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Will Virgin save Northern Rock? Will they take advantage of the beleaguered bank? Whatever you think the markets reacted positively today to news of Virgin being the favourite to ‘rescue the rock’

At the time of writing the Northern Rock (March) market is 109.7p - 110.1p with FinancialSpreads.com. This market expires on 18-Mar-08.

Therefore you can spread bet on Northern Rock shares settling:

Above 110.1p on 18-Mar-08
or
Below 109.7p on 18-Mar-08

With Northern Rock shares, you trade in £X per penny, where a penny is 1p of share price movement. Eg if your stake was £12 per penny and Northern Rock shares move 8p then that would be a £96 difference to your profit or loss.

Northern Rock Example

Let’s say you think that Northern Rock will finish higher than 110.1p by 18-Mar-08.

Therefore you buy at 110.1p for a stake of, let’s say, £10 per penny.

So if, by the closing date, the shares settle at 137.6p, then:

Your profit / loss is worked out by taking the difference between the settlement prices of, 137.6p and the value you bought the spread bet at, 110.1p and then multiplying that by the stake per penny

Profits = (137.6p - 110.1p) x £10 per penny stake.

= 27.5p x £10 per penny stake.

= £275 profit.

But if the market didn’t move as forecast and had Northern Rock shares fallen and closed down at 90.3p, you would have made a loss on this spread bet.

Loss = (90.3p - 110.1p) x £10 per penny stake.

= -19.8p x £10 per penny stake.

= -£198 loss.

Looking for more on Northern Rock spread betting?

Good Luck

DB

As promised last week:

We’ve now increased the number of spreads comparison tables and markets.

We’ve increased the number of markets in our indices comparison
We’ve increased the number of markets in our forex comparison
We’ve increased the number of markets in our commodities comparison
We’ve increased the number of markets in our service comparison

Find out where you can get narrow spreads go to >> Compare Spread Betting Companies

And we’ll be adding even more over the next few weeks.

Enjoy and good luck

DB

I’m losing money, what should I do, Part 1

A new set of tips for you based on when your trading isn’t going so well.

Tip 61. Stop.

62. Looking again at Spread Betting Tip 61 above you may say that’s not a tip. Well you’d be surprised how many people get it wrong. People carry on trading through stubbornness, chasing profits, habit etc.

This brings me to Tip 62. Stop. Paper Trade instead. There are plenty of free demo accounts out there that you can use. Eg see Financial Spreads, Capital Spreads, GFT etc

Try trading for free with a Demo account. You shouldn’t get poorer, you’ll learn more and it’ll give you a break from the financial stress of the markets.

63. Don’t ‘chase your losses’. It can be tempting to increase your stake size on your next trades to cover losses from a previous trade. It can be tempting to quickly open more poorly researched positions in order recover losses.

This will get you into more trouble. It will put more pressure on you and you’ll start losing more money at a rate you never thought possible. Nick Leeson is a good example of someone playing the markets and chasing their (the bank’s) losses.

64. Catching a Falling Knife, Chasing Falling Markets, Averaging Down. I’ve never really understood why traders do this. Why would you increase your position in a market that’s already going against you? You are often best off just accepting the loss. Predicting the bottom of the curve is tricky. You are probably getting yourself into more trouble

65. It can also be tempting to re-enter a trade after it hits your Stop Loss. This is a variation on Spread Betting Tip 64. You’ve already lost once on the trade, be careful. Going back into a market that you’ve already called wrong once may not be your best idea. Research the trade just like you would on any new bet and then only re-enter the market if it looks like a good bet. Make sure you don’t repeat the same mistake on the same market. Do query why you are re-entering a market you’ve already lost on. A losing trade generally means that you’re wrong

66. New Lucky Markets. An old favourite - New Lucky Markets. Sometimes you feel like moving to new markets because the markets you’re currently trading on are losing you money or even ‘unlucky’. That’s like moving from the blackjack table to the roulette table. Fine for recreational fun, it’s not so good for investing. Stick to the markets you know best.

Good Luck

DB

As promised, we’ve been increasing the number of weekly reviews and trading updates on the site. Added every Monday:

Spread Trading – a Daily Trading update:

It was a bloodbath on Friday. Taking its lead from that the Far East put in one of the worst days of the year. It doesn’t bode well for a good opening this morning. Virtually every asset under the sun is being called heavily lower, even Gold…more

Economic Indicators and Company Results

The week ahead, Economic Indicators and Company Results (w/c 12 Nov 07)…more

Spread Betting News Week – a review of the financial press

Plenty of rainforests dedicated to the banking crisis this week; The Telegraph expects HSBC to lead the disclosures, owning up to a further $1 billion of bad debts from…more

Online Trading News – a review of markets over the last week

Equities started the week badly following Citigroup’s weekend disclosure that it had chucked out CEO Chuck Prince and would write down between $8-11 billion on sub-prime…more

Also, coming soon…we’ll be comparing more spread betting markets, more services and covering more companies. Watch this space.

Good luck.

DB

The markets fickle behaviour is becoming ever more annoying. One down day is replaced with an up and traders are being pulled one way and then the other on a stream of contradictory news.

Banking sector valuations continue to be hit and governments across the globe should be worried. Banks have strict rules over capital versus lending which is why they have been so keen on packaging up debt and selling it on. If share capital value falls then this has an impact on the amount they can lend. Damaged banks can easily lead to damaged economies. Whilst it is easy to sit on the sidelines and crow about bankers in trouble in reality you are laughing at yourself.

The FTSE having traded as low as 6410 yesterday is now up at 6500 but not exactly making much further progress in early action. 6500 although obviously a psychological level has proved in the past to be better support than resistance so if we clear above here there is not much in the way of initial resistance to prevent a move higher. That said there is a distinct lack of enthusiasm amongst our punters for further buying as too many have been burnt by getting enthusiastic above this level.

This may be the biggest barrier to further progress in the various western indices as investors

Want to read more? Try our ‘Spread Trading‘ column. Comment updated ‘almost’ every weekday. What can we say? We say ‘almost’…we too try to make some money out of the markets and some days we trade and work before we have time for sweet poetic prose.

Enjoy the new column…Spread Trading on Clean Financial.

DB