Butterfly Options » Spread Betting

Trading the Gold Market to Go Up and Down

admin — Thu, 07 Jan 2010 23:38:51 +0000

Gold has had a tremendous year. The flight to the perceived safety of gold, as well as the US Dollar weakness, has pushed the metal straight through the $1,000 per ounce mark and up to $1,200.However, it has not been a smooth upward journey. Investors should be aware that ‘pull backs’ in gold can be very violent indeed. We have had two major retracements in the last four years from fast rallies. Both of these finally ran out of steam but not before wiping out at least 25% of the price. If the same were to happen this time, Gold would slip towards the $900 mark.The acceleration of the gold market towards the end of 2009 was remarkably similar to the March/May move of 2006 and Oct/March 2007/2008. Both of these rallies saw sharp pull backs before regaining the upward momentum. The current target for the more aggressive gold bulls remains $1400. This level is a good deal closer now than when it was first mentioned by certain analysts. Having said this, it must be mentioned that Gold is having problems getting to $1,400.As it turns out, the problems concerning Dubai presented a massive buying opportunity. Of course, Dubai did give us the lesson that ‘the markets are prone to sharp declines’. Any such decline could shake out many bulls and compound moves to the downside.That is the risk of getting in at these levels. Whilst the upside could be fantastic, investors must have the stomach for possible shocks to the downside. On a bad day that could be as much as 5% in a couple of hours. So what to do? One option is to spread bet on gold. With spread betting you can trade in both directions. If the market looks like it will continue up, then you could bet on it to go up. Likewise, if a correction is due you can look at betting on the price of gold to go down.All forms of financial investment have the potential for incurring losses. For example, trading in stock, property, investment funds and pensions can lead to you losing money. With spread bets your losses can exceed your initial investment.Nevertheless, spread bets are a simple way of a) gaining access to the gold market and b) being able to trade the market in both directions.Yes, the gold market may move the wrong way. However, there are measures you can take to reduce your risks. You can add a Stop Loss to your trades which will mean that, if Gold moves against your position, the stop loss will close your bet and stop you from losing any more funds.On the plus side, the 24-hour trading that some firms like Capital Spreads offer on key markets can provide several opportunities. Whilst the underlying financial instrument may be closed you can still place trades on markets like Gold, Oil, the FTSE 100 and GBP/USD from Sunday night all the way through to Friday evening.

Trading the Markets and the Financial Recovery

admin — Thu, 07 Jan 2010 14:28:02 +0000

With the world in recovery mode, many people are still questioning how the financial markets got so out of control. They are also questioning something a little closer to home; how to better look after their own money and finances.If we are being honest with ourselves, we would probably admit that we can improve on at least one of the following; long term investments, tax efficiency, actively reviewing our existing investments and looking at new opportunities that the markets in 2009-2010 have provided / will provide.Also, I don’t think that there are many of us who wouldn’t benefit from putting more thought and effort into these key areas. Having said that, there are a growing number of individuals who are making use of a newer, and highly regulated, form of trading.One type of trading, namely financial spread betting, has a range of attractive features and is an option worth considering as part of your portfolio.When speculating though you must always remind yourself that the markets can go down as well as up. With spread betting you can lose more than your original stake or investment.But why trade if there is a risk?Whether you have an existing investment plan or not, it always worth considering any avenue that offers quick, simple access to the markets and a range of tax-free* advantages. Spread betting is one such avenue.Of the many other advantages, spread betting profits do not incur capital gains tax*. You are not actually buying and selling any assets or stock or shares. You are simply speculating on the future price or value of a financial market.A boon for many spread bettors is the sheer convenience of trading over the phone and online, even after the main stock markets and futures exchanges have closed.Another plus point is that there may be occasions when an investor wishes to close a spread bet early. This can work in two ways. It can help you limit a losing position or it can also help you lock in profits on a winning trade.The Financial Services Authority regulates the spread betting companies. This helps to ensure a certain level of quality or, more importantly, financial protection. With regulated companies like paddypowertrader you can trade some markets 24 hours a day, including key Forex and Stock Market Index markets. Naturally, you can also trade Crude Oil, Gold, UK and US shares and so on.So whilst there are a good number of positives, it is important to understand the negatives.Spread bets do carry a high level of risk so you should only speculate with money you can afford to lose. Before you trade, please ensure that spread betting matches your investment objectives, make sure you familiarise yourself with the risks involved and seek independent advice where necessary.* Based on current UK Tax law. If you pay tax in a jurisdiction other than the UK then this may be different.

Trading the World Gold Market

admin — Thu, 07 Jan 2010 01:12:52 +0000

Gold has experienced a spectacular rise recently. I say recently, the metal has been trending upwards for months.With limited supply, the pressure should always be easier to apply to the upside. However, if this were the only argument then precious metals prices should never really fall.Perhaps the market is not particularly overbought at the moment so there is still good room for manoeuvre to the upside; unfortunately, the same can of course be said for the downside.We are in uncharted territory. With inflation remaining weak, interest rates likely to stay low, the US Dollar showing no real signs of recovery, banks still looking a bit weak and fears over the strength of the rebound in world growth, all the factors pushing Gold to the upside continue to linger on.Looking at gold on a given day though, the price can easily rally on any weakness in the US Dollar. Of course when a market jumps like that then some investors will inevitably close their positions and take their profits. That can then cause the markets to fall, albeit temporarily.This having been said, selling Gold has proved to be an expensive mistake for quite some months. Aside from minor corrections, the price has slowly ground higher through the whole period.Not only this but since breaking above the critical $985 level back in September 2009 and then repeatedly failing to get back below it, the omens have started to favour yet another spike higher.In an era of concern over the value of assets, gold holds its age old allure. There is still much uncertainty in the markets. The big recipient of all this uncertainty remains the precious metal and it is tempting to speculate that no matter which currency gains the upper hand, the continued undervaluation of the emerging BRIC country currencies will perhaps drive the price of gold to undreamt of levels.So what are the options for the investor? I prefer to spread bet on gold. However, before I continue, it should be noted that, as with all forms of speculation, there is a negative side. You can lose more than your initial stake with this from of trading.One of the main reasons for trading gold through spread betting is that you can go long or short with a spread bet. This means you can speculate on gold to either rise or fall, particularly useful in volatile markets.You also get instant access to thousands of financial markets. Yes you can trade gold spreads but you can also trade the future value of foreign exchange markets like Dollar / Yen and Euro / Sterling as well as stocks and shares or the future price of other commodities like crude oil.With spread bets, no assets or ownership rights are exchanged, you are simply speculating on the future price of a market, the benefit here is that spread betting is tax free*.Before you trade though, note that spread betting carries a high level of risk so you should only speculate with money you can afford to lose. Like the adverts say, before trading, please ensure that spread betting matches your investment needs, make sure you familiarise yourself with the risks involved and, where necessary, seek independent advice.* Based on current UK tax law, if you pay tax in another jurisdiction then tax law may vary.

Stocks and Shares Trading in 2010

admin — Wed, 06 Jan 2010 11:34:55 +0000

I like to trade stocks and shares but what do when unemployment in both the US and UK keep increasing? Interestingly the major stock markets are also increasing.Unfortunately, equity markets are completely detached from the ‘real’ economy. So as unemployment continues to rise, and is expected to continue rising throughout 2010, we could see the Dow Jones and FTSE 100 continue to rally.Yes the stock markets are supposedly ‘forward thinking’ and investing in the future but the current picture is unclear. Looking at the UK, inflation looks like it will remain around its target of 2%. Of course controlling inflation is easier said than done. No one knows what affect the quantitative easing will have on the economy in 6 months time.The focus will be on the outlook for growth and indications of when the US, European and UK stimulus packages will end. Growth is returning but, with Governments short of funds, tax rises are expected in 2010. The little growth we have could quickly end.All-in-all the markets look like they will remain volatile for quite some time. It is not all bad news though. There are a few ways of taking advantage of the market volatility. One option is spread betting, with a spread betting account you can go long or short of the markets. This means an investor can trade a market in the direction they feel it will move. You are not limited to only speculating on markets to go up. If you think the FTSE 100 or Dow Jones will go down you can bet on them to fall. Another advantage in the current volatile climate is that you purely are speculating on the future price of a market; you are not actually buying or selling anything. This lets you complete trades quickly.Of course, all forms of financial investment have the potential for incurring losses. For example, trading in stock, property, investment funds and pensions can lead to you losing money. With spread bets your losses can exceed your initial investment.Having said that spread bets are tax free, there is no capital gains tax, no stamp duty and no income tax on spread betting*. And unlike traditional stocks and shares trading, there are no commissions or broker’s fees.If you are considering spread betting then you should also consider where you might trade. A number of spread betting firms offer the usual benefits of letting you trade thousands of UK, US and European markets as well as letting you trade outside normal market hours. Some firms, such as FinancialSpreads.com, will let you trade markets 24 hours a day.A final comment though, spread bets carry a high level of risk to your capital. You should only speculate with funds you can afford to lose. Like the adverts say, before trading, please ensure that spread betting matches your investment requirements. Familiarise yourself with the risks involved. Seek independent advice where necessary.* Based on current UK tax law, if you pay tax in another jurisdiction then tax law may vary.

Spread Betting Online

admin — Sun, 03 Jan 2010 00:33:44 +0000

WorldSpreads.com prides itself on offering unbiased, accurate and up-to-the-minute spread betting information to all its investors. Whether you are experienced at spread betting in the UK or are starting to learn the basics through spread betting online, we offer you the chance to benefit from our years of expertise and experience in this method of trading.The aim of the WorldSpreads Group is to provide high quality sports and financial betting services to a global audience. In order to ensure the highest standards of service, and to drive its expansion to an international audience, the Group has assembled a team with an envious track record in the industry. Its international expansion is geared around finding the best business partners in new territories who can ensure that the product offering is adapted for the needs of the local customer bases.We offer spread betting information to our investors from the moment they choose to open an account with us. Initially this takes place in the form of a tutorial designed to familiarize a new account-owner with the many financial products there are to choose from, such as CFDs and Futures and Options. The tutorial can take place at our offices or by telephone, if this is not convenient. The tutorial lasts as long as the account-owner desires and once it has taken place, they should then be in possession of all the knowledge they require to begin spread betting online.For those who have been spread betting in the UK for six months or more, we offer more detailed spread betting information in the form of our Advisory Services. Here we pass on market insights and advice that are taken from a team of Independent Analysts. This information can then be used to develop spread betting strategies that are designed to maximise an investor’s profit potential.For further spread betting information, of whatever level, contact us today – either through our website or via our Trading Desk hotline. We look forward to working with you.

Trading the Housing Market

admin — Sat, 02 Jan 2010 12:03:23 +0000

The Sub Prime problem arrived in an economy growing at over 3%. It is disturbing to speculate what will happen to the substantially weakened banks if there is a long recession and the vast bulk of medium rated mortgage risk and possibly even the huge Junk bond market come under, not just the current valuation problems but also, pressure from actual defaults.Whilst many home owners are clearly concerned about falling house prices there are a few interesting options out there both for investors and home owners who want to hedge against falls in the housing market.Spread betting firms like IG Index now offer markets on the Average UK House Price. Of course with any such speculation there are risks. However, trading the Housing Market is an interesting option.Sentiment is now falling and whilst mortgage approvals have been suffering this is not the end (or even beginning) of the story. Viewings and enquiries at Estate Agents have been recording ever lower numbers. The mortgage offer is generally one of the last factors in a house purchase, first comes the hunt. The real test will come if the employment outlook begins to seriously weaken. It must be something of a worry to policy makers that the current anguish is being felt when we have virtually full employment. What on earth will happen if (when) large numbers of high earning jobs start to be lost? Whilst people outside of the City of London like to smile at every misfortune felt by the absurdly overpaid bankers the fact is that in doing so they are laughing at themselves. Weakness in the City would mean an ever widening circle of misery. Looking at the housing market from a slightly different angle, Simon Denham of Financial Spreads recently commented on the current high cost of mortgages, “The ridiculous requirement for banks to mark to market every single asset they hold is playing havoc. Most investments are in very liquid easily priced holdings eg stocks, government bonds, cash etc. However many are in completely illiquid and still perfectly secure assets eg mortgage bonds, property etc. How do you value a product which has good solid worth but for which, temporarily, there is no buyer? Many are being forced to revalue at ruinous levels simply because the auditors, fearful of their own backs, are insisting that this is prudent. None of them would ever dream of selling at these valuation levels but this is academic.“It is this ‘mark to market’ requirement that is likely to hold back recovery. As soon as a mortgage is awarded the lender may have to mark the loan immediately at a substantial loss. You can understand the lender’s reluctance.”It is easy to let the current slowdown in housing to assume crisis proportions in many investors’ minds. However, in reality, a year ago it would have been difficult to find anyone who thought that prices were anything other than over heated. A period of cooling or at least stagnation is probably well overdue. Unfortunately, given that we live in a country where for many people the value of their house defines their wealth, it is easy for any slowdown to affect the national psyche. If we enter a five year slump as per 1989 to 1994 then the economy will find it very difficult to ignore.

Note that spread betting on UK House Prices like other forms of spread betting carries a high level of risk to your money and may not suit all forms of investor. You can lose more than your initial investment so make sure you only speculate with capital that you can afford to lose. Likewise make sure you understand the risks involved and seek independent financial advice where necessary.

Trading Banking Stocks and Shares in 2010

admin — Sun, 27 Dec 2009 23:46:04 +0000

It looks like some of the companies that one would expect to be at the forefront of any world recovery have started to raise the warning flags again. A series of economic analysis announcements are struggling to register much joy for the heavily indebted western nations. It is still possible that the banks were in danger of ‘doing a Japan’ over their debt exposure to the large number of leveraged buyouts of 2005-2007. Yes, the banks are not writing off much of the debt however this is in the knowledge that most deals still have a few years to run. The banks are probably hoping for a bit of an economic turn around to help them out. With interest rates down below 1%, the temptation to run the risk is high. None of the world’s banks wish was to ask the various governments for more money as the strings attached are far from charitable. And if the financial system can build up cash reserves over the next few years until 2013/15, when much of the debt is due for repayment, the banks will be in a much better position to take equity/debt deal replacements.So if the banking stock looks volatile, what are the options for the investor? A trading account where you can both speculate on stock to go up and down may be the way forward.If that’s what you are looking for then a spread betting account might suit your needs.With inancial spread betting you do not purchase the stocks or assets. This means that you are not constrained to simply speculating on an increase in value. If your research indicated a weaker market, you could spread bet on the market to decrease.Also, spread trading offers a wide range of markets so that investors are not just limited to stocks and shares. Stock market index values, foreign exchange pairs, commodity prices and interest rates are all tradable from the same account.So how does it work? Let’s say you wanted spread bet on the UK’s Barclays Bank.Note that you could also bet on US Banks, German Car markers or even some of the major Indian companies.Looking at Barclays though, at the moment there is a spread betting price of 326.9p – 328.2p.Therefore, you could spread trade on Barclays to move above 328.2p or below 326.9p.When you spread bet, you trade on every unit the market goes up or down; in the case of the Barclays market a unit is 1p of the share’s price movement.So, you might choose to spread bet £3 for every penny Barclays stock increases.If you were to buy Barclays at 328.2p and the share increased then you might see the spread move to 356.0p – 357.3p. If this were the case, you could decide to take your profits by closing your trade at 356.0p.Your Profits (or Losses) = (closing price of the market – opening price of the market) x stake per pennyYour Profits (or Losses) = (356.0p – 328.2p) x £3 per penny stakeYour Profits (or Losses) = 27.8p x £3 per pennyYour Profits (or Losses) = £83.40 profitOf course, if the market had decreased to, for example, 303.0p – 304.3p, you could choose to close your spread bet to prevent further losses. Therefore, you would sell back at 303.0p. With the same £3 per penny stake:Your Profits (or Losses) = (closing price of the market – opening price of the market) x stake per pennyYour Profits (or Losses) = (303.0p – 328.2p) x £3 per penny stakeYour Profits (or Losses) = -25.2p x £3 per pennyYour Profits (or Losses) = -£75.60 lossAs the above illustrates, when speculating you must always remind yourself that the markets can go down as well as up. With spread betting you can lose more than your original stake or investment.And like the adverts say, spread betting carries a high level of risk. You should only speculate with funds you can afford to lose. Before trading, please ensure that spread betting matches your investment requirements, familiarise yourself with the risks involved and, if necessary, seek independent advice.If you are still looking to trade, where should you go? Make sure the firm you trade with is Authorised and Regulated by the Financial Services Authority, this generally ensures a certain quality level. Companies like Financial Spreads and ShortsandLongs will let you trade on all of the markets mentioned above.

Trading the Markets after a Recession

admin — Sun, 27 Dec 2009 12:12:18 +0000

So it looks like we have avoided a 1930’s style depression however the current forecasts still suggest slow growth and a difficult time ahead. So what should you do in a difficult environment with your own finances?If we were to be honest with ourselves, then we should probably accept that we can improve on at least a couple of the following; tax efficient investments, long term investments, actively reviewing our existing investments and looking at new opportunities that the financial markets are currently providingI am sure we all appreciate that we could benefit from planning more. That is not to say everyone is simply sitting on their hands. Many people actively trade stocks and shares.The increase in the popularity of spread betting is understandable. A few of the attractive benefits include the fast nature of placing a trade and the large variety of global trading options on offer.Naturally, as with all types of investment, be it on Stocks and Shares, ETFs, pensions etc, there is a negative side and with spread bets you need to be careful because you can lose more than you initially invested.If there is a risk to your capital then why should you contemplate spread betting as part of your investment strategy? Spread betting can be beneficial on a number of fronts, from tax efficient investments* to ease and speed of making a trade.There are many benefits. For example, spread betting profits do not incur capital gains tax*. You are not actually buying and selling any assets or stock or shares. You are simply speculating on the future price or value of a particular financial market.As discussed, investing does have its risks. Nevertheless, there are things you can do in order to reduce your downside. Adding a Guaranteed Stop Loss Order to your spread bet helps reduce your risks. If you start to lose on a trade and the market continues to move in the wrong direction but hits your Stop Loss then your trade will be closed and you won’t lose any more money.In order to spread bet you do not take possession of any assets or stocks. You are just speculating on the future value of a market. This allows you to place trades quickly and with little fuss, an important feature in fast moving markets.Where to trade? A number of spread trading firms offer the usual benefits of letting you trade thousands of international markets as well as letting you trade outside normal market hours. Companies, like Capital Spreads and FinancialSpreads.com, will also let you trade markets like Crude Oil, Gold, the German Dax and the UK FTSE from Sunday evening all the way through to Friday evening.So whilst there are a good number of positives, it is important to understand the negatives.Spread betting carries a high level of risk. You should only speculate with money you can afford to lose. Like the adverts say, before you trade, ensure that spread betting matches your investment objectives, make sure you familiarise yourself with the risks involved and, where necessary, seek independent advice.What else should you consider when trading?In the numerous chat rooms and internet forums there are many trading tips and theories. Some are fairly sensible, some less so. The following includes some of the more common principles.It is worth having a look at a spread trading practice account. These are free accounts with virtual funds. If you are less familiar with this form of trading then a little practice should help you understand the positive and negatives as well as the various types of bet you can place.Greed can be your worst enemy when trading. It can be tempting to trade lots of positions in lots of different markets. Personally, I tend to trade 0-5 markets at any one time. I have no idea how anyone can fully research and make informed decisions on 20 open trades, especially if they start moving against you.* Since you are placing a bet rather than buying an asset or share, it is treated like a bet by the UK and Irish tax authorities which means your profits are tax free. Tax laws can change.

Spread betting and the CFD’s market

admin — Fri, 25 Dec 2009 23:48:27 +0000

There are a lot in common with CFD’s and spread betting, but also lots of different. There is one clear thing; both CFD’s and spread betting are very exiting ways to invest capitals and also high risks ways.

The CFD’s as we all know are traded on margin, the bets you are taking are much higher than you actually invest, and this is why your share from the future profit is usually small. The long term users of the CFD’s traders made them look around for similar options to trade online and they have found the financial spread betting opportunities.

While trading financial spread betting, you place the bet on the spreads of the market values and you do not really hold any stocks or commodities. The bets are only or the market movement and just like the CFD, spread betting online firms are gathering high risk and high potential for revenue. The spread betting firms are got to understand the linking between CFD’s trading and spread betting and you can now find software’s with the two options, working together for the users.

In the forums, you can find talks about the advantages and disadvantages. Both are related to the CFD’ trading systems and the Spread Betting firms. For the UK residents, for example, the spread betting is much more benefit since they have to pay no taxes while betting, in CFD’s there is a government tax. On the other hand, with CFD’s you can trade the smallest amount and lower your risks, with the spread betting there is a limit, how low you can go and many beginners are losing their deposits too fast.

For new member to either CFD / Spread Betting systems, the best suggestions is to focus on one of the above and try to make the best with either CFD’s and Spread Betting. After a while, investigating the other options is another good suggestion

Trading the Dow Jones Index

admin — Fri, 25 Dec 2009 01:14:26 +0000

With the world in recovery mode, many are still questioning how the financial markets got so out of control. There are certainly new investment opportunities in the current environment and it’s always a good time to review your portfolioAccording to Simon Denham of Financial Spreads, “In all this [market uncertainty] it must be admitted that, while equities remain attractive versus everything else, we have not had a serious pull back for quite some time. The fall through June and early July comes to mind but even this did not seem particularly violent at the time.“[As we come to the end of 2009] the Dow Jones appears to have some misgivings about remaining a five figure number. The DJIA has now rejected the 10,000 mark three times. Having said that, we are now uneasily pondering the continuation of the rally”.So to me it looks like the Dow could go either way. But how and where to trade the Dow Jones Index?One option is spread trading – an increasingly common form of trading. There are a wide range of benefits. The variety of trading options, speed and ease of making a trade are making it more and more popular.There are downsides to all forms of investing and with spread trading you need to be careful because you can lose more than your initial investment. Having said that, there is a wide range of markets on offer. You can speculate on thousands of markets from the popular Dow Jones Index and Pound / Dollar exchange rate, to the not so popular Coffee, Dollar / Peso and Interest Rate markets.Also, because you are trading directly with a spread betting company there are no broker’s fees. And, should you choose to do so, you can close a spread bet early. This can help secure profits or prevent further losses.Back to the Dow though, how does the market work? Should you decide to spread bet on the index then, looking at a spread trading website like GFT, you may see a spread of 9800 – 9803.As a result, you could spread bet on the Dow Jones to move above 9803 or below 9800.For this example, you could choose to spread bet £2 for every point the Dow Jones rises or falls.If you bought the Dow Jones at 9803 and the Dow Jones index went up then the spread could change to 9847 – 9850. Therefore, you could close your trade for a profit by selling at 9847.Your Profit (or loss) = (settlement price of the market – opening price of the market) x stakeYour Profit (or loss) = (9847 – 9803) x £2 stakeYour Profit (or loss) = £88 profitThe markets can of course fall, if the market were to drop to, for example, 9761 – 9764 you might decide to close your Dow Jones spread bet to prevent further losses. In that case, you would sell back at 9761.0. So, with the same £2 per point stake:Your Profit (or loss) = (settlement price of the market – opening price of the market) x stakeYour Profit (or loss) = (9761 – 9803) x £2 stakeYour Profit (or loss) = -£84 lossSo whilst the above illustrates the positives, it is important to understand the negatives.Spread bets carry a high level of risk to your capital so you should only speculate with money you can afford to lose. Like the adverts say, before trading, please ensure that spread betting matches your investment objectives. Make sure you familiarise yourself with the risks involved. If necessary seek independent advice.* Tax law can be changed or may differ depending on your personal circumstances.