MoneyAm has just released another edition of its annual awards that aim to recognise the high quality service and innovative products from companies in the online world of finance. Sixteen companies over the same number of categories were awarded a prize, in an event that was able to cast over 7,000 online votes.
This year CMC Markets was able to get the Best Online Spread Betting Service prize, being rewarded for its innovative service. The company beat Capital Spreads, IG Index, GFT UK and City Index (last year’s winner), elevating itself to the top spot. CMC offers a unique platform that is simple to use and fully featured at the same time that certainly seduced traders. CMC was also chosen as the Best Online Education provider, as traders judged its offer of seminars, webinars and online documentations as being the best available. In fact that was also their opinion last year.
In terms of the sister product of spread betting, CFD’s, IG Markets got the edge winning the Best Online CFD Provider award. For all those trading forex products, Alpari UK was the choice. The company won the Best Online FX Provider award.
In terms of charts, this year ETC Capital beat the past winner Spreadex and won the Best Online Charts prize. Capital Spreads got the two awards for the software, collecting both Best Online Trading Platform, and Best Mobile Trading Platform prizes. In this field the competition was huge since online providers have been investing a large part of their funds into the development of platforms instead of betting in a spread war. More and more traders are looking for features and not only for the lowest spreads.
The most important award was given to Hargreaves Lansdown that this year was considered as the Best Overall Online Finance Provider dethroning Barclays Stock Brokers, the past winner.
IG Index, the largest spread betting provider was not able to directly get any award, although IG Markets, a sister company, has won the Best CFD prize. While IG consolidates its dominance in the UK, its peers have been busy trying to catch traders’ attention by providing them with enriched charts, webinars, and many other tools in a desperate attempt to get some extra market share.
City Index, one of the top UK-based spread betting firms, has just published a report about female traders which states that in the last ten years there has been a substantial rise in women opening spread betting accounts.
With the rise of the financial crisis, women started managing their own finances and are increasingly looking at spread trading as the best way to do that. According to data from City Index, in 2011 fourteen more women have opened spread betting accounts than in 2001. The top 20 have made an impressive average annual profit of £271,225.
Spread betting is no longer dominated by the mid-aged City richest, nor even by man or top executives. Recent data published by ETX Capital shows that the younger are becoming increasingly attracted by the simplicity of spread betting. This time, City Index shows that spread betting also increased its popularity among women.
Who are these women?
It is interesting to note that although women on top executive positions are the most attracted by spread betting, there are many other with occupations that are not even related to finance or investment. That’s the case of City Index’s youngest trader, aged 19, sales assistant, who has accumulated £11,222 in trading profits. The range of occupations is large and there are many teachers, secretaries, and even housewives. The youngest woman has 19 and the oldest 94. The most successful to date lives in Windsor, is aged 51, and accumulated a profit of more than £1,200,000. In certain cases it seems that spread betting can be more than a complement to the base salary. That is the case of a contract teacher earning £32,000 annually that has profited over £158,000 through her City Index account.
The simplicity of spread betting makes it the top preference way to trade the markets in the UK and the rise of mobile platform makes it possible for any person with a day job to trade at any time and from any place. From 18 to 99, woman or man, anyone can trade through spread betting.
Stock markets are consolidating near the lows from last week as investors are still unable to find substantive reasons to push prices higher. The main story as we approach the middle of the week is the latest bond auction in Spain, as bond yields are seen rising throughout Europe. Equity futures in US markets are making modest gains but the overall picture is mixed with Asian markets trading lower. European stocks are splitting the difference, trading mostly unchanged with the STOXX 600 benchmark trading just above 242.80 during the London session.
More broadly, however, the STOXX 600 is now showing losses of 11% from its highs seen in the middle of March this year, and this equates to a total performance of -0.7% for the first half of 2012. This is coming largely from worries that Greece will be forced to leave the European Monetary Union and uncertainties relative to the global growth performance for the remainder of the year.
Funding costs for 3-month treasury bonds in Spain rose after 3.08 billion Euros in government debt was sold at auction. Spanish yields are now seen above 2.36%, which is a substantial rise from the auction results that were seen at the end of May. This rise in funding costs is a clear negative for investors who continue to look for evidence of stability before committing to long positions in European equities.
For the rest of this week, expect volatility to be created by Consumer Confidence figures out of the US, which are expected to come in at 64.3 (a light drop from the 64.9 seen the previous month). This will be followed by Trade Balance data out of New Zealand and BBA Mortgage Approvals out of the UK. Into the close of the week, the data docket gets heavier, with Germany preliminary CPI data, Retail Sales out of Japan and then Durable Goods and Pending Home Sales out of the US.
The EUR/JPY is beginning to roll over once again (in line with its long term downtrend) as prices have most recently failed at 101.70, which was a previous high and the 38.2% Fibonacci retracement of the decline from 111.40. This upper level is still the key resistance area to watch, and we will need a break of the double top that is seen here before the bias can turn to bullish in the longer term. Focus now remains on the downside, as prices are looking to target the spike low that is now seen at 95.60. A break here will signal that a top is in place for the remainder of this year.
The DAX is making some interesting technical formations as prices are caught in a symmetrical triangle in the longer term. Prices are giving some indication of which way this triangle will break, given the latest failure at Fibonacci resistance in the 6120 area. 6120 is the key bullish trigger but until that area is breached, we will continue to look at sells on rallies, with the next downside target coming in at 6080, followed by 5920.
22 Jun 2012
Stock markets are holding near the lows of the year, with some sectors starting to show value opportunities for longer term investors. Analyst reports are starting to highlight some of the inconsistencies with current price levels and asset value levels, and some of these areas include oil producers in Russia, Japanese car companies, and European Banks. Global uncertainty and slowdowns in manufacturing growth continue to weigh on sentiment and the total outcome has resulted in a removal of $3.6 trillion in global stock values in the current quarter alone.
One of the more striking features of these declines comes from the fact that nearly 590 companies in the MCSI indices are now trading below the value of their net assets. In the cheapest instances, shares can be seen trading at 0.7 time the company’s book value and this provides a sharp contrast from the nearly 10 times book value that can be seen in the most expensive instances.
Looking at this measurement in the last decade, stocks that trade near the lows (relative to book values) return more than 6 percent on a quarterly basis, which is much higher than the 4.3 percent return that is seen for the stocks trading at the upper end of the measurement.
Despite the positive news out of Greece in the previous week, markets remain concerned and this is being viewed by many as a strong buying opportunity for long term term strategies. Shorter term, however, any rallies remain limited despite the fact that Greece was able to elect a pro-bailout party that is focused on meeting the requirements that must be met before the country can receive continued loan funding. The Euro is attempting a small rally but gains have been limited as sentiment remains heavy and investors remain unconvinced that negative news headlines have ended.
The EUR/USD is showing a rally on the hourly time frames but the latest activity on the daily charts is showing a very ominous bearish engulfing candle and this has essentially eliminated the uptrend channel that was seen previously. Momentum in the MACD indicator is starting to improve but is still negative and the latest failure at the 38.2% Fibonacci retracement level indicates a retest of the lows at 1.2280. Resistance overhead is now seen at the 4H double top, which comes in at 1.2735.
The S&P 500 is looking very top heavy on the daily charts, with lower tops now seen in three cases, starting from what is now likely to be the yearly high (at 1420) from late March. The latest drop is coming at some clearly defined Fibonacci level, which is now seen at the 61.8% decline from 1410. We are currently dealing with moving average support on the daily charts, so we could see some stalling in this area but any rallies are expected to be sold. First resistance is now seen at 1350, which is an excellent sell zone for medium term trades.
As most of you already know, this weekend will be crucial for the Greek as they are going to vote for the second time in a new attempt to elect a government.
Looking at the latest polls, there is a close race between the leftist Syriza and the New Democracy parties as the Greek are divided between staying in the Euro and avoiding more austerity measures. To complicate things even more, it is likely that no matter who wins, it will be difficult to make deals between parties to form a government.
Letting politics aside, we are concerned with spread betters because of increased volatility that will certainly occur. At most spread betting and forex providers, markets open at Sunday night. With the Greek election going underway, markets can open with a significant gap. If that is the case, even if you set a stop loss, you won’t be able to close your positions at the desired price. If volatility is extreme, the difference between the stop and the real closing price may be so large that the funds in your account are not sufficient to cover the losses.
Besides the market gap risk, there is a risk of extreme volatility occurring during all Sunday night until Monday morning. As you may be aware, no one will have final results at the first hours of Sunday night and speculation will occur. Any piece of information will certainly cause extreme variation in Euro pairs and, to a less extent, in equity indices. That means that speculating in the result will be a tough game to play, and markets will certainly go up and down like a yo-yo. Although you may guess the final result you can be caught by a stop order or a margin call before you imagined. The path to the final result will certainly be tortuous.
Another problem to account for respects the widening of spreads during the night. Banks and other liquidity providers may widen their spreads to protect themselves against unfavourable moves or even suspend trading completely for some time. You should be prepared for this situation. If your spread betting provider suspends trading, you may be caught off guard with a position that you are not able to close, or if spreads widen too much you may end with a margin call.
For all the stated above, we recommend all spread betters to either reduce exposition or close positions until 21.00 today. In the particular case of EUR/USD, the risk is of keeping holdings overnight is extreme. In the case of the major indices like the Dax, the FTSE, the Dow, and some other, the risk is also elevated. If you have any doubts about the risk you are incurring or about how your spread betting provider will react, save your money and close all positions.
You do have alternatives that are less risky, but can be costly:
- Buy a guaranteed stop. That will give you peace of mind but can cost you too much to be worth it;
- Trade options on the Euro, the FTSE, or the Dow. Depending on your prospects you can buy a call or a put. The biggest advantage is that your maximum loss is know with certainty. You can trade options at IG Index, for example.
The timeline depicted below can serve as a guide for the night:
- Sunday, 19:00 – 21:00 – The first exit polls will be announced;
- Sunday, 21:00 – Official results will start to come out. It is expected that around midnight, 10 to 15% of the votes will have been counted, but may be still too soon to know the final result and volatility can create a yo-yo effect in markets;
- Monday, early in the morning – Final results will be known;
- Monday, late in the afternoon – According to the constitution of Greece, the Greek President, Karolos Papoulias, will ask the leading party to form a government. Depending on the election result this will take more or less time. As we have seen, the last election led nowhere and a new election was called.
For more information about this particular election you can use Wikipedia. Just as a final note, please have in mind that the Greek parliament has 300 seats in total. The winning party earns a bonus of 50 seats, while the remaining 250 are distributed proportionally.