The Ashmore Group was founded in 1992, and is a fund manager specializing in the emerging markets. When spread betting on Ashmore, you must realize that you are betting on the share price of the company, and not necessarily on how well its funds are performing. Though the two are related, there is no direct connection.
In this recent daily price chart you can see a reasonable amount of volatility, as well as the fact that the shares have gone into a strong uptrend. One caveat is that the shares have expressed gap opens on a few occasions, and this can catch you out if you are the wrong side of the trade. You can insure yourself against bad losses by using a guaranteed stop loss (GSL), but as this costs you more in terms of an increased spread, you must carefully consider the pros and cons.
Ashmore is expecting the assets of the developing world to increase from $70 billion to over $100 billion in the next five years. Emerging markets are already about half the world’s purchasing power, and Ashmore believes that it is in an expanding sector.
The company is only just outside the FTSE 100, in the FTSE 250, with an estimated market cap of about £2 1/2 billion. The CEO has been awarded a £5 million bonus recently, which suggests that the company is performing well and expects to make good ongoing profits.
As long as the price continues to hug the upper Bollinger Band, and the MACD is increasing, it looks as if the current uptrend will continue; however you should watch out for the MACD slowing and turning in a downward direction, as this might indicate that the stock is overbought. Similarly, if the stock price starts falling away from the Bollinger Band, and particularly if it crosses the middle moving average line, you might expect a price reversal or at least a consolidation.
Ashmore Group Rolling Daily
Ashmore Group seem to be in an uptrend, and you could place a spread bet that the trend will continue. The current price for a rolling daily bet on Ashmore is 378.95 – 380.85, and you may decide to stake £7.50 per point at the buying price of 380.85.
Should the price continue to rise, you might find that the quote goes up to 492.63 – 494.53, and then decide to close the bet and collect your profit. While you have held the bet open, you may have been charged a small amount each evening when the bet was rolled over by your spread betting company; but this amount is usually not large compared to the profit or loss from market movements.
Say you close the spread bet at 492.63, up from the opening price of 380.85. Taking one from the other, you have made a net gain of 111.78 points. As you staked £7.50 per point, that amounts to a profit of £838.35.
If the price had started to trend downwards after you placed your bet, you could have decided to close the trade for a loss when the quote got to 289.20 – 291.10. Working out your loss, 380.85 minus 289.20 is 91.65 points. For your chosen size of stake, this would have cost you £687.38.
As an alternative, you may have considered placing a stoploss order on this bet when you took it out. Often, stoploss orders will save you some of the loss, as they will activate and close the trade as soon as your limit is reached. Perhaps in this case the stoploss order closed out your trade when the quote was 315.65 – 317.55. Taking 315.65 away from 380.85, you find that your loss in this case was 65.2 points. For this wager that would cost you £489.
Ashmore Group Futures Based Spread Bet
To take a longer view on the stock price of Ashmore Group, you may decide to place a far quarter futures style bet for which the current quote is 380.10 – 384.69. With a bullish outlook, your long bet will be at the buying price of 384.69, and you may choose to wager £5 per point.
Over a few weeks or months, you might find that the price goes up to 468.65 – 472.39, and you would decide to close the bet to collect your winnings. The opening price was 384.69, and you close the bet at 468.65, the selling price. That means you gained the difference of 83.96 points. £5 times 83.96 is £419.80, the amount of your profit for this bet.
But if the price suddenly started falling after you placed the bet, you could choose to cut your losses and close the trade quickly. Even with a futures style bet, you can close the bet as soon as you want to, and do not have to wait until expiration. Perhaps you close it when the price has dropped to 315.62 – 318.39. Your bet was placed at 384.69, and this time you closed it at 315.62. 384.69 minus 315.62 is 69.07 points. Because your stake was £5 per point, this would cost you £345.35.
To save them watching the prices all the time, many spread traders use a stop loss order to protect them from excessive losses on losing bets. The spread betting company will automatically close your bet once a certain level of loss is reached. In this case, you might find that a stoploss order would have closed your bet at 330.25 – 334.39. The bet opened at a price of 384.69, and it closed at a price of 330.25. That means you lost 54.44 points. With a stake of £5, that amounts to a loss of £272.20.