What is a Futures or Forward Spread Bet?

Futures Trades
Futures trades are useful if you can see into the future…

A futures spread bet has a set expiry date that is normally within the next month or quarter.

With a Futures Spread Bet

  • arrow_forwardUnlike a “Daily” market, you do not pay to keep a trade open overnight
  • arrow_forwardThe market often has a wider spread than a Daily market
  • arrow_forwardIf you want to keep your trade open on the expiry date then tell your spread betting company in advance (they will often charge you half the width of the spread to keep it open)
  • arrow_forwardKeep an eye on the expiry date, these aren’t always obvious but should be listed in the ‘market information’ on your spread betting platform (see below)
From a ‘trading cost’ point of view, futures trades are useful if you want to keep a trade open for 1 to 3 months (for monthly futures) and 1 to 6 months (for quarterly futures).

If you want to take a longer-term position then spread bets and CFDs are probably the wrong products.

You are probably better off using a lower cost and unleveraged product like an ETF.

With some platforms the type of market isn’t that clearly labelled. However, you can normally tell a futures contract because it has the expiry month of the trade in the name of the market, e.g. Brent crude oil (Aug).

Warning: Expiry Months Can Be Misleading

The expiry month and the actual expiry date can vary!

The name of expiry month is only a guide, check the actual date.

E.g. in the screenshot below, looking at the US Light Crude – Future (Sep), you can see this is the September US crude oil market.

However, in the market information, Financial Spreads confirm the expiry of 21 August 2017.

This isn’t an arbitrary date, you can see they base the name of the market, and the expiry, on the official CME expiry date, i.e. when the underlying market expires.

Note, like the screenshot below, the spread betting platform might show the local UK time of the expiry, the CME date/time will be based on the local US time.

If in doubt, just check the expiry date on your spread betting platform.

Checking Futures Markets Expiry Dates

Daily Trades

Most spread bets are not Futures or Forwards markets but daily spread bets / daily funded bets.

These tend to be more popular for short term trades because of the lower trading costs.

Also see our guide to daily spread bets / daily funded bets.

What is a Forward Bet?

This is the same as a Futures bet (see above).

You often see “Forward Bets” on the IG platform, other platforms use the term “Futures” to mean the same thing.

Commodities Futures

Most soft (agricultural) and energies commodities markets still operate as Futures (Forwards) market because this is how the underlying market is priced.

The exceptions tend to be gold and silver which are increasingly priced as a daily markets.

Forex Futures

With spread betting and CFDs, nearly all forex markets are priced as daily markets. It’s rare you’ll find a forex futures market.

Also see, how to spread bet on forex.

Stock Market Futures

Some stock market indices are available as both “Daily Cash” (aka “Rolling Daily”) and Futures markets e.g.

Stock Market Futures

However, given how few trades are futures/forward trades, I would expect many firms to stop offering these markets.

The Cost of Rolling Over a Futures Spread Bet

With most platforms, you simply pay half the spread of the market to rollover a futures trade.

  • infoRemember: you do need to tell your spread betting firm in advance if you want to do this.
IG no longer offer the above discounted rollover on futures markets. With IG, if you want to roll a futures trade over from one period to the next then you pay the full price of closing the trade to the mid-point (i.e. half the spread)… AND the full price of opening the new trade (i.e. whole spread).

Don’t let this put you off too much. This rollover cost impacts a miniscule number of trades.

Also, as discussed above, if you are constantly holding futures trades and wanting to roll them then spread bets might not be right type of product.

ETFs could be a better option for your long-term trading.

AuthorAlex Turner

Senior Editor, SpreadBetMagazine

Leave a Reply

5 Comments on "What is a Futures or Forward Spread Bet?"

Notify of
Sort by:   newest | oldest | most voted
Daily Spread Bets and Daily Funded Bets Guide

[…] spread betting industry. These markets are popular because they often have tighter spreads than Futures trades (aka ‘Forward’ trades). Therefore, if you want tight spreads and no expiry date, rolling spread bets are a good solution. […]

Hong Kong Stock Market Spread Betting Guide

[…] market isn’t more popular with spread bettors is because it’s often only available as a futures market rather than a daily market… and that often means wide spreads e.g. you’ll often get a […]

Cocoa Spread Betting Guide

[…] is an example of how a futures spread betting market […]

Crude Oil Spread Betting Guide

[…] is an example of how a Crude Oil futures spread betting market […]

Wheat Spread Betting Guide

[…] date for the ‘March’ market, 20 February 2012. It should be noted that, as this is a futures spread bet, your position will close when the March Wheat futures markets expire, 20 February 2012. […]