You assume the currency risk when trading a contract in another currency. I don't think any broker would hedge this for you. With the currency spread, you are getting spot market rather than Thomas Cook rates though 🙂
If you're in for only 2pts (max 30mins), it would be some move that moved it 10c though and I think if the currency pair moved that fast that quick, that you'd probably have your stop hit on ES anyway.
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So, I presume most of the ES brokers are in the states anyway.
Will they hold your account in GBP for you and do an instant currency exchange to USD and then back when you close your trade? Most of the US brokers I've seen so far don't give you spot...they don't give you Thomas Cook rates either but somewhere in between so it's still a consideration.
I mean sticking the orders in as limit orders so you're earning rather than paying the spread.
For short term trading, DMA is absolutely far cheaper than SB, whatever tax included (and cgt is unlikely)
comissions on FTSE futures, off the top of my head, are (per round trip) about 40p at LIFFE, 6p to LCH, and then whatever clearer/broker charges on top. So if you're doing decent volume well under a quid a round trip. 1 lot is £10pp fwiw.
If we assumed that I was only scalping and was paying 0.5 spread for 2.0 pts on a SB broker, that's a 25% "tax" that's effectively hidden.
So, CGT is around 20%. I could reduce the CGT by talking to an accountant. Commissions seem neglible compared to the trade size so may as well be somewhere in the region of 0%-1% depending on trade size. Income tax is the other but presumably if you have any other kind of income, then all the trading earnings would be taken as CGT?
I would guess the scalp trades would have a higher win ratio trading inside the spread with limit orders as I wouldn't have to overcome the spread first. Presumably on the bigger order sizes the MM won't always fill your entire order though?
Any recommended UK brokers to have a look at for FTSE futures? The ES I can check out as above but still not too sure about the currency exposure.
With the FTSE, it's a little different as it's only a 1pt spread maybe going for something like 20pts, which is only a 5% "tax".
Might be overthinking it but I think it's important to consider the different implications as a different type might suit each market. Seems like SB would be worth it for FTSE trading and FX but DMA for the ES...