'Market' means whatever Finspreads is quoting at the moment the market is at your specified level, this does not mean you will get an exit at a specified price, when the market is trading at this specified price, and does not mean that you are trading on prices any closer to the real market. Therefore the actual real difference between the 'our quote' & 'market' may be minimal since although you can opt to close at the market stop you will, still, only get paid according to their spread at the time and that will probably be a worse price than by using 'their price'.

Q.25: Are there any companies that allow me to use the market prices to trigger the stop and limit orders, which would then transact at the firms prices?

I'm quite happy using spread betting as my main trading instrument for the time being, and have slowly but surely made money in my first year of trading, but if I could use market prices to trigger the stop and limit orders, which would then transact at the firms prices, it would make my job of automating my trading whilst I'm at work a whole lot easier.

A: Yes, some do offer market price but I’m not sure which although I think Man do even though I believe only on daily cash prices -

"Market Price Order Orders can be left on a market basis. This means that if the underlying market triggers your order, you will be filled on our current quote."

Q.26: My FTSE stop was hit when the underlying markets were closed!!

I feel like I have been scammed, but I would like the view of a senior trader who have experience of markets. I traded with IG Index on Friday going long on the FTSE 100 March at 6181...with a stop at 6151, the market closed at 6177 at 5:30 on Friday. On Monday Morning the opening was 6166 and low was 6163 and so far the high has been 6223.

I have been told I was stopped out on Friday at 8:10 (after the exchange was closed) according to in-house quoting by IG Index as they quote a price 24 hours a day. They say that the low was 6151 right where my stop was and they do this on the basis of other markets that are trading at that time and the fluctuations taking place at that point. Is this a scam on their part? They have in-house information as to where all the stops and positions are held by their clients and can make a market in order to stop them out. Please comment????

A: In short the answer is NO, this is not a scam.

Be careful when trading the FTSE or other European markets because the price movements of the US markets will affect them accordingly throughout the US session >9.15pm UK time. If the Dow Jones Index plummets by 200 points and then recovers to previous levels - the FTSE cash quote will fall sharply also even though the market has closed.

When trading with spread betting companies you're not trading the underlying index, you're trading IG's version of that market. If you are holding overnight beyond the close, you have to be prepared for such incidences. The best way to avoid being stopped out after the market closes on any FTSE spread bet is to leave a screen order instead of a market order. This means that your order won’t be monitored when the exchange is closed (in your case the FTSE). The only problem you'll have with screen orders instead of market orders is that you won’t have any protection against large US moves. I believe IG doesn’t offer these kind of orders anymore (check the other providers). City Index still do screen orders but over the telephone only.

I suggest you do some research on the spread betting companies, their activities and other traders experiences of them. When creating your strategy to trade the FTSE cash you need to take this into account - you can't rely on yahoo data for instance to formulate a plan.

Capital Spreads now not only offer 1 tick FTSE Spreads...
they are now also offering a range of small cap and AIM stocks
& if you want to set up an account with them via me they offer you a Ł70 bonus after 2 trades – and I’d get Ł20 too!
I quite like these win win things ...so click here if you want to open your account.

...Continues here - Basic Spread Betting Questions (page 5)

Hope that answers some of your questions but feel free to send me queries, comments or concerns at traderATfinancial-spread-betting.com or by filling in the form below :-)

Please do not copy/paste this content without permission. If you want to use any of it on your website contact us via email at traderATfinancial-spread-betting.com (remove the AT and substitute by @).

Comments	Date

Name:
Email:
Comments :