Top 3 Spread Betting Firms

[Jack o'Clubs]

Could you please say who this "SB" is, this looks very interisting.

edit: Never mind found it: TwoWayFutures, I had a look at them, all seams very good their, anyone trading with them, if so, whats your experience like?

Just search these forums - quite a lot of feedback. I use them and am perfectly happy. The trade off is between higher comms vs no CGT. You need to be making enough each trade to clear the higher comms, eg. $10 a contract for US index futures (vs a couple of bucks on IB), so it might not suit scalpers but is perfect for position trading. My strategy would be to trade with a low-cost broker until I get close to my CGT limits for the year and then switch to TwoWayFutures/Futuresbetting (same crowd).

 

[marlintrdg]

Just search these forums - quite a lot of feedback. I use them and am perfectly happy. The trade off is between higher comms vs no CGT. You need to be making enough each trade to clear the higher comms, eg. $10 a contract for US index futures (vs a couple of bucks on IB), so it might not suit scalpers but is perfect for position trading. My strategy would be to trade with a low-cost broker until I get close to my CGT limits for the year and then switch to TwoWayFutures/Futuresbetting (same crowd).

Thanks Jack o'Clubs,
Doing that as I email, that's a really good plan you have their, and your comment about "position trading" is for me..

 

[jas-105]

A few things distinguish a Spread bet from a CFD - Spread bets have finite end dates, where as CFD's are open end dates. One of the other things is the fact that the Spread betting firms makes you a market per se, and if this company is going to roll out DMA to their spread betting clients ie remove the market making aspect of the price, what makes it still constitute a Spread bet? Just because they call it a spread bet doesn't make it so! I'd love some more input from this firm?

But surely a non-DMA firm will make a market around the exchange quoted market anyway ?
What do you think their market-makers are looking at when they make a price , I doubt they are that clever to guess it correctly ?
Just because a spread betting firm decides to automate this process doesnt differentiate them from non-DMA's, it just makes for a tighter spread, doesnt it ?
Your comment on CFD's sounds correct, but do any SB firms offer an open ended "bet" ?

 

[CityTrader]

But surely a non-DMA firm will make a market around the exchange quoted market anyway ?
What do you think their market-makers are looking at when they make a price , I doubt they are that clever to guess it correctly ?
Just because a spread betting firm decides to automate this process doesnt differentiate them from non-DMA's, it just makes for a tighter spread, doesnt it ?
Your comment on CFD's sounds correct, but do any SB firms offer an open ended "bet" ?

Of course it differntiates them from other Spread Betting firms. There is no one taking the other side of their bet. This Twowayfuture is merely wrapping the cash price into a Spread Betting wrapper. With all other spread betting firms, a price is made by the dealrs ( obviously) around the underlying instrument. whether that firm chooses to "hedge" the risk is down to them, but I wouldn't sleep at night, expecting a Spread Bet from DMA to remain tax free. In which case a CFD ( down to about 6 bp round trip) is much cheaper.

 

[gle101]

Of course it differntiates them from other Spread Betting firms. There is no one taking the other side of their bet. This Twowayfuture is merely wrapping the cash price into a Spread Betting wrapper. With all other spread betting firms, a price is made by the dealrs ( obviously) around the underlying instrument. whether that firm chooses to "hedge" the risk is down to them, but I wouldn't sleep at night, expecting a Spread Bet from DMA to remain tax free. In which case a CFD ( down to about 6 bp round trip) is much cheaper.

Well I wouldn't say that all prices are made by the dealers when it come to SB companies. If you mean a dealer being a physical person, that is. As for instance in the case of Worldspreads, it is for the most part of the time a completely automatic process. They have an algorithm based on the cash price that calculates the quote offered at a dazzling speed, which in fact at times, can be much less than the actual direct market price. In TWF case you trade directly on the cash price, they are in fact adding a "commission spread" after your trade has been executed. The biggest difference as I see it between a SB (with instant execution) and a DMA is, that, on a SB you can't have an order within the spread itself but on a DMA that is one of the main advantages.

As I understand it Two way Futures is at the moment classified as a spread betting company. I am sure they have been very careful getting this approved by the authorities before promoting it as being tax free. One can also debate if tax free applies to professional traders.

 

[dcarrigan]

Just search these forums - quite a lot of feedback. I use them and am perfectly happy. The trade off is between higher comms vs no CGT. You need to be making enough each trade to clear the higher comms, eg. $10 a contract for US index futures (vs a couple of bucks on IB), so it might not suit scalpers but is perfect for position trading. My strategy would be to trade with a low-cost broker until I get close to my CGT limits for the year and then switch to TwoWayFutures/Futuresbetting (same crowd).

i am with you on the above jack o clubs. i trade f betting ft, dow ib. i have both on screen at same time and in futures bettings defence i can say there prices are inline with the da prices.

 

[gle101]

Just search these forums - quite a lot of feedback. I use them and am perfectly happy. The trade off is between higher comms vs no CGT. You need to be making enough each trade to clear the higher comms, eg. $10 a contract for US index futures (vs a couple of bucks on IB), so it might not suit scalpers but is perfect for position trading. My strategy would be to trade with a low-cost broker until I get close to my CGT limits for the year and then switch to TwoWayFutures/Futuresbetting (same crowd).

Why trade with TWF when you can get a much better price trading IB? That is apart from the profit being tax free of course. Also you are talking about increasing the no. of trades in order to get a lower commission, isn't it hard to position trade with so many trades per day? As I understand it with TWF you have to have quite a high no. of trades each month in order to lower the commission rate to an acceptable level.

Sorry, I think I somewhat misunderstood your post. In fact you said "You need to be making enough each trade to clear the higher comms". I guess the average spread will be quite wide, commission taken in consideration?

 

[Jack o'Clubs]

Why trade with TWF when you can get a much better price trading IB? That is apart from the profit being tax free of course.

Er, I think you've answered your own question.

Also you are talking about increasing the no. of trades in order to get a lower commission...? ...Sorry, I think I somewhat misunderstood your post. In fact you said "You need to be making enough each trade to clear the higher comms". I guess the average spread will be quite wide, commission taken in consideration?

No, I'm not talking about increasing trading to benefit from lower comms! The comms do come down with volume, but I wouldn't advocate overtrading just to try and get costs down. The maths is pretty simple. If, for example, TWF comms = $10/contract and IB comms = $2.40/contract, what kind of average profit/trade do you need to be making where the tax saving makes up for the higher comm? I think most people should be able to work that out for their personal circumstances. For me, as a position trader, my profits per trade will be pretty high, so a few bucks extra in comms is far outshadowed by saving 40% of the profit in CGT. Someone scalping a few points here and there is going to need the lowest comms they can get to make any profit at all. It's pretty simple to work out and the Futuresbetting website has their commission rate card so you can check it all out for yourself and see if it's worthwhile for you. All I'm saying is that it is for me.

 

[gle101]

Er, I think you've answered your own question.



No, I'm not talking about increasing trading to benefit from lower comms! The comms do come down with volume, but I wouldn't advocate overtrading just to try and get costs down. The maths is pretty simple. If, for example, TWF comms = $10/contract and IB comms = $2.40/contract, what kind of average profit/trade do you need to be making where the tax saving makes up for the higher comm? I think most people should be able to work that out for their personal circumstances. For me, as a position trader, my profits per trade will be pretty high, so a few bucks extra in comms is far outshadowed by saving 40% of the profit in CGT. Someone scalping a few points here and there is going to need the lowest comms they can get to make any profit at all. It's pretty simple to work out and the Futuresbetting website has their commission rate card so you can check it all out for yourself and see if it's worthwhile for you. All I'm saying is that it is for me.

Thank you for the explanation. I now do get your point about the tax benefits.

 

[bfinn]

Best for index futures

I bet only quarterly/monthly futures of the FTSE and emerging market indices/iShares, generally holding for several months. As I am betting over £3 million of underlying I've spent several weeks researching and modelling the costs of 13 different spread bet sites, including spreads, interest paid on cash, margin deposit (primarily interest lost on it), rollover costs, and credit. For my purposes, the best (in terms of lowest costs) are:

1. For FTSE100 futures: Cantor Index, IG Index and GFT all similar, CMC not far behind. The worst are City Index and Finspreads. (IG Index are also currently very cheap for daily rolling FTSE100 bets.)
2. For emerging market futures: IG Index by a long way, not least because they seem to be about the only spread bet company that handles emerging markets (and not many others even handle iShare futures). Also best for FTSE-250. Incidentally Finspreads offers Poland (WIG20 index) which no-one else seems to do.

So overall, if you were to choose a single spread-bet site for UK & emerging index quarterly/monthly futures, by my calculations IG Index provides the best deal. (Note I have not taken into account other factors such as stops, platform features and customer service.)

 

[marlintrdg]

I bet only quarterly/monthly futures of the FTSE and emerging market indices/iShares, generally holding for several months. As I am betting over £3 million of underlying I've spent several weeks researching and modelling the costs of 13 different spread bet sites, including spreads, interest paid on cash, margin deposit (primarily interest lost on it), rollover costs, and credit. For my purposes, the best (in terms of lowest costs) are:

1. For FTSE100 futures: Cantor Index and GFT neck and neck, CMC not far behind. The worst are City Index and Finspreads.
2. For emerging market futures: IG Index by a long way, not least because they seem to be about the only spread bet company that handles emerging markets (and not many others even handle iShare futures). Also best for FTSE-250. Incidentally Finspreads offers Poland (WIG20 index) which no-one else seems to do.

Whats your take on IG Index for shorted trem, say two to four weeks, for UK shares, and US futures?

I'm taking a look at them as I post..

 

[bfinn]

Daily rolling bets

For 2 weeks you're probably best off with daily rolling bets, which I haven't spent much time looking at. However I did model IG Index's FTSE100 index daily rolling bets, which are very cheap at the moment (the cost of carry being no more than for a quarter bet), as a result of a pricing anomaly which they will be eliminating shortly (according to their head of futures). Currently they charge I think 0.5 points per day to roll, but will replace this with a LIBOR-based financing charge. So if you're planning to trade the FTSE100 index short-term soon, it's unlikely you can do better than IG Index.

I haven't done any modelling on US futures, nor on individual UK shares (except for iShares).

 

[marlintrdg]

For 2 weeks you're probably best off with daily rolling bets, which I haven't spent much time looking at. However I did model IG Index's FTSE100 index daily rolling bets, which are very cheap at the moment (the cost of carry being no more than for a quarter bet), as a result of a pricing anomaly which they will be eliminating shortly (according to their head of futures). Currently they charge I think 0.5 points per day to roll, but will replace this with a LIBOR-based financing charge. So if you're planning to trade the FTSE100 index short-term soon, it's unlikely you can do better than IG Index.

I haven't done any modelling on US futures, nor on individual UK shares (except for iShares).

Thanks for your insights on IG Index, I have a binary betting account with them but never looked at them for spreadbetting, that's a real screw-up on my part. I'll spend sometime looking them over this week..

 

[bfinn]

Sorry, I forgot to say in my earlier post that IG are also very good cost-wise for FTSE-100 quarterly bets; similar to Cantor. I'll edit it.

 

[Jack o'Clubs]

You guys might want a look at this thread by The Blades in which he works out the cost of various spreadbetting firms in different markets - I've found it quite useful from time to time.

http://www.trade2win.com/boards/showthread.php?t=18701

 

[romik]

Unless one is scalping, I don't see any reasons to use a futures broker being UK resident. I used IG and found them to be very so-so, spreads are too wide for intraday. Been using CS for a while now, not bad at all.

 

[dcarrigan]

Unless one is scalping, I don't see any reasons to use a futures broker being UK resident. I used IG and found them to be very so-so, spreads are too wide for intraday. Been using CS for a while now, not bad at all.

are CS spreads on ft and dow competitive, only ask because i carnt see them been able to compete with f betting (1 ft futures) or ib (1 dow futures).

 

[the blades]

are CS spreads on ft and dow competitive, only ask because i carnt see them been able to compete with f betting (1 ft futures) or ib (1 dow futures).

Hello dc,

are you not comparing apples an pears though?

How about placing a few bets at £5 per point with FB each month? How do they then compare with CS?

UTB

 

[dcarrigan]

Hello dc,

are you not comparing apples an pears though?

How about placing a few bets at £5 per point with FB each month? How do they then compare with CS?

UTB

fb £10 per full point with 1 point spread no matter how many trades. reduces to .5 if 125 round trips a month. only downside is 5k deposit because you are trading live futures. admititly the £10 stake may put some off.

 

[the blades]

fb £10 per full point with 1 point spread no matter how many trades. reduces to .5 if 125 round trips a month. only downside is 5k deposit because you are trading live futures. admititly the £10 stake may put some off.

aye, twas my point - £10 per pt is above what a lot of spreadbetters are after.

Out of interest, how much do they charge for FTSE 350 companies? (If you're not a "frequent" trader)

Cheers,
UTB