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sbirch

Spreadbetting Fees and Leverage

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I would like to start trading ETFs with a minimum holding period of one month. To avoid account inactivity fees with regular brokers I had considered using spreadbetting, but I'm a little confused by the funding requirements :confused:

 

With daily funded bets (I'm looking at IG Index) the funding charges seem to be based on the assumption that I am borrowing money from the spreadbetting firm to leverage the position, but if the position was un-leveraged (i.e. I buy £1 per point on an etf trading at £100 and keep £100 in my account) then I wouldn't need to borrow money. In this scenario, why would IG still charge me to roll over the daily funded bet?

 

SB

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Id steer well clear of spread betting firms. Your execution costs will be much higher: wider spread and paying 'their' price, not the market price which will be a few pence/cents away from the real market. Believe me, this adds up over time.

 

Look at Lightspeed trading. I'm thinking of opening an account with them for longer term equity investments. I dont believe there are any inactivity charges. Most brokers wont charge for financing.

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Id steer well clear of spread betting firms. Your execution costs will be much higher: wider spread and paying 'their' price, not the market price which will be a few pence/cents away from the real market. Believe me, this adds up over time.

 

Look at Lightspeed trading. I'm thinking of opening an account with them for longer term equity investments. I dont believe there are any inactivity charges. Most brokers wont charge for financing.

 

Thanks for that, sounds perfect! I would rather avoid spreadbetting if possible and was only considering it as a last resort due to the account fees problem. I'll take a look at lightspeed. Cheers!

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it depends where you are located - remember spread betting gains are tax free in the UK unlike futures/options/normal shares...

 

you can compare a few companies here Compare Financial Spread Betting Companies

 

Also, spread betting companies/CFD brokers have different policies and some will only charge you financing rates on the 'amount borrowed'. In any case it might be well worth looking at holding spread bets via futures if you wish to trade over 1 month or so - the spread might be a little wider but they are well worth considering for their flexibility [and no daily fees then]

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