Spread Betting - What is the Difference Between a Rolling Daily and a Futures Contract?

LONDON, February 2, 2012 /PRNewswire/ --

A common question asked by clients new to spread betting is 'what is the difference is between Rolling Daily and Futures contracts'. Capital Spreads are keen to highlight the differences between these two contracts as they have varying pros and cons, depending on what type of trader you are and what your trading strategy is.

Futures Contracts

A Futures contract has a set expiry date and if you have a position open on that market and have not closed it by that expiry date and time; your position will be closed at the announced settlement price. Angus Campbell, Head of Sales at Capital Spreads, believes that 'traders with a longer-term view may opt to trade futures contracts as opposed to rolling daily contracts'. There is no overnight financing debit or credit applied as there are with rolling contracts and because there is a fixed term expiry, it can encourage traders to stick to a plan rather than trade many times in a short space of time.

Rolling Daily Contracts

Elliott Winner, Sales Account Manager at Capital Spreads says that 'the Rolling Daily contracts attract a tighter spread and so are used more by short term traders who will hold on to positions for less than a day or up to a couple of months at most, there's nothing to stop you from holding onto a rolling contract from a lot longer'. Capital Spreads allows the trade to 'roll' to the next trading day until it is either closed by the trader or if the stop/limit order is hit. Rolling Daily contracts do attract an overnight financing debit or credit which is applied to your account every day that it is held overnight.

For more information on Rolling Daily and Futures contracts, consult the Capital Spreads website.

Why not try trading rolling daily and futures contracts on our spread betting demo account.

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SOURCE Capital Spreads