yeah… and what about effect of backwardation, on longs, on shorts? what is the amount bacwardation for ig cfd-futures? cant wait for the answers…

justisan wrote: what is the amount bacwardation for ig cfd-futures?

If you ever see a Future Price that is less than the (equivalent) Spot Price then screenshot it and we would then have proof and a figure for backwardation.

Yes, but Long and Short periods held would need to average out roughly the same.

So we have Contango and Cost of Carry. And we have Backwardation. Now, before e.g. Grahal thinks that both are the same, dig out your best AI and find out. On top of that, blame me of suggesting (in yesterday’s post) that both are the same. The effect would be the same, but the reason of existence is very different. For that, answer justisan’s question first. 🙂

Meanwhile now AI-up what Back Adjustment is. Haha. The fun ? in PRT-IB we deal with it every hour of the day. But assumed that AI will cough up for you what it means, did we realize that it is there in everything we see (with Futures) ? maybe not so much ?

Then again answer JS’s question : Contango and Long vs Short. No wait … Cost and Carry and Long vs Short. Ah, got it. Backwardation then ? oops. Try Back Adjustment first.

Futures are complex products, they say. And what develops in this thread is not part of that (says me). Unless we start to pull out elements like in the last posts.

I think I said it in this thread, recently. Don’t start with cattle or chicken. Or look up what happened to oil back in 2020 (Corona). Futures can be dangerous products. Best is to practice with equities (S&P and such) and lose some money only.

Yeah, that’s how it works… probably the caffeine 😉

I see multiple misunderstandings above but I would get tired to come with explanations, and anyway everybody can read all relevant contents on www directly or extract all those info with some ai chatbot. in the end what counts is the effect, here in particular related to cost of keeping a position overnight in cfd (original topic of this thread) versus futures, and here cfd positions are systematically at substantial cost disadvantage which cumulate to massive amounts over time, one can easily lose 10-20-30% of the long term performance, depending on how frequently and for how long positions are held overnight, which in the end means that when trading exact same systems with cfd if one is working generally profitable, one will make money much slower, and if one is generally losing, one will lose faster.

jebus’ findings are real and impressive, few years ago I was figuring out something similar, and we also had some conversation with JS related to the topic / cost of carry, link below, where I was comming up with simple realistic example/calculation in relation to “overnight financing for cfd” vs “cost of carry for futures”.

My Algo journey 5 years deep

GraHal wrote: justisan wrote: multiple misunderstandings Please briefly bullet point 3 (no need for explanation) … we can then fully educate ourselves.

I marked several statements. a comment on the cfd-related one, so first one marked: cfd broker running a b-book or hybrid one does not loan 95% of the contact value to its clients. he might not loan even a single cent, but here the fantastic part for the broker comes: he acts as if he would be loaning those 95% and charges relevant market interest rate + heavy “handling fee” on top if positions are kept overnight.

regarding last marked statement: it’s not clear whose arrangement with brokers you mean, to me it sounds (and sure I might misunderstand you) like you mean market maker’s arrangement with brokers – and if you mean that, then that is not the case, there are no such arrangements between them, margin is not a requirement comming from market makers, but from clearing house, and market makers also need to fulfill margin requirements.

cheers

justisan

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