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Crude oil trading - minimising overnight financing costs?

  • #1
  • First Post: Oct 3, 2019 1:56am Oct 3, 2019 1:56am
Good morning all,

Could anyone please advise which broker would allow me to open unleveraged positions in WTI crude oil? I would like to hold oil for longer periods and trying to avoid overnight financing fees which can work out to be quite expensive. Or any other suggestions how to minimise overnight financing cost?

Best

tonny
  • #2
  • Oct 4, 2019 12:48am Oct 4, 2019 12:48am
What instrument are you trading tonny47? CFD, futures?
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #3
  • Oct 4, 2019 2:01pm Oct 4, 2019 2:01pm
Quoting Ef5
What instrument are you trading tonny47? CFD, futures?
used CFDs in the past, currently dont have any positions open. i am flexible on the instrument
  • #4
  • Oct 4, 2019 2:55pm Oct 4, 2019 2:55pm
Many brokers offer CFDs Futures. By trading a futures contract you'll have no overnight fees (unless you rollover into the next futures contract of course).
  • #5
  • Oct 4, 2019 4:00pm Oct 4, 2019 4:00pm
Quoting HairyHarley
Many brokers offer CFDs Futures. By trading a futures contract you'll have no overnight fees (unless you rollover into the next futures contract of course).
when i click on CFD, it says mentions daily financing, so confused about no overnight fees not being charged on CFDs
this is just a random example link, not trying to promote here
https://www.cityindex.co.uk/commodities-trading/
  • #6
  • Oct 5, 2019 7:39am Oct 5, 2019 7:39am
Not sure about your broker, but my understanding is that when you go into CFDs and choose e.g. WTI, you would normally have the option of:

Spot (overnight rollover charges applied if the position is head for more than a day)
Futures Nov 19 (larger spread but rollover charges only applied if position is held beyond expiry, in this case 21st October)
Futures Dec 19 (larger spread but rollover changes only applied if position is held beyond expiry, in this case 19th November)

Happy to be be corrected but that's my understanding. Worth checking what futures contracts your broker offers and if in doubt, drop them an email. Or open a small position to see how it works.

Hope that helps.
  • #7
  • Oct 6, 2019 12:10am Oct 6, 2019 12:10am
Quoting HairyHarley
Not sure about your broker, but my understanding is that when you go into CFDs and choose e.g. WTI, you would normally have the option of: Spot (overnight rollover charges applied if the position is head for more than a day) Futures Nov 19 (larger spread but rollover charges only applied if position is held beyond expiry, in this case 21st October) Futures Dec 19 (larger spread but rollover changes only applied if position is held beyond expiry, in this case 19th November) Happy to be be corrected but that's my understanding. Worth checking what...
thanks, much appreciated
  • #8
  • Oct 6, 2019 10:49pm Oct 6, 2019 10:49pm
Quoting tonny47
{quote} used CFDs in the past, currently dont have any positions open. i am flexible on the instrument
I'd go with futures to avoid overnight costs or high spreads. The only downside is the barrier to entry is much higher so I don't know if that's a factor.

If you go with futures, I think TD Ameritrade has the all-around best offering. Interactive Brokers is better in some ways, but I wouldn't use them as my only broker because their platform is weak and they don't offer free data.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #9
  • Oct 11, 2019 1:24am Oct 11, 2019 1:24am
Quoting Ef5
{quote} I'd go with futures to avoid overnight costs or high spreads. The only downside is the barrier to entry is much higher so I don't know if that's a factor. If you go with futures, I think TD Ameritrade has the all-around best offering. Interactive Brokers is better in some ways, but I wouldn't use them as my only broker because their platform is weak and they don't offer free data.
Thanks! I had a look at interactive brokers about a week ago but they seem to have very poor reviews. Will read more about both
  • #10
  • Oct 11, 2019 9:53am Oct 11, 2019 9:53am
Quoting tonny47
{quote} Thanks! I had a look at interactive brokers about a week ago but they seem to have very poor reviews. Will read more about both
They’ve been good for me, but a big reason I like them is they pay decent interest on cash balances. Most brokers pay something like 0.05% but they were paying around 2.0%. (It’s probably lower after the rate cuts.) Paying higher interest isn’t really an advantage anymore; now that everyone has gotten rid of commissions you could just take your cash balance and put it into something like GSY at the end of the day.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #11
  • Last Post: Oct 13, 2019 1:57pm Oct 13, 2019 1:57pm
Also do not forget to check where broker might compensate this "loss" I was rather impressed with some low (whatever) before I found out that they ripped me off somewhere else What about exiting the market before the "SWAP TIME" and re-enter later? Also, will you be in BUY or SHORT? Just compare the whole picture of the broker... total costs... I would stick to major/proven brokers... if in doubt
Can you afford to take that chance?
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