Go from spreadbetting to real trading?

[brewski1984]

Is it worth leaving spread betting and using a proper futures account? Does the advantage of not paying tax on spread betting outweigh using a real account? I have absolutely no idea about paying tax or anything and it seems far easier to stick to spread betting but if it's a mugs game I'd like to stop being a mug!

 

[isatrader]

Futures accounts require a much larger capital stake. For example ES futures (Emini S&P 500) are $12.50 per tick and they move per 0.25 points, so currently the 200 day average true range of ES is around 25 points. Which is ((25 x 4 ticks) x $12.50) = $1250 of movement on an average day + fees per side of the trade.

Hence, you need a lot more capital to have sensible risk management. $25k is a suggested minimum from what I've read. So, although like you I want to trade a proper account. I've made the next step up to CFDs first which is less capital intensive, but still not ideal. Tax wise isn't an issue I think at the moment, as it's capital gains tax on profits and you have around a £10k allowance each year.

 

[brewski1984]

Yeah I've had a go on Mirus Futures Demo and understand the tick sizes etc I just wondered how big an advantage the tax free status was compared to the costs of a real account with tax. I guess the main question I'm asking is would being breakeven on a spread betting account equal profit on a futures account with the same trade results? I'm not clever enough to work all that out myself. You would trade a futures account if you had the capital?

 

[isatrader]

Ignore the tax free status was my point, its a sales tactic. As until you make over around £10k of profit in a year from trading your tax bill is still zero. The spreads are what kill you if you day trade in an SB account as as you increase your trading size the spreads costs you the same percentage of the trade, but with futures there's no spread I believe, just the trade fees per side. So these decrease in proportion to the trade as you increase your size.

Would I trade a futures account if I had the capital - yes, but only if I had a solid method with an edge and positive expectancy. At the moment I'm still developing my method, so I'll stick to a smaller size for now.

 

[brewski1984]

Thanks for your replies matey.