Posted tagged ‘CFDs’

IG Group in Healthy Profits

July 29, 2009

It is the hot new way to invest and is raking in the customers each month – financial spread betting.  The market leader for spread betting, forex trading and CFD platforms, IG Group, have reported healthy profits despite the recession.  Indeed, profits were up 30% to GBP 126 million. 

So why is this trade fashion so huge?  Spread betting firms report 2,000 new customers each month.  In fact, spread betting is attractive to investors and savers who are after a new way to make money.  Low interest rates, no commission – and it is cheap to get cracking.

Spread betting is also extremely exciting to those who have an appetite for a thrill – as markets rise and fall, profits can be large….and so can losses.  Make sure you take out a stop loss!

Futures traders are under a bit of negative attention in the USA, where regulatory watchdogs are trying to prove that Futures trading on the energy market has a direct effect on oil price spikes and dips.  In the UK, the FSA says there is no evidence to suggest speculation on the markets has a negative effect on the price of a barrel of oil and are not taking action. 

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British Pound Up on MPC “news”

July 10, 2009

Just what is going on?  Usually, when the MPC is due to make an announcement, everybody is pretty sure what they will say, and then they say it.  In simple terms, at least.  But yesterday, they managed to leave the City confused, surprised and perhaps a little disappointed…

The committee had been expected to announce that they intend to extend QE and possibly even request permission from the Government.  However, in their statement they said that they intend to spend the rest of the current programme and then….well, they would see and decide at the next meeting in August.

So what on earth does that mean, asked City insiders and traders on the markets.  Did they intend to spend more come August or is that it?

The opinion is divided.  One thing is clear – the British pound was up by around 1 per cent against the US dollar and the yield on the benchmark 10-year gilt up by over 3 per cent.

Oil Down….Again..

July 8, 2009

Oil prices have hit six-week lows and a barrel is now worth $62.30, down 63 cents.  Now, the question is: is there a general increase in caution in the trading community?  Is everyone worried about what is happening in the global recovery that we were all beginning to see?

Things are getting confusing again.  Ok, so let’s do a quick round-up:

  • Oil prices have risen steadily and (fairly) quickly since the start of 2009
  • The general mood of late has been of ‘bottoming out’ of the recession – things can only get better
  • Overall good news from industry sectors as demand and production increased
  • ‘Green shoots’ becomes the word du jour again
  • V-shaped is the shape of the recession, say analysts
  • Business sentiment is up in the UK and Europe

Things were definitely looking up, weren’t they?  But, now the USA as the world’s most powerful economy, has put a couple of spanners into the works – 1. the latest unemployment figures were worse than expected and 2. fresh fiscal stimulus is being speculated over

Over in the UK, the BoE is planning new asset purchasing and Alistair Darling is going to announce the new FSA guidelines for the financial sector – set to be much stricter.

So is there an overall “down” mood or is the recession more W than V?  Some are saying that the dip in oil price is merely a correction on the too-early recent rally.

Stick with risk or head to the havens?  That is the most important question for investors right now!  Commodity traders are reminding us that while oil is down, precious metals are remaining consistent!

Oil Price Jump on Tuesday was thanks to Rogue Trades?

July 3, 2009

We even reported the jump in oil prices on Tuesday.  We thought it was mainly down to the Nigerian militia attacks, and sure enough the situation in Nigeria is being linked to the push up in oil prices.  However….

…..it turns out that the sudden jump in the price of a barrel on Tuesday was mainly down to a man called Steve Perkins.  The man, who works (or should we say worked) at London oil broker PVM carried out a series of rogue trades which caused the oil price to jump sharply.

By the time the contracts (which were Futures) were sold, the price had fallen…meaning PVM lost a total of $10 million.  The incident is being investigated fully by the FSA.

What really makes this story intriguing is that Steve decided to make the trades at around 2AM London time.  At 2AM most people are fast asleep (well on average on a Tuesday) and trading is generally very thin.  Therefore, the system the company has in place to detect oddities was able to easily point back the trades, which all came from one source,  to him.

Anti-Money Laundering Regulations in the Spotlight

July 1, 2009

Money Laundering.  When you hear the term as a child, you might imagine wads of cash in a washing machine.  But then you become an adult and you might realise just how important this is in the financial services sector.

If you type Foreign Exchange, overseas mortgages, share dealing or any trade or money transfer type into google, you will get literally hundreds of results for online brokers and services.  They are all involved in the movement of money and currencies  -in the case of the Forex market this is happening at every minute of the day across seas and continents.  So how do you know the money is ‘clean’ (in other words not obtained through criminal acts)?

Well, all financial services must comply with anti-money laundering regulations.  If a company is not compliant with these, do not touch them with a barge pole.  Or at least, find out why or go to the FSA (or main country regulating body) and ask them.

We all want our money to be in safe hands.  An area which is constantly under the spotlight for money laundering is the money transfer area – Western Union and their competition are always having to keep a close eye on clients and transactions.  Make sure you use a legitimiate service.

Share Dealing for Long Term Returns

June 19, 2009

Ok, so it isn’t the latest way to trade or invest, but give it a chance: share dealing.  One of the best ways to invest and yet in recent times often pushed aside for the more snazzy forms of investment trading, such as CFDs and Spread Betting.

They key to share dealing is that you have to be prepared to be in it for the long run.  If you want quick, speedy, high-risk trading then look to the world of Forex and CFDs, but if you want to slowly build up a wide portfolio and higher likelihood of good returns, think shares.

The strategy you want to work on is up to you and your investment manager.  Either you are prepared to give this plenty of time and attention, or you let the investment manager do the work – this depends on how much you are willing to pay.

The point is, while CFDs can be really exciting and adrenalin-producing, shares offer a long-term investment that may be more sensible and is less reliant on the market fluctuation.  Of course, share values go up and down as well but this is less the focal point than on derivatives trading.

Consider it.  Weigh up how much you are willing to invest, how much effort you personally want to put in, and what you think the best strategy is.  Now find a good broker!