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Deals, Dividends and Deductions

By on September 5, 2012 in capital spreads, ig index, intertrader, position trading, stop orders

In this update I’d like to remind you of how your spread betting ledger cash balance — which is not the same thing as you overall portfolio valuation, or your available trading funds — is affected by three kinds of transactions: deals, dividends, and deductions.

Deals

In one of my spread betting accounts I closed several positions that I didn’t wish to keep alive because the stop orders on those positions were not guaranteed, and I’m liking guaranteed stop orders right now. Had the positions been held in a Capital Spreads or InterTrader account, I could have guaranteed the stop orders retrospectively… but they weren’t, so I couldn’t, and I chose to close the positions at a profit instead.
Anyway, the closed positions resulted in almost £60 being added to my cash balance.

Dividends

I reckon there are still many actual or would-be spread bettors out there who don’t realise that you can receive dividend income from longer-term position trades rather like how you would receive dividends in a conventional share dealing account.

To prove it, I can tell you that my cash balance in the same spread betting account increased by just over £14 today as a result of dividend receipts.

Deductions

Dividends are really only applicable to longer-term position trades rather than day trades, and those longer term positions suffer from financing charges levied by the spread betting companies in exchange for the leverage they provide.

Today, the same spread betting account cash balance was reduced by a minuscule £0.26 as a result of financing charges (i.e. interest).

All Together Now

The following IG Index “Transactions” report shows the aforementioned balance-affecting transactions from today:
Dividend Deductions
You can see how those transactions have been classified as DEALs, DIVIDENDs, and — unfortunately for my headline — WITHs.

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Disclaimer: this posting is for general education only; it is not trading advice.