Posts from — August 2010

Financial Market Comments from Yusuf Heusen, Senior Sales Trader, IG Index.

In mid-morning trading the FTSE 100 is trying to stage a recovery after a sharp initial decline.

The FTSE 100 gave an impression of suffering the after-effects of overindulgence following the bank holiday weekend, dropping around 70 points at the bell this morning. However, by mid-morning the index seems to have found room for a good breakfast and is attempting something of a modest recovery.

The decline has been led by a sell-off among miners and sounds-like-a-stuck-record concerns over the strength of the US recovery.

Regarding the miners, Eurasian, Kazakhmys, Xstrata and Vedanta Resources are among the leading losers this morning, all down around 2% as base metals prices retreated.

The latest US concerns have risen out of worries that reports today will show that US home prices slowed in June and consumer confidence is approaching five-month lows.

Sterling too has had a disappointing morning, dropping against 15 of its 16 most-actively traded peers, including 0.3% against the Dollar, ahead of a report that economists say will reveal fewer lender-approved mortgages last month.

It’s only really been ARM Holdings (+4.17%) and Cable & Wireless (+2.07%) that have bucked the trend thus far today, although as the morning has progressed we’ve seen more life from London’s blue chips.

After an initial drop of some 70 points, by 10am (London time) the FTSE had arrested the fall and was last seen looking slightly better off.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Good Luck!

DB

The above comments do not constitute investment advice and Clean Financial accepts no responsibility for any use that may be made of them.

Content provided by IG Index which is Authorised and regulated by the Financial Services Authority. FSA Register number 114059.

• European stock market futures are pointing to a positive start after late Friday evening rally in the US.
• This comes on the back of Friday’s comments from US FOMC chairman Ben Bernanke that the Fed is prepared to do whatever it takes to get the economy back on track.
• Things were looking even better until the emergency meeting from the Bank of Japan failed to live up to expectations. Traders were hoping and looking for a bigger stimulus injection than was announced.
• The yen has reversed its early losses on the news, with a 1% reversal on the earlier move on the AUD/JPY that actually puts the yen in credit for the day.
• Risk appetite has swung back to cautious mode, with the EUR/USD down 0.2%.
• It is a bank holiday in the UK today so the GBP/USD and GBP/JPY may not act as they usually do.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Commentary by Dave Evans, BetOnMarkets.

Good Luck!

DB

The above comments do not constitute investment advice and neither Clean Financial nor any contributing author or contributing company accepts any responsibility for any use that may be made of them.

Where to Spread Bet on BHP Billiton?

 
You can spread bet on BHP Billiton with any of the following companies:

• Financial Spreads
• IG Index
• Spreadex

BHP Billiton Spread Betting – More Details

 
For more information on trading BHP Billiton, also see BHP Billiton Spread Betting.

Spread Betting on BHP Billiton

If an investor wants to speculate on companies like BHP Billiton then one option could be to spread trade on the BHP Billiton share price.

Looking at the Tradefair site, they are currently pricing the BHP Billiton Rolling Daily market at 1791.1p – 1794.4p. Therefore, an investor could spread bet on the BHP Billiton share price:

• Increasing higher than 1794.4p, or
• Decreasing lower than 1791.1p

When spread trading on UK shares you trade in £x per penny. Therefore, if you invest £4 per penny and the BHP Billiton shares move 5p then there would be a difference to your profits (or losses) of £20. £4 per penny x 5p = £20.

Rolling Daily Equities Markets

You should note that this is a ‘Rolling Daily Market’, therefore there is no set closing date for this market. If your trade is open at the end of the day, it just rolls over to the next day.

If a trade is rolled over and you are spread betting on the market to:

• Move up – then you will usually be charged a small overnight financing fee, or
• Move down – then a small payment is often credited to your account

To learn more about Rolling Daily Markets please see Rolling Daily Spread Betting.

BHP Billiton Rolling Daily Shares Spread Betting Example

Now, if you consider the above spread of 1791.1p – 1794.4p and make the assumptions that:

• you have analysed the markets, and
• you think that the BHP Billiton share price looks like it will increase and move above 1794.4p

then you could decide that you are going to buy at 1794.4p and risk £2 per penny.

With such a bet you win £2 for every penny that the BHP Billiton shares rise higher than 1794.4p. Of course, it also means that you will make a loss of £2 for every penny that the BHP Billiton market falls below 1794.4p.

Put another way, should you buy a spread bet then your profits are found by taking the difference between the final price of the market and the initial price you bought the market at. You then multiply that price difference by the stake.

As a result, if after a few trading sessions the stock rose then you might want to close your spread bet and therefore guarantee your profits.

So if the market rose then the spread might move to 1866.2p – 1869.5p. To settle/close your trade you would sell at 1866.2p. Therefore, with the same £2 stake you would make:

Profit = (Settlement Level – Initial Level) x stake
Profit = (1866.2p – 1794.4p) x £2 per penny stake
Profit = 71.8p x £2 per penny stake
Profit = £143.60 profit

Financial spread trading is not always straightforward. In this case, you wanted the share price to increase. Nevertheless, it can also go down.

If the BHP Billiton share price had fallen then you could close your spread bet in order to limit your losses.

If the market dropped to 1718.1p – 1721.4p then this means you would settle your spread bet by selling at 1718.1p. Therefore, you would make a loss of:

Loss = (Settlement Level – Initial Level) x stake
Loss = (1718.1p – 1794.4p) x £2 per penny stake
Loss = -76.3p x £2 per penny stake
Loss = -£152.60 loss

Note – BHP Billiton Rolling Daily spread betting market quoted as of 27-Aug-10.

 
Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Where to Spread Bet on Dana Petroleum?

 
You can spread bet on Dana Petroleum with any of the following companies:

• Financial Spread
• GFT
• IG Index

Dana Petroleum Spread Betting – More Details

 
For more information on trading Dana Petroleum, also see Dana Petroleum Spread Betting.

Spread Betting on Dana Petroleum

If an investor is looking to invest in firms like Dana Petroleum then one option could be to spread trade on the Dana Petroleum share price.

If you were to look at the Financial Spreads spread trading site, they are currently showing the Dana Petroleum Rolling Daily market at 1805.7p – 1811.3p. This means an investor can spread trade on the Dana Petroleum shares:

• Rising above 1811.3p, or
• Falling below 1805.7p

Whilst making a spread bet on FTSE 350 shares you trade in £x per penny. Therefore, if you risked £2 per penny and the Dana Petroleum share price changes by 5p then that would make a difference to your profit/loss of £10. £2 per penny x 5p = £10.

Rolling Daily Equities Markets

You should note that this is a ‘Rolling Daily Market’, therefore there is no predetermined settlement date for this market. As a result, if your trade is still open at the end of the trading day, it simply rolls over to the next trading day.

If your bet does roll over and you are speculating on the market to:

• Rise – then you would normally pay a small financing fee, or
• Fall – then a small payment is often credited to your account

To learn more about Rolling Daily Markets please see Rolling Daily Spread Betting.

Dana Petroleum Shares Rolling Daily Spread Trading Example

Now, if you consider the above spread of 1805.7p – 1811.3p and make the assumptions that:

• you have done your market research, and
• you think that the Dana Petroleum share price will increase and move above 1811.3p

then you may choose to go long of the market at 1811.3p and invest £1 per penny.

This means that you make a profit of £1 for every penny that the Dana Petroleum shares go higher than 1811.3p. However, it also means that you will make a loss of £1 for every penny that the Dana Petroleum market falls below 1811.3p.

Considering this from another angle, should you buy a spread bet then your profits (or losses) are worked out by taking the difference between the settlement price of the market and the price you bought the market at. You then multiply that price difference by the stake.

With this in mind, if after a few sessions the stock rose then you might want to close your position to lock in your profit.

So if the market rose then the spread, set by the spread betting company, might move up to 1924.5p – 1930.1p. In order to close/settle your position you would sell at 1924.5p. Accordingly, with the same £1 stake:

Profits (or losses) = (Final Price – Opening Price) x stake
Profits (or losses) = (1924.5p – 1811.3p) x £1 per penny stake
Profits (or losses) = 113.2p x £1 per penny stake
Profits (or losses) = £113.20 profit

Speculating on equities, whether by spread betting or not, is not always straightforward. In this case, you wanted the share price to go up. Nevertheless, the share price could fall.

If the Dana Petroleum shares began to drop then you could choose to close your position in order to limit your losses.

Should the spread drop to 1707.2p – 1712.8p you would close your position by selling at 1707.2p. So your loss would be calculated as:

Profits (or losses) = (Final Price – Opening Price) x stake
Profits (or losses) = (1707.2p – 1811.3p) x £1 per penny stake
Profits (or losses) = -104.1p x £1 per penny stake
Profits (or losses) = -£104.10 loss

Note: Dana Petroleum Rolling Daily spread betting price quoted as of 27-Aug-10.

 
Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Financial Market Comments from David Jones, Chief Market Strategist, IG Index.

In mid-morning trade the FTSE is slightly lower, as a cautious tone runs through the financial spread betting markets.

With the first major announcement of the day out of the way, the UK GDP revision, you could be forgiven for thinking that someone forgot to tell investors, as equity markets were broadly unmoved.

But today, of course, what everyone is really waiting for is the afternoon’s US GDP revisions and the speech from Fed Chairman, Ben Bernanke.

After the weak economic data on jobs and housing in recent weeks there does seem to be an air of dread around markets at the moment, and it feels like it would take some outstanding positive news to shake this off. Unfortunately that seems like something of a long shot at the moment.

Looking ahead to the US open, we are currently expecting the Dow to start off around 10 points weaker than last night’s close, but this is all subject to change with the GDP announcement coming in ahead of the official open.

With volumes light anyway it looks like we are going to potentially see a volatile end to the week.

A finish by the FTSE above 5200 would help repair some of the damage done since the beginning of August, but it still looks as if investors are too nervous to be making any major commitments at the moment.

Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Good Luck!

DB

The above comments do not constitute investment advice and Clean Financial accepts no responsibility for any use that may be made of them.

Content provided by IG Index which is Authorised and regulated by the Financial Services Authority. FSA Register number 114059.