Rolling Daily Bets (also know as Daily Funded Bets or Rolling Cash Bets) or are a common tool used by financial spread bettors looking to take positions over the short and medium term, especially those which are designed to last over several days. Rolling daily bets provide an automatic facility for rolling transactions overnight, such that traders can remain exposed to the market for as long as it takes for a trade to reach maturity. While financing charges are applicable with rolling daily bets, and applied on a daily basis, how can traders make them work within their portfolio, and how do rolling daily bets compare to longer and shorter term means of spread betting?
In financial spread betting, it’s important to have access to and command over the tools necessary to get the job done. For some strategies, the trades are all short term in nature, and so the type of position doesn’t necessarily matter in terms of achieving the desired outcome. For some positions however, eyes have been cast to the longer term, with the anticipation of holding a position for several days. In these circumstances, spread betting brokers offer rolling daily bets, designed to facilitate holding bets over a longer period of time, to make these slightly longer-term strategies a possibility.
What Are Rolling Daily Bets
example of spread bet types on a trading platform
Rolling daily bets (daily funded bets) are a type of spread betting bet that allow traders to automatically hold positions for a period of multiple days. With rolling daily bets, positions continue to roll overnight with financing charges being applied, such that traders can more effectively take exposure to markets over the slightly longer term. Because of the structure, they afford levels of functionality that wouldn’t otherwise be available to financial spread betting traders, and as a result have an important role to play in allowing greater position diversity.
While for all intents and purposes rolling daily bets have the same trading effect as other bets, daily funded bets do not expire (expiry date is set far in the future) at the end of each day and consequently continue to roll indefinitely along with the other orders traders have in place in a market. While financing costs should always be of some concern in rolling daily bets, they do have their distinct advantages.
Rolling Daily Bet Advantages
The first key benefit of trading rolling daily bets is that you can benefit from tighter spreads in your markets. This has the effect of saving on the cost of the trade and means such bets need to move to a lesser degree to offset the impact of the spread. While financing charges are still an issue, rolling daily bets tend to work out to be a more cost-effective way of taking exposure to medium term spread betting trades, and the automatic rolling functionality makes them a convenient addition to the toolbox for traders of this kind of strategy. On top of it, rolling daily spread bets on shares are subject to spread betting dividend adjustments.
Rolling Daily Bet Disadvantages
The issue of financing is one that we’ve already touched on, and it is by and large the main disadvantage. While there’s no escaping financing charges (compare to quarterly spread bets), rolling daily bets can also cause problems where market conditions change overnight while the position and the orders around it stay the same. In this sense rolling bets can mean positions that might have been profitable at close of day could open with a much lower value or worse, a loss, on top of the costs of the spread.
How to calculate overnight financing change:
For long positions: change = (interest rate + broker rate) * total value of your position / 365
For short positions: change = (interest rate – broker rate) * total value of your position / 365
* broker rate is about 2.5%
How to Deploy Rolling Daily Bets Most Effectively
The best use of rolling cash bets is for traders who expect markets to rise or fall over a more protracted period. If you can identify a wider trend in a market, rolling daily trades can be a great way to capitalise on that and giving markets a chance to follow their trends can be enough to make the difference in spread betting terms. Where every point is a multiple of the original stake, the risks are high, but with rolling daily bets in place that support market trends over the medium term it can be possible to use these to good effect in driving trading results.