Financing Costs

[cube101]

Hi All,
A question, if some can help me?

I have been trading a profitable system now for approx. 2-3 years however I am constantly seeing a good chunk of profit disappearing to the cost of ‘roll-over’, financing, interest (whatever you want to call it) It’s averaging around £3500 – 4000 per year.
I’ll give a broad overview.

Trading account £25,000 (i'm guessing those with large accounts can get better rates?)
Average number of trades per year approx. 200
Average time holding a position is 2-3days (some trades will be over in hours, others can drag on 5+ days – no way of knowing in advance which will do what)
The rough average financing per trade is about £18-20

So my question, is there any way to reduce this cost of business? Who seems to offer the cheapest financing?
Finally, I’m surprised this isn’t discussed more often as it’s a big cost when you start scaling up.

Thanks in advance

 

[scose-no-doubt]

Spread betting?

 

[cube101]

yes currently, although have also used a retail forex company and financing cast was pretty similar tbh.

 

[Martinghoul]

If you're getting charged too much, you should be able to reduce it by switching to a "fairer" provider. If you're getting charged the market rate, then you have to live with it, as it's the cost of doing business.

 

[scose-no-doubt]

The usually do libor + 3% I think.

 

[Martinghoul]

The usually do libor + 3% I think.

Who's "The"? LIBOR + 3% is not too nice. I am pretty sure that what IB does for FX is also pretty horrendous.

 

[cube101]

Yeah I guessed that might be the responce :-( you can but try.
Just wanted to see what others do in this respect.

who would you concider the fairest of fair providers?

 

[scose-no-doubt]

Meant "they" as to cover the general round about from what I know of spread bet bookies. Typo.

 

[Martinghoul]

Yeah I guessed that might be the responce :-( you can but try.
Just wanted to see what others do in this respect.

who would you concider the fairest of fair providers?

I am a big fan of GFT... They do the rolls using straight IBOR rates for the two ccies. That's better than what IG does, for instance, where they would actually do the roll trade (out of spot position and into T/N) at half the regular bid/offer (or at least that's my recollection). It's nice of them to waive half of the bid/offer, but I don't see why I should be charged anything at all. That's why I always trade fwds, when I do longer-term trades in IG, even though the bid/offer is wider.

 

[Martinghoul]

Meant "they" as to cover the general round about from what I know of spread bet bookies. Typo.

I know... I was only kidding.

 

[cube101]

cheers guys, ill check out GFT.
Anyone rate Oanda UK?

If i knew I was holding a position over a week in advance i'd go with a forward contract but the speads are so much tighter on spot so it works out better most of the time to pay the finance than pay the wider spread.

 

[scose-no-doubt]

Well seeing how you've had your answer, may I detract a little?

Mr Ghoul, what are your musings on the recent libor lulz and did you have an inkling there was something fishy going on during? As an industry insider do you think that this inquest going to spur any real changes?

 

[Martinghoul]

Well seeing how you've had your answer, may I detract a little?

Mr Ghoul, what are your musings on the recent libor lulz and did you have an inkling there was something fishy going on during? As an industry insider do you think that this inquest going to spur any real changes?

Oh god, there is soooooo much written on the subject, I hesitate to add anything to the noise. As a market participant, I have some thoughts on all these LIBOR shenanigans that are based on (occasionally painful) personal experience (no, I don't mean prison, as I have never been that close to the action).

One outcome that is pretty certain to me is that it's going to be an almighty lawsuit with a potentially massive settlement that the banks are likely going to have to agree to. At any rate, I would be happy to give you more detailed thoughts, but maybe this ain't the right thread for it.

 

[scose-no-doubt]

I'll start a thread if you wouldn't mind venting in it

 

[Martinghoul]

I'll start a thread if you wouldn't mind venting in it

I don't mind...

 

[scose-no-doubt]

http://www.trade2win.com/boards/gen...ppyboob-bob-diamond-co-house.html#post1916374

 

[Gregfx]

Hi All,
A question, if some can help me?

I have been trading a profitable system now for approx. 2-3 years however I am constantly seeing a good chunk of profit disappearing to the cost of ‘roll-over’, financing, interest (whatever you want to call it) It’s averaging around £3500 – 4000 per year.
I’ll give a broad overview.

Trading account £25,000 (i'm guessing those with large accounts can get better rates?)
Average number of trades per year approx. 200
Average time holding a position is 2-3days (some trades will be over in hours, others can drag on 5+ days – no way of knowing in advance which will do what)
The rough average financing per trade is about £18-20

So my question, is there any way to reduce this cost of business? Who seems to offer the cheapest financing?
Finally, I’m surprised this isn’t discussed more often as it’s a big cost when you start scaling up.

Thanks in advance

it does sound that you pay a lot of swap commissions. However, it is depended on how many traded you make, what is the leverage that you are using and for how long you keep the positions. I trade in similar way that you described and I pay significantly less than you do.