Posts from — August 2011

Mid-morning and the FTSE is pushing higher, with traders’ screens awash with blue.

It’s been a positive start to the month’s final trading session with buyers seemingly out in force and no emerging signs of profit-taking. Smith & Nephew is leading the push higher, adding almost 7% amidst takeover rumours.

Miners are also proving to be in demand again. However, some worrying economic data from the Continent may have set investors’ alarm bells ringing this morning.

July retail sales in European powerhouse Germany showed no real growth, but had fallen -1.6% on a year-on-year basis, whilst the Eurozone unemployment rate failed to move below 10%.

Having said that, yesterday’s FOMC minutes left the door very much open for the Fed to take further action to stimulate the economy. With a raft of US employment readings due between now and the weekend break, many will be clamouring to see what Bernanke can pull out of the box next.

Traders will be watching those Challenger and ADP employment reports this afternoon but this is beginning to look like a win-win situation.

Upbeat numbers suggest the US isn’t as close to the precipice as some may think, whilst a shortfall adds weight for further rounds of QE.

Certainly the futures are pointing to the Dow Jones resuming its upward trajectory and we’re currently calling the index to open up 33 at 11,593.

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 Ben Critchley, Sales Trader, IG Index.

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.

In mid-morning trade, it has been a story of playing catch-up so far for shares in London.

With a strong performance by US equities on Monday when London was closed, it’s not surprising to see blue chips leaping from the opening bell this morning.

Investment banking upgrades for the banking sector has meant that RBS is the top of the tree with a 7% gain, which of course still only translates into a couple of pence higher than Friday’s close.

This positive start has meant the FTSE 100 has reached levels not seen for almost a couple of weeks, and back then it was plunging lower.

It should make for an interesting few days to see if there is the confidence out there for the market to build on this sharp start to the week and push higher.

Looking ahead to the US open, after yesterday’s 250 point gain, expectations are for the Dow to start around 80 points lower this afternoon.

There is an interesting day in prospect with the minutes from the last Fed interest rate setting meeting due out after the European close. After yesterday’s one-way traffic in the US, it could make for a more indecisive and volatile last couple of hours on Wall Street.

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 Ben Critchley, Sales Trader, IG Index.

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.

Where to Spread Bet on Bank of America?

You can spread bet on Bank of America with any of the following companies:

• Financial Spread
• Inter Trader
• IG Index

Although note that you can also spread bet with other Spread Betting Companies.

Spread Betting on Bank of America

If you decide to speculate on US companies like Bank of America then one possibility could be to spread trade on the Bank of America share price.

Looking at the FinancialSpreads spread trading site, as of Thursday, they were showing the Bank of America Rolling Daily market at $7.64 – $7.67. Therefore, an investor could spread trade on the Bank of America shares:

• Moving above $7.67, or
• Moving below $7.64

Whilst making a spread bet on S&P 500 equities you trade in £x per cent. Therefore, if you chose to risk £6 per cent and the Bank of America share price changes by $0.05 then there would be a difference to your profit/loss of £30. £6 per cent x $0.05 = £30.

You are also able to trade this market in Euros or Dollars, e.g. €x per cent.

Rolling Daily Equities Markets

It is important to note that this is a Rolling Daily Market and so unlike a normal spread betting futures market, there is no settlement date. If you decide to leave your trade open at the end of the day, it just rolls over into the next session.

If you do roll over a trade and you are spread betting that the market will:

• Increase – then you are charged a small overnight financing fee, or
• Decrease – then you will usually receive a small credit to your account

For a more detailed guide to Rolling Daily Markets, including a fully worked example, please read our feature Rolling Daily Spread Betting.

Bank of America Rolling Daily – US Equities Trading Example

If we think about the spread of $7.64 – $7.67 and make the assumptions that:

• you have done your analysis, and
• it leads you to feel that the Bank of America shares are likely to increase and move higher than $7.67

then you could decide that you want to buy at $7.67 for a stake of £3 per cent.

With such a bet you win £3 for every cent that the Bank of America shares increase and go above $7.67. Nevertheless, such a bet also means that you will lose £3 for every cent that the Bank of America market moves lower than $7.67.

Considering this from another angle, if you were to ‘Buy’ a spread bet then your P&L is found by taking the difference between the closing price of the market and the price you bought the spread at. You then multiply that difference in price by the stake.

If after a few hours the share price started to increase then you might want to close your position and therefore guarantee your profits.

So if the market increased then the spread, set by the spread betting company, might move up to $8.00 – $8.03. You would close your trade by selling at $8.00. As a result, with the same £3 stake this trade would result in a profit of:

P&L = (Final Level – Initial Level) x stake
P&L = ($8.00 – $7.67) x £3 per cent stake
P&L = $0.33 x £3 per cent stake
P&L = 33¢ x £3 per cent stake
P&L = £99 profit

Spread betting on equities may not go to plan. With this example, you had bet that the share price would rise. Of course, it could go down.

If the Bank of America shares had fallen then you might choose to close your position in order to limit your losses.

So if the spread pulled back to $7.38 – $7.41 then you would settle/close your trade by selling at $7.38. Accordingly, your loss would be:

P&L = (Final Level – Initial Level) x stake
P&L = ($7.38 – $7.67) x £3 per cent stake
P&L = -$0.29 x £3 per cent stake
P&L = -29¢ x £3 per cent stake
P&L = -£87 loss

Note: Bank of America Rolling Daily market quoted as of 25-Aug-11.

Bank of America Spread Betting – More Details

For more information on trading Bank of America, also see Bank of America Spread Betting.

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.

Guide to Online Spread Betting on G4S

Where to Spread Bet on G4S?

You can spread bet on G4S with any of the following companies:

• Financial Spreads
• Tradefair
• Capital Spreads

Although note that you can also spread bet with other Spread Betting Companies.

Spread Betting on G4S

Should you want to invest in UK companies like G4S then one solution could be to place a spread bet on the G4S share price.

If an investor was to look at the Capital Spreads spread trading website, as of Friday, they were showing the G4S Rolling Daily market at 259.2p – 259.7p. This means you could spread trade on the G4S share price:

• Going above 259.7p, or
• Going below 259.2p

When making a spread bet on FTSE 350 shares you trade in £x per penny. As a result, if you decide to have a stake of £15 per penny and the G4S shares move 5p then there would be a difference to your profit/loss of £75. £15 per penny x 5p = £75.

Rolling Daily Equities Markets

You should note that this is a Rolling Daily Market which means that there is no closing date for this market. Therefore, if you decide not to close your trade by the end of the day, it will simply roll over to the next session.

If you do let your trade roll over into the next day and are spread betting on the market to:

• Increase – then you usually pay a small overnight financing fee, or
• Decrease – then a small payment is usually credited to your account

For a fully worked example see Rolling Daily Spread Betting.

G4S Rolling Daily Equities Spread Betting Example

So, if you consider the above spread of 259.2p – 259.7p and make the assumptions that:

• you have done your analysis of the markets, and
• you feel that the G4S shares are likely to push higher than 259.7p

then you may decide that you are going to buy a spread bet at 259.7p for a stake of, let’s say, £10 per penny.

So, you make a profit of £10 for every penny that the G4S shares go above 259.7p. Nevertheless, such a bet also means that you will lose £10 for every penny that the G4S market decreases below 259.7p.

Thinking of this in a slightly different way, if you were to buy a spread bet then your profit/loss is calculated by taking the difference between the closing price of the market and the price you bought the spread at. You then multiply that difference in price by the stake.

Therefore, if after a few days the share price started to increase then you might think about closing your trade and therefore guarantee your profits.

If that happened then the spread, set by the spread betting company, might move up to 268.8p – 269.3p. You would close your position by selling at 268.8p. Accordingly, with the same £10 stake you would make:

Profit / loss = (Final Level – Initial Level) x stake
Profit / loss = (268.8p – 259.7p) x £10 per penny stake
Profit / loss = 9.1p x £10 per penny stake
Profit / loss = £91.00 profit

Financial spread trading on shares doesn’t always go to plan. In this example, you had bet that the share price would rise. Naturally, it could fall.

If the G4S shares had started to fall then you could choose to close your trade to stop any further losses.

Should the spread fall back to 249.3p – 249.8p you would sell back your position at 249.3p. That would mean you would lose:

Profit / loss = (Final Level – Initial Level) x stake
Profit / loss = (249.3p – 259.7p) x £10 per penny stake
Profit / loss = -10.4p x £10 per penny stake
Profit / loss = -£104.00 loss

Note – G4S Rolling Daily market quoted as of 26-Aug-11.

G4S Spread Betting – More Details

For more information on trading G4S, also see G4S Spread Betting.

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 Unite Group?

You can spread bet on Unite Group with any of the following companies:

• Financial Spread
• Inter Trader
• IG Index

Although note that you can also spread bet with other Spread Betting Companies.

Spread Betting on Unite Group

If an investor wants to invest in UK companies such as Unite Group then one solution could be spread betting on the Unite Group share price.

Looking at the Inter Trader spread trading site, as of Friday, they were showing the Unite Group Rolling Daily market at 169.1p – 170.3p. Therefore, an investor could spread bet on the Unite Group shares:

• Increasing higher than 170.3p, or
• Decreasing lower than 169.1p

Whilst spread trading on FTSE 350 shares you trade in £x per penny. So, if you risked £10 per penny and the Unite Group share price moves 5p then that would alter your bottom line by £50. £10 per penny x 5p = £50.

Rolling Daily Shares Markets

This is a Rolling Daily Market which means that unlike a futures market, there is no closing date. If a trade is still open when the markets close at the end of the day, it will roll over to the next trading day.

If a bet is rolled over and you are speculating on the market to:

• Move higher – then you are charged a small overnight financing fee, or
• Move lower – then a small payment will usually be credited to your account

To see a fully worked example read Rolling Daily Spread Betting.

Unite Group Rolling Daily Equities Trading Example

So, if we consider the above spread of 169.1p – 170.3p and assume:

• you have done your market analysis, and
• you feel that the Unite Group share price is likely to increase and move above 170.3p

then you might decide that you want to buy at 170.3p and invest £15 per penny.

With such a bet you make a profit of £15 for every penny that the Unite Group shares push higher than 170.3p. Nevertheless, it also means that you will lose £15 for every penny that the Unite Group market falls lower than 170.3p.

Looked at another way, should you buy a spread bet then your profit/loss is worked out by taking the difference between the settlement price of the market and the initial price you bought the market at. You then multiply that difference in price by the stake.

As a result, if after a few days the share price started to increase then you might want to close your position and therefore guarantee your profits.

If that happened then the spread, determined by the spread betting company, might change to 177.1p – 178.3p. You would settle your position by selling at 177.1p. Accordingly, with the same £15 stake your profit would be:

Your Profits (or losses) = (Settlement Price – Opening Price) x stake
Your Profits (or losses) = (177.1p – 170.3p) x £15 per penny stake
Your Profits (or losses) = 6.8p x £15 per penny stake
Your Profits (or losses) = £102.00 profit

Spread betting on equities is not simple. In this example, you wanted the share price to rise. Nevertheless, the share price can also decrease.

If the Unite Group shares had fallen then you might decide to close/settle your trade to stop any further losses.

So if the market fell to 164.3p – 165.5p then this means you would sell back your position at 164.3p. That would mean you would make a loss of:

Your Profits (or losses) = (Settlement Price – Opening Price) x stake
Your Profits (or losses) = (164.3p – 170.3p) x £15 per penny stake
Your Profits (or losses) = -6.0p x £15 per penny stake
Your Profits (or losses) = -£90.00 loss

Note – Unite Group Rolling Daily equities market correct as of 26-Aug-11.

Unite Group Spread Betting – More Details

For more information on trading Unite Group, also see Unite Group Spread Betting.

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.