Posts from — October 2011

In mid-morning trade the FTSE 100 has been edging steadily lower as some of last week’s euphoria fades.

The blue-chip index has pushed back to last Thursday’s lows as traders continue to rein in some of last week’s enthusiasm ahead of some key economic meetings this week.

After the positive knee-jerk reaction by financial spread betting markets, many now want to see further details of how the increased bailout fund will be financed.

As a result, the G20 meeting towards the end of the week has introduced a now familiar note of caution.

Heavyweights in the mining and banking sectors are also dragging the index lower this morning, despite Barclays‘ latest quarterly profits beating expectations.

The share price of the bank did rally by around 20% last week so it is maybe not too surprising to see it struggling for even more momentum today, despite these results.

Looking ahead to the US open at the moment it looks like the Dow is set to start off around 100 points lower than Friday’s close.

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 the Dow Jones?

Investors are able to spread bet on the Dow Jones stock market index with these spread betting firms:

• Financial Spreads
• IG Index
• Inter Trader

However, you should note that this spread betting market may also be available with other Spread Betting Companies.

Dow Jones Spread Betting – More Information

For more details about speculating on the Dow Jones index, also see Dow Jones Spread Betting.

How to Spread Bet on Indices – Dow Jones Rolling Daily

As with most key financial markets, an investor can spread bet on stock market indices, like the Dow Jones, to rise or fall.

Looking at the Inter Trader spread betting site, as of Friday, they were showing the Dow Jones Rolling Daily market at 12164 – 12166. This means an investor could spread bet on the Dow Jones index:

• Rising above 12166, or
• Falling below 12164

Whilst spread trading on the Dow Jones index you trade in £x per point. So, if you decide to invest £4 per point and the Dow Jones moves 10.0 points then that would change your profit/loss by £40. £4 per point x 10.0 points = £40.

Rolling Daily Indices Markets

Be aware that this is a Rolling Daily Market and so there is no predetermined settlement date for this market. If your position is still open at the end of the day, it just rolls over into the next day.

Should your bet roll over, if you are speculating that the market will:

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

If you would like a fully worked example then see Rolling Daily Spread Betting.

Dow Jones Rolling Daily Index Spread Trading Example

Now, if we consider the above spread of 12164 – 12166 and assume that:

• you have done your market analysis, and
• you think that the Dow Jones index will go above 12166

then you might decide to buy at 12166 and risk, for example, £2 per point.

With such a spread bet you win £2 for every point that the Dow Jones index moves higher than 12166. Conversely, however, you will lose £2 for every point that the Dow Jones market decreases below 12166.

Looking at this from another angle, if you were to ‘Buy’ a spread bet then your profit/loss is worked out by taking the difference between the closing price of the market and the price you bought the spread at. You then multiply that price difference by the stake.

If after a few trading sessions the stock market started to increase then you might want to close your position so that you can lock in your profit.

So if the market rose then the spread might change to 12226 – 12228. You would close your position by selling at 12226. So, with the same £2 stake your profit would be:

Profit / loss = (Final Price – Initial Price) x stake
Profit / loss = (12226 – 12166) x £2 per point stake
Profit / loss = 60 x £2 per point stake
Profit / loss = £120 profit

Speculating on stock market indices, whether by spread betting or not, is not straightforward. With this example, you had bet that the index would rise. However, the index might fall.

If the Dow Jones market fell then you might choose to close your trade to limit your losses.

Should the market pull back to 12098 – 12100 you would settle/close your trade by selling at 12098. If so, this would result in a loss of:

Profit / loss = (Final Price – Initial Price) x stake
Profit / loss = (12098 – 12166) x £2 per point stake
Profit / loss = -68 x £2 per point stake
Profit / loss = -£136 loss

Note: Dow Jones Rolling Daily spread quoted as of 28-Oct-11.

Spread Betting: Accounts and Offers

For a detailed spread betting comparison, including spread sizes, the spread betting markets on offer and account services, please see Spread Betting Account.

In addition, for details on current spread betting offers from some of the leading financial spread betting companies, also see Spread Trading Offers.

Financial spread betting involves a high level of risk to your trading capital and can result in losses that are greater than your initial stake. Please ensure that it fits your investment objectives as it may not be suitable for all types of investor. You should only speculate with money that you can afford to lose. Before trading, please ensure you fully appreciate the risk and where appropriate seek independent advice.

Where to Spread Bet on BNP Paribas?

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

• Financial Spreads
• Inter Trader
• Capital Spreads

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

Spread Betting on BNP Paribas

If an investor is looking to speculate on French companies like BNP Paribas then one possibility could be to spread bet on the BNP Paribas share price.

Looking at the InterTrader site, as of Friday, they were showing the BNP Paribas Rolling Daily market at €35.80 – €35.90. Therefore, an investor can spread trade on the BNP Paribas share price:

• Moving above €35.90, or
• Moving below €35.80

Whilst spread betting on French shares you trade in £x per cent. So, if you decided to have a stake of £4 per cent and the BNP Paribas share price moves €0.05 then that would make a difference to your profits (or losses) of £20. £4 per cent x €0.05 = £20.

Note that you are also able to trade this market in Dollars or Euros, e.g. $x per cent.

Rolling Daily Shares Markets

Note that this is a Rolling Daily Market and therefore it does not have a set closing date. If your trade is open at the end of the day, it just rolls over to the next day.

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

• Go up – then you will be charged a small overnight financing fee, or
• Go down – then you will normally receive a small credit to your account

If you would like a fully worked example then see Rolling Daily Spread Betting.

BNP Paribas Rolling Daily – French Shares Spread Trading Example

If we consider the spread of €35.80 – €35.90 and make the assumptions that:

• you have analysed the markets, and
• it leads you to think that the BNP Paribas shares will rise higher than €35.90

then you may decide that you want to buy a spread bet at €35.90 for a stake of £2 per cent.

So, you make a profit of £2 for every cent that the BNP Paribas shares increase and go above €35.90. Conversely, however, it also means that you will make a loss of £2 for every cent that the BNP Paribas market moves lower than €35.90.

Thinking of this in a slightly different way, if you 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 market at. You then multiply that difference in price by your stake.

Therefore, if after a few hours the share price rose then you might want to close your spread bet in order to guarantee your profit.

Taking this a step further, if the market did go up then the spread could change to €36.53 – €36.63. In order to close your spread bet you would sell at €36.53. Therefore, with the same £2 stake:

P&L = (Settlement Price – Opening Price) x stake
P&L = (€36.53 – €35.90) x £2 per cent stake
P&L = €0.63 x £2 per cent stake
P&L = 63c x £2 per cent stake
P&L = £126 profit

Speculating on equities, whether by spread betting or not, doesn’t always go to plan. In this example, you had bet that the share price would increase. However, it can also decrease.

If the BNP Paribas shares fell then you might choose to close your spread bet to limit your losses.

If the market dropped to €35.36 – €35.46 then this means you would settle your position by selling at €35.36. This would result in a loss of:

P&L = (Settlement Price – Opening Price) x stake
P&L = (€35.36 – €35.90) x £2 per cent stake
P&L = -€0.54 x £2 per cent stake
P&L = -54c x £2 per cent stake
P&L = -£108 loss

Note: BNP Paribas Rolling Daily spread betting price taken as of 28-Oct-11.

BNP Paribas Spread Betting – More Details

For more information on trading BNP Paribas, also see BNP Paribas 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.

Mid-morning and the FTSE is struggling to hold onto early gains.

After the jubilant response from markets on Thursday to news of the European leaders’ plans to resolve the debt crisis, there is a degree of consolidation taking place right now.

While there could be some concern that the rally hasn’t been sustained, it’s worth acknowledging that we haven’t seen any notable reversion as a result of profit-taking.

Although whether traders on Wall Street will want to sustain the upbeat mood remains to be seen.

Economic and corporate calendars have been rather quiet for the last few hours, so there’s little meaningful direction coming through from the fundamentals.

Having said that, the banks seem to have remained very much in the driving seat, with miners lending support too.

The biggest loser amongst London’s blue chips is Royal Dutch Shell, which continues to give back more of yesterday’s results-driven gains.

The University of Michigan confidence reading will be closely watched just after the US open, as any wobbles here could be precisely the sort of number to spook traders ahead of the weekend break.

We’re currently calling the Dow Jones spread betting market to start around 25 points lower, after Thursday’s 340-point gain.

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.

European financial spread betting markets have let out a collective ‘phew’ this morning and are currently trading positively across the continent.

After punch-ups, mud-slinging and political wrangling, Eurozone leaders hammered out a three-pronged agreement in the early hours of the morning.

In what could be described as a bit more than a trim, Eurozone leaders agreed with Greek debt holders a 50% haircut on the value bonds.

This move reduces Greece’s debt level from a heady 160% of GDP to 120%, providing some reassurance to the markets that the issue was in hand.

Other components of the deal include expanding the size of the European Financial Stability Fund and an agreement for lenders to increase their levels of capital over sovereign debt.

The FTSE 100 spread betting market has responded positively to the news, with one lone offender in the red, British American Tobacco (-0.09%).

Unsurprisingly, banks have responded positively, with Barclays (+9.74%), Lloyds Banking Group (+6.13%), and Royal Bank of Scotland (+5.97%) all making substantial gains.

Miners also saw gains with Xstrata (+5.48%) and Rio Tinto (+5.23) currently up on the day.

The UK’s leading index is currently trading around the 5660 level (9.50am London time).

However, with EU leaders urging Italy to get its affairs in order and details of increasing the size of the bailout fund remaining unclear, we will have to see whether these solutions appease the markets in the long term.

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 Will Hedden, 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.