Spreadbetting is not limited to the stock market indices and is now commonly used as the preferred method of speculating on a wide variety of events. The two most established sectors are the financial and sporting events markets.
What markets can I trade with financial spread betting?
The best thing about financial spread betting is that it has really opened up the world of financial trading to the masses. Through a financial spread betting provider we can actually access hundreds of different financial instruments from international shares to entire stock exchanges and coffee beans. No longer do you need to have access to hundreds of thousands of pounds to access the international markets. Just think how powerful that is.
Pretty much anything where there is a market including shares, oil, gold, house prices, politics and sport. Financial spread betting is the biggest part of the UK market. Investors can bet on individual shares, indices such as the FTSE 100 or FTSE 250, commodities, currencies and interest rates.
Ayondo quote between 2,500 and 3000 separate prices.
Financial spread betting covers a wide variety of markets:
- Stock market indices & sectors – the FTSE, Dow Jones, Nasdaq, DAX, Nikkei and many others, plus a wide variety of industry sectors.
- Individual equities & bonds – choose from thousands of individual equities and bonds from the UK, US and Europe.
- Currencies and interest rates – all the world’s major currencies and several major bank interest rate movements.
- Commodities – speculate on the price of oil, precious metals like gold and silver, pork bellies and orange juice.
- House prices and politics
For instance, I currently trade 4 major world market indexes using end-of-day data. These are the FTSE 100 (UK), the CAC 40 (France), the DAX (Germany) and the DJIA (US). The sporting spreadbet sector includes all manner and combination of sporting bets from every major sporting fixture:
- Football – bet on the statistics for the full season or individual games – from overall winners to total goals and from number of bookings to ‘shirt supremacy’!
- Horse racing – all the major fixtures and a host of combination bets
- Cricket, rugby, golf, tennis, snooker, dog racing – all forms of combination bet on the statistics surrounding the results.
Financial spread betting is the biggest part of the spread betting market in the United Kingdom; with the forex and index spread betting markets being the most popular. Traders tend to favour liquid markets so as to be able to readily enter and exit positions without having to pay wide bid-offer spreads. Likewise, spread traders tend to prefer markets which are volatile, as the only way they can make money is from up and down movements outside the initial spread.
Similarly, commodities markets permit you to trade prices like gold and oil, two of the most commonly followed commodities, in addition to precious metals like silver and platinum, industrial metals like copper, energy markets, and agricultural products like wheat and frozen orange juice.
“Only trade a market you know. If you didn’t know that higher oil prices escalate airline costs and could pressurize the share prices of airline stocks, you may be fighting a losing battle when buying into EasyJet shares for example.”
Let’s take an example of a spread bet on the supermarkets sector. Sector spreadbets are a great way to take a view on an entire industry by giving you exposure to a basket of underlying shares in a particular sector. Let’s say you believe the supermarkets are going up in the near future. Your spread betting provider quotes you a price of 4450 – 4469 You buy at 4469. Two weeks later, the spread is 4648 – 4665. You decide to take a profit and sell at 4648. So, your profit is 4648 less 4469, or 179 points.
While the trading range in stock markets has at times been relatively tight, there are always opportunities in other markets around the world. The Oil price has been booming ahead recently, currency markets have been very jittery at times, the gold price is also powering ahead and copper has been very strong. However, it would be a big mistake to log onto your spread betting account and start trading all these global markets on a whim – just appreciate that there is much more to the markets than whether the price of Vodafone shares or the Dow is up or down. The more liquid markets blue chips stocks and the various forex pairs may well be a good starting point, just remember to keep your stakes low at first so that you get a grasp of how they can move day to day.
Over the years, spread betting has opened up a huge number of financial markets to its customers. Now it also provides many of the tools necessary to help those customers trade those markets successfully. There is no doubt that as systems continue to improve, the spread betting providers will continue to strive to provide the best range of services available.
