E.g. with ‘futures’ spread bets, the specified closing date can be several months after the initial bet is placed.
On the other hand, a ‘Spot’ market trade often closes at the end of the same trading day.
The most popular trade though is a Rolling Daily Contract aka Rolling Daily Spread Bet aka Daily Funded Bet (DFB) aka Daily Funded Trade (DFT).
These are designed as short terms trades and if they are not closed at the end of the day they simply rollover to the next day for a relatively small financing charge.
For more details see our guide to Rolling Daily (Daily Funded) spread bets.
Spread Betting MarketsIf you are looking for information on a particular market, please click on the relevant link below.
FTSE 100 Shares
FTSE 250 Shares
Dow Jones Shares
S&P 500 Shares
NASDAQ 100 Shares
Daily Rolling Contracts vs FuturesWhen trading Futures spread bets, the spread is typically wider than for the more immediate Rolling Daily quote. This allows the spread betting companies to protect themselves over the added uncertainty over a longer period of time.
There are no commissions or brokers fees on a futures trade. If the market moves into a profit paying position for you then you simply receive the profits as with an ordinary spread bet.
In contrast, Rolling Daily spreads usually employ narrower spreads than a futures bet because the market makers have more immediate knowledge about potential movements. This lowers risk and so the spreads can be narrower.
When you ‘Roll’ a bet into the next day you naturally retain the price of your initial trade. Therefore, if you continued the bet for an extended period of time you will maintain the same spread potentially to the same point in time as with a futures bet, thus creating the same level of uncertainty.
This is accounted for in a different way, however; as a series of small overnight financing fees proportional to your stake size. Essentially it’s a small overnight interest charge on your investment. The fee is often small compared to the value of your trade but if you roll the bet for a longer period then the individual charges do add up.
On the other hand, if you Sell a market via a Rolling spread bet then some of the companies will actually pay you a similar overnight financing fee.
If you open and close your trade on the same day, like many investors do, then there is no overnight charge.
As a rough rule, trades that you want to keep open for periods of a month or longer may be cheaper with a futures contract. For short term trades investors may be better off with a Rolling spread bet.
Spread betting carries a high level of risk. You can lose more than your initial investment or stake. Spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.