I want to trade ETF's on commodities, indexes and maybe a little forex on the daily timeframe. Average 100 days in trade. I am from Sweden and I think I am paying too high commission and fees. I pay 0,14% commission and there is a 1,16% spread, so total 1,3%. For this I get a 2,71 leverage. How much does it cost to trade on a US/International exchange? Can you recommend any? What does it cost to leverage? I want only 1:2 or 1:3 leverage. My total account is $38K, but I will probably start trading with around $7,5K.
Check out IB (interactive brokers . com). Very low fees. Not sure about FX rates, and margin fees/rates. All the info is on their site. Do the fees matter THAT much since you hold 3 months? If so, IB is probably the best in that department.
Will check out IB. Yes my "compounded annual interest" or "CAR" halves when I add 1.3% trade fee. In other words my profit is cut in half by "fees".
If I am correct IB charges 1.59% per 24 hours when borrowing money for leverage? Is this correct or am I mistaken?
I really wished we would standardize the system of units and conventions. For example, lets all use metric. I'm only speaking out because OP is european and use the comma ',' instead of period '.', and probably use spaces instead of commas for every thousands. E.g. one million is 1 000 000,00 instead of 1,000,000.00. Anyway just a rant because it gets annoying reading different units also like degreesC and degreesF; mm, 3/16", 2 stones, etc.
It is not a daily rate but rather expressed as an APR. You may wish to refer to this prior thread which contains an explanation and example of the interest calculation: http://www.elitetrader.com/vb/showthread.php?t=280738
I would recommend to stay away from trading commodities using ETF's over long periods (more than a few weeks), unless the market you are trading has an inverted futures price curve. In the normal market, where longer dated futures are more expensive than near-month futures ETFs typically have roll their positions every month, selling cheaper contracts that are about to expire and with proceeds buying more expensive contracts with expirations further out. Because of the price difference the ETF will be able to buy fewer contracts than it sells, therefore bleeding money out every roll, and this is your (investor's) loss, which could really add up over several months... You can limit the damage somewhat by trading ETFs that don't invest all of their funds in the futures with the same expiration, but spread their funds over multiple expirations (12 or more moths is preferred) , like USL does, as opposed to USO. Because USL has to roll only 1/12 of it's position every given month, and USO has to roll it's entire portfolio monthly - USL will outperform USO over long term, however USO has advantage during periods when oil market is experiencing inverted price curve... http://www.investopedia.com/articles/07/contango_backwardation.asp
Thanks for the tip. I tried IB and wow, their trading platforms look really bad. At the IB trading site I can only see a few commoditys like oil, metals and sugar and that is too few. Also the ETF's might not be what I am looking for. All I want to do is trade commodities and some indexes like S&P and DAX, but I don't want the complexity of futures contract months. Is ETF's what I am looking for?