Category — Free Spread Trading Information

Financial Market Comments from Joshua Raymond, Market Strategist, City Index.
 
As the year draws to a close, City Index stock market expert Joshua Raymond summarises 2011, analysing the stock indices from a fundamental perspective and gives his thoughts on what is likely to be in store for 2012.

It has been a bearish year for the FTSE 100 spread betting market, with the benchmark UK index currently looking likely to post a 9% loss on the year after growing 22% in 2009 and 9% in 2010. The 9% fall on the year tells a tale of difficult trading conditions for investors and bearish sentiment, with investors fearful that the world is teetering back on the brink of another recession.

To put this year’s loss on the FTSE into greater perspective, the last 26 years have netted an average yearly growth in the UK’s benchmark index of 7.48%. During that time, there have only been six bearish years and interestingly enough, 2011 would actually mark the best bearish year for the FTSE 100 over the last six years.

This will inevitably beg the question, with so much still at stake in the Eurozone, is the worst yet to come? One’s likely answer to this question will be defined by whether one sits in the sceptic or optimistic camp. With spread betting, it is possible to take a position on the markets, irrespective of whether they are rising or falling.

2011 Spread Betting Dominated by Three Key Themes

Trading in 2011 has been dominated by three key themes:

1. Market shocks
2. Slowing growth
3. Eurozone debt crisis

These main market shocks have contributed to sharp equity falls and damaged longer term market sentiment: the Arab Spring Uprising, Japanese Tsunami and US Credit Rating downgrade.

The Arab Spring Uprising, typified by the revolution and toppling of the long standing rulers of Tunisia, Egypt and Libya, triggered sharp rises in the price of crude oil on global supply fears.

Nymex crude oil reached a record high of $114.83 at the start of May, and this rise applied significant pressure on stocks globally initially as traders had to come to terms with higher crude oil prices escalating business costs.

The Japanese earthquake and tsunami on March 11 triggered the first real market shock of the year, with the Japanese Nikkei falling over 1000 points before quickly recovering, and European indices following suit in similar fashion. The tsunami was devastating to both Japan and companies that relied upon produce from the region, such as car manufacturers.

In early August, the somewhat surprising cut of US’s top notch credit rating by Standard and Poor’s, after weeks of uncertainty over the raising of the US debt ceiling played a role in the biggest equity losses of the year.

From August 1 to 9, some seven trading days, the FTSE 100 lost as much as 1100 points or 19%, putting the UK index in bear market territory and hitting its lowest point in the year, 4791.

Slowing growth and the Eurozone debt crisis has also significantly impacted market sentiment this year, and these two themes are likely to play a major role in how markets progress next year.

Investors have been particularly troubled by the somewhat obvious slowdown of economic activity both in developed nations and developing economies such as China. This has raised fears that a global double dip recession could be on the cards.

At the same time, and linked to the growth issues, is the fact that the Eurozone sovereign debt crisis has put the whole Eurozone on the brink of failure.

This comes with Greece requiring new bailouts and Italy and Spain struggling to raise finance at acceptable costs in the debt markets.

The debt crisis has claimed the heads of multiple governments, with a swift change in power in Spain, Greece and Italy.

Swift change in the governments of these countries has coincided with lack of political unity and progress in Europe as a whole, with countless disagreements and public leader bashing, which culminated in the seeming isolation of the UK from the EU.

And what’s more, potential credit ratings downgrades for Europe’s top notch club has kept market rallies short lived and several unanswered questions going into 2012.

Outlook for 2012

2012 is likely to be dictated by a number of important events but three key themes, which will likely be the Eurozone sovereign debt crisis, slowing global growth and the quantitative easing global monetary policy.

Note that all of these key themes for 2012 are a mere continuation of some of the major themes of trading in 2011, and therein lies part of the problem.

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 City Index which is Authorised and regulated by the Financial Services Authority.

In mid-morning trade the FTSE 100 spread betting market has managed to push higher as the wind-down to Christmas begins in earnest.

London has succeeded in shrugging off a weak overnight performance in Asia, as spread betting account holders take heart from the relative recovery of Wall Street last night.

Bank shares are at the forefront this morning, as financial stocks benefit from the ECB’s largesse yesterday, while BA’s parent company International Airlines is on the ascent on news that it has bought British Midland from Lufthansa.

GDP figures on the UK provided little in the way of excitement, with third-quarter growth lifted by 0.1% to 0.6%. Any nascent optimism generated by this was quickly demolished by a downward revision to the second quarter’s figure, which was cut from the Scrooge-like 0.1% growth to no growth at all.

Trading this afternoon might get a bit more interesting, given the avalanche of US data out later.

On the slate today is a revision to the US’ third-quarter GDP reading, the usual weekly jobless claims and the final December reading from the Michigan confidence index.

US futures have pushed on, with the Dow Jones expected to start around 50 points higher today, the last full day of trading before Christmas.

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 Michael Page?

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

• Financial Spreads
• Inter Trader
• IG Index

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

Spread Betting on Michael Page

If you decide to invest in UK companies like Michael Page then one solution is a spread bet on the Michael Page share price.

If an investor was to look at the InterTrader trading site, as of Friday, they were showing the Michael Page Rolling Daily market at 322.2p – 323.7p. As a result, you can spread trade on the Michael Page share price:

• Going above 323.7p, or
• Going below 322.2p

When financial spread betting on FTSE 350 shares you trade in £x per penny. Therefore, if you invest £20 per penny and the Michael Page share price moves 5p then there would be a difference to your P&L of £100. £20 per penny x 5p = £100.

Rolling Daily Equities Markets

One important thing to note is that this is a Rolling Daily Market and so unlike a futures market, there is no settlement date. If a trade is still open when the markets close at the end of the day, it just rolls over to the next trading session.

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

• Rise – then you are usually charged a small overnight financing fee, or
• Fall – then a small payment is usually credited 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.

Michael Page Rolling Daily Equities Spread Trading Example

So, if we consider the spread of 322.2p – 323.7p and assume:

• you have analysed the equities market, and
• you think that the Michael Page share price looks like it will push above 323.7p

then you might decide that you want to go long of the market at 323.7p for a stake of, for example, £10 per penny.

With such a spread bet you make a profit of £10 for every penny that the Michael Page shares increase and go higher than 323.7p. Of course, such a bet also means that you will make a loss of £10 for every penny that the Michael Page market falls below 323.7p.

Put another way, should you ‘Buy’ a spread bet then your profits (or losses) are worked out by taking the difference between the closing price of the market and the initial price you bought the market at. You then multiply that difference in price by the stake.

Therefore, if after a few days the share price moved higher then you might want to close your spread bet in order to secure your profit.

Therefore, if the market moved up then the spread might move to 335.5p – 337.0p. You would close your position by selling at 335.5p. As a result, with the same £10 stake your profit would come to:

Profit = (Closing Level – Initial Level) x stake
Profit = (335.5p – 323.7p) x £10 per penny stake
Profit = 11.8p x £10 per penny stake
Profit = £118.00 profit

Trading equities, whether by spread betting or otherwise, is not easy. In this example, you had bet that the share price would go up. Nevertheless, the share price can also decrease.

If the Michael Page stock fell then you might choose to close your trade to limit your losses.

So if the spread pulled back to 313.5p – 315.0p then this means you would settle your position by selling at 313.5p. As a result, your loss would be:

Loss = (Closing Level – Initial Level) x stake
Loss = (313.5p – 323.7p) x £10 per penny stake
Loss = -10.2p x £10 per penny stake
Loss = -£102.00 loss

Note: Michael Page Rolling Daily spread betting price accurate as of 09-Dec-11.

Michael Page Spread Betting – More Details

For more information on trading Michael Page, also see Michael Page 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 Kesa Electricals?

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

• Financial Spreads
• Inter Trader
• IG Index

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

Spread Betting on Kesa Electricals

If an investor decides to speculate on companies such as Kesa Electricals then one solution could be to spread bet on the Kesa Electricals share price.

If you were to look at the capital spreads spread betting site, as of Friday, they were showing the Kesa Electricals Rolling Daily market at 71.3p – 71.9p. Therefore, you can spread bet on the Kesa Electricals share price:

• Increasing higher than 71.9p, or
• Decreasing lower than 71.3p

Whilst financial spread trading on FTSE 350 equities you trade in £x per penny. Therefore, should you decide to invest £15 per penny and the Kesa Electricals shares move 5p then that would change your profits (or losses) by £75. £15 per penny x 5p = £75.

Rolling Daily Shares Markets

You should note that this is a Rolling Daily Market which means that there is no preset closing date for this market. If a trade is still open when the markets close at the end of the day, it will simply roll over to the next session.

If you allow your bet to roll over and are spread betting on the market to:

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

For a more detailed example see Rolling Daily Spread Betting.

Kesa Electricals Rolling Daily Shares Trading Example

If you think about the above spread of 71.3p – 71.9p and make the assumptions that:

• you have done your market analysis, and
• you feel that the Kesa Electricals shares look like they will rise higher than 71.9p

then you may choose to buy a spread bet at 71.9p for a stake of, for the sake of argument, £25 per penny.

Therefore, you make a profit of £25 for every penny that the Kesa Electricals shares move above 71.9p. However, such a bet also means that you will lose £25 for every penny that the Kesa Electricals market falls lower than 71.9p.

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

If after a few trading sessions the stock moved higher then you might want to close your spread bet so that you can secure your profit.

So if the market increased then the spread could change to 74.8p – 75.4p. You would close your spread bet by selling at 74.8p. So, with the same £25 stake this trade would result in a profit of:

Profit / loss = (Settlement Price – Opening Price) x stake
Profit / loss = (74.8p – 71.9p) x £25 per penny stake
Profit / loss = 2.9p x £25 per penny stake
Profit / loss = £72.50 profit

Spread betting on shares may not go to plan. With this example, you wanted the share price to increase. Naturally, it might go down.

If the Kesa Electricals shares had started to fall then you could choose to close your position to stop any further losses.

So if the spread fell to 68.4p – 69.0p you would settle your spread bet by selling at 68.4p. This would result in a loss of:

Profit / loss = (Settlement Price – Opening Price) x stake
Profit / loss = (68.4p – 71.9p) x £25 per penny stake
Profit / loss = -3.5p x £25 per penny stake
Profit / loss = -£87.50 loss

Note – Kesa Electricals Rolling Daily spread betting price quoted as of 09-Dec-11.

Kesa Electricals Spread Betting – More Details

For more information on trading Kesa Electricals, also see Kesa Electricals 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 Aquarius Platinum?

You can spread bet on Aquarius Platinum 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 Aquarius Platinum

If you are looking to speculate on companies like Aquarius Platinum then one option could be to place a spread bet on the Aquarius Platinum share price.

If you were to look at the Tradefair spread trading website, as of Friday, they were showing the Aquarius Platinum Rolling Daily market at 186.9p – 188.3p. Therefore, you can spread trade on the Aquarius Platinum share price:

• Rising higher than 188.3p, or
• Falling lower than 186.9p

When spread trading on FTSE 350 equities you trade in £x per penny. As a result, should you decide to invest £10 per penny and the Aquarius Platinum shares move 5p then that would alter your profit/loss by £50. £10 per penny x 5p = £50.

Rolling Daily Shares Markets

One important thing to note is that this is a Rolling Daily Market and so there is no set settlement date for this market. Therefore, if you decide not to close your trade by the end of the day, it simply keeps rolling over into the next trading session.

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

• Move up – then you will normally be charged a small financing fee, or
• Move down – then you will often receive a small payment to your account

To learn more please read Rolling Daily Spread Betting.

Aquarius Platinum Rolling Daily Equities Spread Trading Example

If you think about the above spread of 186.9p – 188.3p and assume that:

• you have done your analysis, and
• you feel that the Aquarius Platinum share price looks like it will increase and move above 188.3p

then you may choose to buy at 188.3p and invest £15 per penny.

This means that you make a profit of £15 for every penny that the Aquarius Platinum shares increase and go higher than 188.3p. Of course, it also means that you will lose £15 for every penny that the Aquarius Platinum market moves below 188.3p.

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

With this in mind, if after a few hours the share price started to move upwards then you could choose to close your trade to secure your profit.

Taking this a step further, if the market rose then the spread might change to 194.9p – 196.3p. In order to close/settle your position you would sell at 194.9p. Therefore, with the same £15 stake you would calculate your profit as:

Profit / loss = (Final Price – Opening Price) x stake
Profit / loss = (194.9p – 188.3p) x £15 per penny stake
Profit / loss = 6.6p x £15 per penny stake
Profit / loss = £99.00 profit

Speculating on equities, whether by spread trading or otherwise, is not always straightforward. In this example, you wanted the share price to rise. However, it could decrease.

If the Aquarius Platinum stock began to fall then you could close your trade in order to restrict your losses.

If the spread fell to 180.8p – 182.2p then you would settle your spread bet by selling at 180.8p. As a result, your loss would be:

Profit / loss = (Final Price – Opening Price) x stake
Profit / loss = (180.8p – 188.3p) x £15 per penny stake
Profit / loss = -7.5p x £15 per penny stake
Profit / loss = -£112.50 loss

Note – Aquarius Platinum Rolling Daily spread betting market accurate as of 02-Dec-11.

Aquarius Platinum Spread Betting – More Details

For more information on trading Aquarius Platinum, also see Aquarius Platinum 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.