Financial Spread Trading
An Online Guide - How to Profit Through Financial Spread Trading

: Recommended Reading

: Introduction (Home)

: Markets

: Stop Losses

: Market Orders

: Margin and NTRs

: Money Management

: Adding To Trades

: Strategy Examples

: Suggested Reading

: Bookmakers

: BetOnMarkets Guide

: My "Newbie" Mistakes

: Trading Tips

: Contact

: Site Map

: External Links

 

An Explanation of the Markets You Can Trade

All spread betting companies offer a large range of markets to trade. The most common are as follows:

Indices

These include the FTSE 100, Dow Jones 30, S&P 500, the Nasdaq, the Nikkei, the German DAX, the French CAC and the Swiss SMI amongst others.

Each index is made up of shares from its respective country. The FTSE 100 contains the largest 100 shares in the UK or rather, the 100 biggest companies by Market Capitalisation (Market Cap for short).

The Market Cap is calculated by multiplying the share price by the number of shares available.


For example: If the ABC company has 1,000,000 shares available and each share has a value of £10 then the Market Capitalisation of ABC is £10million.


Many traders stick to the well known indices such as the FTSE and the Dow but they may well be missing out of hundreds of trading opportunities by doing so.

Equities

Equities are simply single shares in companies such as BP, Vodafone, IBM, Microsoft, Google etc

You will find that all spread betting firms quote prices for hundreds of shares from large companies such as HSBC, Tesco and BT down to smaller FTSE 350 companies such as Domino's Pizza and Synstar.

Most firms will also quote a massive range of American and European shares with gives you a huge range of trading opportunities.

Currencies

The Foreign Exchange market provides yet more trading vehicles. The main currency pairings include the GBP/USD (Pound vs US Dollar or "Cable"), USD/YEN (US Dollar vs Yen), GBP/EUR (£ vs Euro) etc

There are also several other markets to choose from which include the CAD (Canadian Dollar), the AUD (Australian Dollar), the RAND (South African currency), the CHF (Swiss Franc) and more.

Currencies are always quoted in pairs and so if you place a BUY bet on a pair, you are betting that the first currency will get stronger against the second. Buying the GBP/USD means you are backing the Pound to strengthen against the Dollar. Selling the GBP/USD means you are backing the Pound to weaken against the Dollar.


If you have any difficulty working out which way to bet, ring your spread betting company and explain exactly what it is you want to do. They will understand if you say "I want to back the Pound to strengthen against the US Dollar" and will read back your bet before it is final to make sure there are no mistakes.


Commodities

These can be split into sections as follows:

Energies such as Crude Oil, Unleaded Gas, Heating Oil, Natural Gas and Propane

Grains - Wheat, Corn, Soybeans, Oats etc

Meats - Live Cattle, Feeder Cattle, Lean Hogs and Pork Bellies

Metals - Gold, Silver, High Grade Copper, Platinum, Palladium, Aluminium etc

Softs - Cotton, Orange Juice, Coffee, Sugar, Cocoa and Lumber

Sectors

Some spread betting companies also offer prices on UK and US industry sectors.


For example: A position on the FTSE 350 Mining sector in effect gives you a position on 9 FTSE 350 mining companies. The constituents of this sector are:

Anglo American, Antofagasta, Aquarius Platinum, BHP Billiton Plc, Lonmin, Randgold Resources, Rio Tinto, UK Coal and Xstrata Plc.


As you can see, you are in no way limited by the number of markets you can choose to trade. If you look at little further than the FTSE and Dow, you should be able to find valid trading opportunities each and every week.

Next page - Stop Losses...

 


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