Certainly, the most popular individual shares for spreadbetters belong to the FTSE 100. A good starting point for anyone wanting to use spread betting for profit is the list of FTSE 100 shares. The FTSE 100 is made up of the hundred biggest blue-chip companies in the UK market, and as such they represent about 80% in value of the stock market. This equates to about 9% of the global share market. Many of these companies are household names, so you have a starting point for getting to know enough about them to feel comfortable trading them.

Trading Nasdaq Shares

Spread Betting Apple Stock | Trading Apple Share
Spread Betting Google | Trading Google Shares

The word Google has entered the English language, because of its dominance of the Internet culture that we now live in. There can be no-one reading this who has not heard of Google, and very few people in the remotest parts of the planet who do not know of this giant. But not everyone knows that most spread betting providers will allow you to take a position on its stock price. Google is a successful global company that deals in information, first and foremost. Its revenues are primarily from delivering advertising, although it is always exploring new technological boundaries.

Google is the leading Internet search provider, and it provides customized advertising on its search pages. This is only a small part of its business, which includes AdWords, a program used by companies to promote their products with targeted advertising, and AdSense, a program that delivers relevant advertisements to websites.

But Google has done much more than this, including notably the Google Earth program which allows computer users to view satellite photographs of anywhere on earth, and in most cases also zoom in to “street scenes”, pictures of any neighbourhood. The latest push by Google it is their Google+ program, which allows sharing online.

Google has also developed mobile applications which include searching by voice and by location, and advertisements customized for mobile phone users, including “click to call” advertisements which allow the interested consumer to easily connect with the advertiser.

The principles behind the basic Google search algorithm are jealously guarded, and constantly changed. This is partly to provide a better user experience, selecting search results which are most relevant, and also to make it difficult for website developers to know how to get their website to the first position of the search, which is obviously prized for commercial reasons.

The company is constantly developing further applications through its own devices and from acquisitions, and shows every sign of keeping ahead of the game. Its stock is a typical “growth” stock, increasing steadily in value.

While these fundamentals would imply that it was a safe bet is to simply take a long position on the price, in practice of course stock prices do not go up in a straight line, but have “retracements”, or periods when the price falls back, typically regressing by a third, a half, or two thirds, according to the Fibonacci theorem of technical analysis. Unless you have a trading plan, which includes measures to limit your loss if you bet in the wrong direction, you may not make a profit from spread betting on Google.

Given the growth in value, most of your winning bets will be buy bets, and it is always considered safer to be betting in the direction of the prevailing overall trend. You should use technical analysis to assess the mood of the market, in its most basic form whether the stock is overbought (overvalued) or oversold (undervalued) at any particular time, and make your bet appropriately. You can use technical analysis to figure out target prices, based on patterns and support and resistance levels, and take care to only bet when the potential return is worth the risk.

Spread Betting on Google (GOOG)

Google is a strong international technology company, and it has posted good gains in recent years.

It was hit in the global economic crisis of 2008, as you can see, and it faces stiff opposition from other technology giants, although it holds a unique position. The current price for a rolling daily bet is 60,460 – 60,468. As it is on the US markets, this means that one that Google share costs about $604.

If you are bullish on Google, and believe that the price will go up, then you want to place a long spreadbet. You are allowed to bet as little as 24 pence with IG Index, and this is because the numbers are so large that a one-point move is almost insignificant on the price. Say you bet 24 pence per point.

If you are right, the price might go up to 65,263 – 65,271, which as you can see is near the top Bollinger band. If technical analysis does not suggest there will be a breakout, you might want to close your bet and take your profit.

Your long spread betting position was placed at 60,468, the buying price, and it closed out at 65,263, the selling price. That means that you have made 65,263-60,468 points profit. This works out to 4795 points. As your stake was £.24 per point, you have made £1150.80.

If instead of staying in the upper Bollinger band the price fell, you would want to close your bet quickly to minimize your losses. Say it went down to 60,130 – 60,138 and you closed your bet. This time the difference in points is 60,468-60,130, which is 338 points. For your given stake, you have lost £81.12.

You could also place a futures style spreadbet on Google, and the current quoted price for seven months away is 60,711 – 60,744. This quote suggests that the market, as evaluated by your spread betting company, already thinks that the price is going up from the present one. If you agree and believe the price will go higher still than the 60,744 buying price, then you place a long bet of, say, £.60 per point.

Once again, if you are right the price might go to 63,115 – 63,123, and you could close your spread bet and collect your winnings. In this case you have won 63,115 less 60,744 points, which works out to 2371 points. For your chosen stake, you have won £1422.60.

If the price did not go up at all by the time the due date of the bet arrived, you might find that you are looking at a spread betting quote of 60,471 – 60,485. You would have to close your bet and accept your loss. This could also happen if the price went up, but did not get as far as your initial price, and then came back down.

In this case your spread bet went on at 60,744, and closed at 60,471, losing you 273 points. For your stake, you have lost a total of £163.80.

There can be few people in this current age who have not heard of Apple, formerly called Apple Computer. For years it has been at the forefront of innovation in the electronic industry, creating products that no one knew they wanted before they saw them and became rabid fans. Many put this situation down to the talent of Steve Jobs, who rejoined the company in 1997 following some years away, and has steered the latest innovations. Since his unfortunate death, the jury is still out on how the new Apple will develop, but it is plain that Job’s influence will continue for a few years, developing his existing concepts.

Apple Inc., to use its current name, is an American company quoted on the US exchanges, and has branched out significantly from the earlier Apple Computer. Apple started with the Apple II, first assembled in Steve Jobs garage, and went through an Apple Liza (who remembers that?) before the Macintosh line of computers which have continued to enjoy popularity, despite competing with virtually every other computer manufacturer using the IBM standard. It has long been said that the Macintosh computer is superior for certain applications, and it has been adopted, for instance, by the newspaper industry for layout and composition uses.

Apart from updates to the Macintosh, there are a host of other products which Apple invented, and virtually created the market for; devices such as the iPod, the iPhone, and the iPad, not to mention applications such as iTunes. Apple shares generally move upwards, and have recently broken the $500 barrier, although it is not certain whether this will stick. In fact Apple has increased in value so significantly that it now represents 1/6 of the NASDAQ 100 share index.

Here is a weekly chart of Apple’s share price: –

You can see how Steve Job’s death caused a momentary dip in price at the beginning of October, but growth has continued, with minor retracements coinciding with occasional bad publicity, such as an iPhone issue which affected the antenna if held in a certain way.

From a spread betting perspective, you can rely on technical analysis to clue you in on the market sympathy, and give you an indication of when the occasional retracements will occur. Stock prices rarely continue in one direction indefinitely, even though it is a popular strategy to follow a continuing trend, assuming it will keep on, as trends can last for some time. The steadiness of Apple’s trends suggest that it may be worthwhile taking out futures style bets during one of the price surges, intending to hold them for several months.

As there can be occasional hiccoughs in the rising price, you should take care to have an established stop loss position any time that you have an open bet. In order to make a consistent profit at spread betting, you must ensure that you do not take any major losses to your capital. This is far more important than identifying the possible maximum profit moves.

Spread Betting on Apple (AAPL)

Apple Inc. is a US based company, and has just broken the $500 per share barrier. As such, IG Index have a minimum 0.24 bet (24 pence) as opposed to the usual 50p or £1, simply because the numbers you are betting on are so large. The current rolling daily price is 50,208 – 50,216. If you think that the stock is due for a retracement, you might want to place a sell bet at, say, 30 pence per point.

Say you are right, and the price could not stay above $500 at the moment. It is an important psychological level, and may have tempted several stockholders to take their profits, which action might push the price back down. Perhaps the level dropped to 48,309 – 48,317, and you decide to close your bet and get your winnings. You can work out how much quite easily.

• Your short bet was placed at 50,208
• Your bet closed at 48,317
• The difference between these is 50,208 less 48,317, which is 1891.
• Your stake was £.30 per point
• Therefore you won 1891 times £.30
• This adds up to £567.30.

Having broken through the $500 psychological barrier, you might find that the share price continues to rise instead of dropping back, and be faced with closing your bet for a loss to avoid losing more. Perhaps the price goes up to 50,291 – 50,299 before you close your bet.

• Your short bet was placed at 50,208
• Your bet closed at 50,299
• The difference between these is 50,299 less 50,208, which is 91.
• Your stake was £.30 per point
• Therefore you lost 91 times £.30
• This adds up to £27.30.

As an alternative, you may look to the future with Apple and decide to take a futures based bet, intending to hold onto it for a few months if it goes in the right direction. The current quote for seven months out is 50,415 – 50,448. If you think that Apple will increase in value over the next few months, then you can place a long bet at 50,448, staking perhaps £.75 per point.

Assuming the price does go up to 51,027 – 51,042, you can close your long bet and take your profit. Here’s the calculation: –

• You opened your long bet at 50,448
• It closed at 51,027
• That means you gained 51,027 less 50,448 points, or 579 points
• You staked £.75 per point
• That means you won £434.25

Once again, you must consider the other outcome, where your bet loses, and make sure that you can cope with the loss without losing too much of your trading funds. Say the price went down to 50,306 – 50,336, and you didn’t see any hope of your bet winning, you might close your bet and accept your loss. In this case: –

• You opened your long bet at 50,448
• It closed at 50,306
• That means you lost 50,448 less 50,306, or 142 points
• You staked £.75 per point
• That means you lost £106.50.

The origins of Thomas Cook were well over a century ago, and the name is synonymous to many English people with a travel agency. In recent years, there have been some substantial changes and upheavals in the fortunes of this once prestigious company. Recent years have been difficult for many industries, and travel is one of the items which is discretionary when funds are low, thus hard economic times are not welcome to travel agents.

Thomas Cook Group PLC is actually a recent corporate formation, established in 2007 with the merger of Thomas Cook and My Travel Group. In November 2011, concerns about losses resulted in the shares opening at less than half their previous day’s value, and brought matters to a head. Here is a chart of recent values: –

At the end of November, TCG negotiated a bank loan which helped the share price rise from around £.20 to £.30 (the price previously reached a record low of 9p), but there is a cloud over the future of the company.

One of the concerns is that Thomas Cook, as with other travel agencies, takes money from customers for future holiday packages, thus its cash flow is extended. There are important trade protections in place which guarantee or help when a travel company runs into economic difficulties, but these of course do not extend to shareholders or share prices, and simply cover the customers.

There are a number of issues facing this and other travel companies. There has been a general fall in international leisure travel due to economic circumstances, and because of natural disasters and civil unrest in many areas. Some say there is an oversupply of travel capacity, given the limited discretionary spending that many travellers face.

With this as a backdrop, it is still possible to look at spread betting on the Thomas Cook Group as a potentially profitable pursuit. Given the precipitous drop last November, a cautious spread trader might be tempted to pay extra for a guaranteed stop loss, which is not something which is generally recommended since you are charged upfront via a larger spread for the GSL, whether or not the bet turns bad. However, in some circumstances it could prove to be good value.

As a general guideline, it would be wise to stay in touch as far as possible with when any announcements were due, and avoid spread betting immediately prior and after them. The corporate announcements have an ability to cause large swings in the price. Apart from that, if you can identify a trend, and by using technical analysis work out if it is sustainable, you may be able to score good profits from betting on this company.

Normal advice is to consider the way that the share has moved over the last few months, but given the unusual nature of the price movements there is probably little to be gained from considering more than a week or two. Above all, set a realistic stop loss level and make sure that you adhere to it.

Spread Betting on the Thomas Cook Group

If you wish to spread bet on the Thomas Cook Group, then it is best if you have some time to spare so that you can keep a keen eye on the market. The company has been volatile in its trading in recent months, and even a regular stop loss might not have helped you avoid big losses recently. The recent price quote for a daily rolling bet was 13.466 – 13.534, that is shares can be bought for between 13 and 14 pence.

If you think you have identified an uptrend, and want to take a long bet on TCG, then it will go on at 13.534. Say that you bet £150 per point. Perhaps the price will go up to 15.853 – 15.921, and you will close the bet to collect your winnings.

• Your long bet was placed at 13.534
• Your bet was closed at 15.853
• The difference is 15.853-13.534, which is 2.319
• You gained 2.319 points
• Your bet was £150 per point
• Therefore your total winnings are £347.85

If the price goes down instead of up, then you must act quickly to close your bet and minimize your losses. Say it drops to 13.253 – 13.321.

• Your long bet was placed at 13.534
• Your bet was closed at 13.253
• The difference is 13.534 less 13.253, which is 0.281
• That means you lost 0.281 points
• Your bet was £150 per point
• Therefore your total loss is £42.15

You can also place a futures style spread bet on the Thomas Cook Group. The spread betting quote for 6 months away is 13.522 – 13.685. As you probably know, the larger spread, or difference between the buying and selling prices, is because you can hold this spread bet open until the expiry with no further costs, whereas a daily rolling bet may have small interest charges each evening, when it is rolled over to the next day. Perhaps you think that the price will go down, and you place a short bet at 13.522 for £250 per point.

If you are right, the price might go down to 11.233 – 11.396, and you could close the bet to take your profit. This time the bet opened at 13.522, and it closed at 11.396, which means the difference is 2.126 points. This means for your chosen stake of £250 per point, you have won £531.50.

Even though you have futures style bet which you can hold for several months, you can close it at any time and you may need to do that if the price goes against you. Say the price went up to 13.763 – 13.923, and you decided to cut your losses and close the trade.

Your short bet was placed at 13.522, and you closed it at 13.923. That’s a difference of 0.401. Your bet was for £250 per point, so you lost 0.401 times £250, which works out to £100.25. Even though the price only went up a small distance, because of the large spread between the buying and selling prices losing is not cheap.

Premier Foods is one of the largest food manufacturers in Britain. It owns many famous names that have been bought by British consumers for generations, most notably brands like Hovis, Typhoo, Birds Custard, Branston Pickle, Bisto Gravy, and too many more to list. But things have not been easy in the last few years, and at some times it seems like Premier Foods has been struggling to exist.

Of course the food industry suffers when consumers have less to spend, and only staples are being bought. Unlike other industries, at least a certain minimum must be purchased, but given the impermanence of food, the amount of supply must be carefully metered to avoid too much spoilage.

Premier Foods has been trying to bring down its debt by selling off parts of its operation. The global economic crisis occurred at the wrong time, making its earlier aggressive takeover policy a liability. The analysts at BNP Paribas, the French bank, even gave a negative value to its shares in 2011, while admitting that this was really just an “academic concept”.

The company started in the mid-70s, when it was called Hillsdown, and it expanded by acquisition. It bought the food business of Beechams, Typhoo, and Cadbury’s. After it had acquired some parts of Nestles, it was listed on the Stock Exchange and bought parts of Ambrosia and Kraft Foods. It subsequently sold Typhoo, but bought Oxo, Fray Bentos, Batchelor’s, and the UK rights to Campbell soups which it had to describe as “formerly Campbell’s” as it did not buy the branding.

All these purchases meant that it was burdened with debt when tough economic times happened. It has been re-inventing itself, and divesting some of the businesses in an effort which seems to be having some effect.

The charts show how even a supposedly safer market sector such as food can have its ups-and-downs. Investors have seen the stock price slashed in recent years, and the negative valuation of BNP was based on standard accounting practices.

The share prices seem to be driven more by internally generated factors, rather than universal market criteria, and are therefore more difficult to anticipate, unless you have an inside line into when the announcements are going to be made. This makes trading on the stock price more problematic, but the safer option is probably to wait until after an announcement sets the price running on an up or down trend, and then to bet on the trend continuing. This follows the standard technical analysis idea that a trend will continue unless the price is acted upon by another force, a sort of variation on Newton’s laws of motion.

Provided Premier Foods avoids bankruptcy, then it should become more predictable and evenly priced in the future. The opportunities to exploit large price swings are there right now, but unless you are an experienced spread better you need to proceed with extreme caution and not overextend your account. Whenever you place a bet, you should know what the downside can be, and at what point you are going to close the bet and accept your losses, if it goes against you.

Spread Betting on Premier Foods

Premier Foods is a major food manufacturer in the UK, which is involved with very many markets and many household names. It has had some financial troubles, and should be traded cautiously. The current price for a rolling daily bet is 11.721 – 11.779. If you think that the current upward trend will continue, you might want to place a buy bet for £40 per point.

Your long or buy spread bet would go on at the higher of the two quoted prices, is 11.779. The price can easily change three points in a week, so say it went up to 14.632 – 14.690, at which point you decided to close your bet and collect your winnings. You can easily work out how much you won from the point gain and the stake.

Your bet started at 11.779, and when it closed the selling price was 14.632. That means you gained 14.632-11.779 points, which is 2.853 points. If you multiply that by the stake of £40 per point, you find you have won a total of £114.12.

If instead the price had gone against you, and gone down, then it would have reached a level at which you needed to close the bet and accept your loss. Say you did this when it went down to 10.234 – 10.292.

As before, your bet started at 11.779, and you closed the bet by selling at 10.234. The difference between these two prices is 1.545. Your stake was £40 per point, which means you lost 1.545 times £40, or £61.80.

The difference between the two prices, the buying and selling prices, is about 0.060 points on this rolling daily bet, and you may be charged interest each night that the bet is rolled over. As an alternative, you could take out a futures style bet which you can hold without any interest charges right up to the expiry date, months away. The current price for seven months away is 11.767 – 11.910, a spread of 0.143, so you have to make up more ground before the bet gets into profit. Even though it is a futures style bet, you are at liberty to close it any time you want to, and you don’t have to wait for the due date.

So assume that you take a long bet at £65 per point as you believe the price will rise over the next few months. If you are correct, perhaps you will cash it in when the price is quoted at 16.230 – 16.362. Your buy bet was placed at 11.910, and was closed at 16.230, which means you gained 4.32 points. Multiplying this by your stake, you have won £280.80.

The chief problem with a futures style bet is that you have a larger built in loss in the spread, if the price goes the wrong way. In other words you cannot let the price go much further down before you close for a loss. If it went down to say 11.239 – 11.363, and you closed to cut your loss, you would lose 11.910-11.239, which is 0.671. Multiplied by your stake, you have lost £43.61.

You may be forgiven for not knowing much about Afren, if you have not kept up with current events. The company is young, only founded in late 2004, and though it is listed on the London Stock Exchange, its operations are mainly in Africa. It is in the highly volatile oil and gas exploration business, and has the stated aim of becoming the largest African oil exploration and production company.

It plans to accomplish this by partnering with the native companies and governments, and also has ambitious plans to access substantial gas resources that are thought to be in the Gulf of Guinea. While Africa is the focus, with assets in Nigeria, Ghana, Côte d’Ivoire, South Africa, Kenya, and others, the company is also looking at the Middle East as a future source. It has the expertise to explore, evaluate, and develop through to production the energy sources that it finds.

It is interesting to note the politics that is playing out in connection with this company. Osman Shahenshah is a cofounder of the company, and he believes that Africa represents a safer option for oil and gas companies than even Britain. He points to various tax changes for the North Sea exploration, and that Africa has no similar arbitrary expropriations. In addition, he regards the banking issues in Europe as evidence of further troubling events.

Nigeria is cited as the major cash generator at the moment, with more than $1 billion of revenues in the last year. But Kurdistan represents a greater resource reserve for the future. The only downside so far is that some African workers have been taken hostage, though subsequently released. It seems this came from nationalistic demonstrations.

It must be said that the oil and gas industry stands in good stead for having large profits, despite any green opposition to the continued and increased use of fossil fuels. The problem as far as investment is concerned is that the industry runs on a “feast or famine” basis, at least when dealing with the earlier stages such as exploration. If there are no finds, then stocks are valued down because of the immense cost of exploration; but when oil or gas is struck, it is easy for stock valuations to rise dramatically, in line with the anticipated size of reservoir.

By taking a spread betting approach to oil and gas, you can be well placed to profit from the large moves that are commonly seen, while not sacrificing your capital in the event of unexciting results. It has been said many times, but needs emphasis, that the spread trader can just as easily take large profits from a down market as an up market.

The other point that needs emphasis is that you need to have a trading strategy which protects your capital, and allows you to close trades quickly when they go against you, while not limiting the better chances and taking you out of the bet before it shows its worth. For this you need to form and test your trading plan on the particular security, and make sure that you set suitable parameters for any indicators that you are using.

Spread Betting on Afren

Afren is in the oil and gas business, and this typically means that the share prices will be volatile. As Afren also develops resources as well as exploring for them, there is some moderation of the volatility, but you can expect to be kept on your toes by this stock. The current spread betting quote for the rolling daily bet is 131.17 – 131.83.

Considering first the case when you think that the price of the shares will rise in the next few days, you might want to place a long or buy bet for £20 per point. You should be careful not to over extend yourself, and watch for the price going the wrong way. Say all goes as planned, and the price goes up to 140.50 – 141.17. You can close the bet and this is how you would work out how much you won: –

• you opened your long or buy bet at a price of 131.83
• and closed it at the selling price of 140.50
• which means you have made 140.50 less 131.83 points
• or 8.67 points.
• You bet a total of £20 per point
• so multiplying 8.67x£20, you have won a total of £173.40 on this bet.

If the price had instead come down, you would have closed the trade for a loss. Say the price went down to 129.83 – 130.50 and you cut your losses.

• As before, you opened your long bet at 131.83.
• This time, you sold it at 129.83
• giving you a loss of 2.0 points.
• With a stake of £20 per point, you would have lost £40.

Perhaps at the beginning you took a bearish view on this company, and instead of placing a long bet you decided to bet £35 per point on a short or sell bet, which would be placed at the lower price of 131.17. If it works out, the price might go down to 123.21 – 123.88, and you can count your profit: –

• your short bet opened at 131.17,
• and closed at a price of 123.88.
• You won 131.17-123.88 points, which is 7.29 points.
• For your chosen stake of £35 per point, you have won £255.15.

Once again, the bet might have gone in the wrong direction, in this case upward, and you would be forced to make a decision to close the bet and cut your losses. Suppose you did this when it reached 132.75 – 133.38. You go through the same process to work out how much you lost: –

• Your short bet opened at 131.17,
• and closed at the buying price of 133.38.
• This means you lost 133.38 less 131.17 points.
• A total loss of 2.21 points.
• That means you lost £77.35.

One of the secrets to being profitable at spread betting, or indeed with any sort of financial trading, is to keep your losses small by quitting a position as soon as it is obvious it’s not working out.

Small caps is the market terminology which refers to smaller companies. While a lot of the attention and the headlines go to the largest companies which make up the FTSE 100 and FTSE 250, the small cap part of the market can frequently be the most successful for traders. FTSE small cap shares are defined as those which are not in the first 350, the main indices, but still listed in the All-Share index. This runs to around 271 companies with market values ranging from £390 million all the way down to less than £20 million. Cap refers to market capitalisation, which is the value of an enterprise when you multiply its number of shares by the present share price.

The next level down is covered by the FTSE Fledgling index, which is made up of about 220 shares. These range from £88 million to less than £1 million in value. As we already noted there are about 271 companies making up the FTSE Small Cap index list, and often an economic recovery is led by the small companies first. Certainly you cannot expect both the large and small companies to grow in tandem. This is for the obvious reasons that there is much more momentum involved with large companies, which find it difficult to change direction quickly in response to economic events.

As with the blue chip (larger) companies, these small companies also have an index that measures performance. You can expect that the spread on the Small Cap Index will be larger than on the FTSE 100 Index to reflect the volatility, but the spreads on indices in general are better than on individual stocks, and the figures are going to be fairly consistent across all brokers, leaving you free to concentrate on whether you think the market is going up or down. In fact, once you get down to the small cap level you may find it hard to spread bet on the individual stocks, due to their volatility. There can also be liquidity problems that would require your bookmaker to increase the spread to cover eventualities.

The other problem with trading small caps individually is that they can be thinly traded, and because of this the customary tools of technical analysis become less effective. If you are attracted by the volatility and scope for large moves that the small cap market can offer, then you are best trading the index, at least at first, before looking for individual stocks. Sometimes you will see the FTSE 100 showing signs of a recovery, but with little movement in the small cap and AIM markets. This is an indication that the market is not healthy, and that the apparent recovery may falter.

If you choose to spread bet on the stocks, then you should watch particularly for stocks making a new high, as this is more significant with small caps than with majors. Majors can make new highs because of the general market mood, but a small cap will usually have a good reason to go up. Because of the volatility, you also need to take a view on where you set your stop loss. You need to give the stock room to move to avoid being stopped out merely on the noise of the market.

A good way to set your stops is by referring to the previous action, rather than setting a percentage or set distance. The way the price moved previously will give you support and resistance levels, and if you set your stop just outside these you will be more in tune with the expected moves.

Premier Foods Spread Betting | Trade Premier Foods
Thomas Cook Spread Betting | Trading Thomas Cook

>> Trading European Shares

The FTSE 250 is a very interesting selection of shares for the spread better. Unlike its bigger brother, the FTSE 100, it contains mid-cap companies, many of which are nonetheless still household names. The FTSE 250 represents about 15% of the UK market capitalization. The largest 100 companies, in the FTSE 100, cover 80% of the UK market. However, with 250 companies to choose from, from the 101st to the 350th in the country, there is a wide range of sectors and volatility for the active trader in the FTSE 250.

Because they are more volatile than the top 100, these companies are appealing to traders with some investment experience who want the possibility of stable but fast-growing picks. It doesn’t matter much to the spread better that the dividends tend to be smaller with this range of companies. The FTSE 250 has greater potential capital growth and consequently rewards for the trader.

It is somewhat harder to profit from the day-to-day fluctuations of the FTSE 250 index in the same way as the FTSE 100, but for beginners FTSE 250 stocks offer a practical starting point. In particular FTSE 250 share trades work better with longer term plays over 3 or 4 months. If spread traders employ quarterly contracts, all the costs of the bet will be reflected in the spread which makes it possible to run positions like a shares portfolio, provided stop loss orders are appropriately linked to these trades to to offset the downside risk. A spread betting investor with a position on Rightmove from 2009 could have profited from the action by riding its steady uptrend from 160p all the way up to 1,011p. Moreover, leveraged spread betting positions would have resulted in a better return than owning the underlying shares.

In 2009 the best performer in the FTSE 250 was Ferrexpo, up 520% and beating any returns in the FTSE 100. On average the FTSE 250 was up 42%, whereas the FTSE 100 index could only achieve 22%. Despite the fact that the FTSE 250 doesn’t include the top companies, there are many that are familiar on the High Street, such as Bovis Homes, Britvic, Daily Mail, Dominos Pizza, Easyjet, Ladbrokes, Mothercare and others.

One company that has been doing well should be familiar to the spread better. It’s IG Group which provides trading services for both spread betting, CFDs and Forex. In recent years it has expanded into mainland Europe, Singapore, and the United States, and these growth areas are now contributing nearly half of its revenues.

Another company which can be expected to continue growing in the current economic climate is JD Wetherspoon, which is now the biggest pub chain in the UK. It has an active expansion program, opening 39 new locations in 2009 and expecting to open another 40 in 2010. The shares were up 38% in the past year.

A third company which has been doing well because of the downturn is the UK-based staffing business SThree, whose shares more than doubled in value in the last year. It’s aggressively growing into Europe and expanding from its traditional IT sector involvement to cover the engineering, accountancy, HR and financial topics.

As you can see, the FTSE 250 has some excellent prospects for profit, despite the current state of the economy. The companies are still large enough that you will have heard of many of them, and researching into their profitability will be easy; but being outside the top 100 capitalized companies means that they are not so stuck in their ways, and are able to perform better than their larger peers. FTSE 250 stocks are not as risky as small-cap companies and easier to deal in than AIM companies but still offer good scope for profit from spread betting. Small caps companies on the other hand can be harder to spread trade due to their spreads, increased volatility and illiquidity.

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>> Trading AIM Shares

Blinkx is a £90 million cap listed on London’s Alternative Investment Market, AIM and is one of the more popular AIM trading stocks amongst spread betters.

Blinkx is a go-ahead technology play, specializing in software that ‘understands’ internet based video by using advanced speech, text and pattern recognition as opposed to traditional search technology which relies on keywords. The goal of this is to categorize online video based on its content, which leads to countless uses with the recent upsurge in video popularity – for instance, it can be used to target advertising based on the content. To-date Blinks has index over 35 million hours of media allowing vievers to search and access the video content on demand.

Blinkx started as a video search engine, part of the Autonomy Corporation, but was spun off into a separate company in 2007, and trades on the AIM. Dr Michael Lynch, the founder and Chief Executive of Autonomy, is a non-executive Director of Blinkx, and has recently sold some of his shares in Blinkx for nearly half-a-million pounds. In case you think this means that Blinkx must have peaked, you should know that this was only 3% of his personal shareholding in the company, and he still owns 7.5% of the company. Insider trading is generally not significant if it is only selling, as shareholders can sell shares for a multitude of reasons not necessarily connected with the company’s performance.

Blinkx has had a shaky start after the launch, when it was felt it would be a rival to Google video and YouTube, and has only just been able to declare a modest profit. Further losses on the same scale would have seen the company out of funds in a little over a year, but the turnaround, however modest, has fired up the market’s enthusiasm and the shares are about 60p, after a rise from 13p in May 2010. In fact in the last year the price has varied from less than 12p to more than 75p. When you consider that the IPO was at 45p per share in May 2007, you can see that there has been a bumpy ride.

On 15th October 2010 Blinkx proceeded to place 23.2 million new shares (representing 7% of the company), which placing raised capital of £19.5 million which management stated will serve to support the growth strategy.

So is BLNX a good bet?

So is BLNX a good bet? Henry, a technical chartist tried his hand at analysing it.

I tried a random search of Rotork on You Tube and Blinkx. I got 43 results on You Tube and 4 on Blinkx. The picture quality was much better on Blinkx and the advertising was more in your face. Blinkx has some good financial videos from Cantos. I reckoned its possible they could get the advertising growth they’re looking for. On current forecasts for 2011 they look to be on target. What doesn’t look quite right is 2012 forecast. The profit forecast out performs the EPS and revenues. I can see how profits can outperform revenues if cost base remains static as advertising increases but I can’t see how at the same time EPS would only rise at half the rate as profit. They had 50% revenue growth, 100% EPS growth and 200% profit growth. IF they did manage to achieve that the 2012 eps x 30-40 might be in order to give a potential share price of 110p-140p so there is a lot of potential IF they make 4x expected current half year profit. In any event it looks like it’s a stock that will make big moves as we saw with 11% yesterday and already pulling back 2.5% today. My conclusion is that it’s worth trading both long and short on technical analysis of something like a 5ema x 10ema. Its currently showing a short trade so I’ll be inclined to wait for a long crossover and hope for another leg up.

Spread Betting Blinkx

Now if you want to spread bet on Blinkx, this is exactly the sort of information you want to hear, as high volatility leads to greater profits. The question is how to anticipate the next moves. You should consider the price earnings ratio, and how that compares to similar companies, and must keep in mind that the performance of Internet based companies is notoriously difficult to predict.

Factors that work in Blinkx favour include that it is planning and has successfully tested a new service called ‘Cheep’, which is supposed to be able to tell when a transaction online is about to take place, and provide a more competitive price. Another plus for Blinkx is that Michael Lynch is a BBC board member, and thus can be expected to know about potential BBC spending. It appears that this may already have worked in favour of Autonomy and Blinkx, as these two companies were selected for the Democracy Live project which was launched by the BBC in November 2009. Democracy Live provides live video feeds of parliament and other assemblies, and uses the technology to match the video to the written records with a search function. Blinkx’s CEO and founder Suranga Chandratillake has noted that video advertising is one of the fastest-growing mediums online and he expects to further accelerate the growth of Blinkx’s business.

Do you want something more exciting in your trading? Have you considered trading AIM and small cap shares? These types of equities are the most volatile, and this equates to huge potential profits, but with a large downside risk.

AIM stands for alternative investment market, and that’s just what you get in this area of the financial world. These are the companies that are small and fast growing, and this market is optimistically called a ‘nursery for business’. With light regulation and low fees, many firms that would not qualify for the conventional route have joined this market and investors have been enticed by the prospect of rapid and large gains.

The AIM market remains the main focus for many retail traders and investors. The volatility offered by the shares and the potential returns of many of their business plans remain fertile ground for investors who have carried out thorough research. The mere fact that many of these companies are off the radar of the analysts covering the major stocks presents opportunities for those prepared to do their homework. There are also tax advantages for investors putting in money for the long-term.

Against these advantages, you must be careful in selecting which companies to trade. The lack of regulation has attracted many foreign groups who want to raise money and were not qualified for listing in their home countries. There have been some dramatic crashes and questionable quality of some of the firms. The leverage which permits you to have an exposure to a stock or share by say, placing 25 or 30 % of its value make this a sophisticated and valuable tool but clearly leverage needs to be handled with care.

The key to this market is to be careful with your stock picking. The average returns have not been spectacular, mainly for the reason that for every company that makes it big, there are other companies that are dramatic failures.

If you’re prepared to do your homework, certainly there are some gems in the small-cap market. The issues that you need to look at include the difficulty in checking up on many of the companies. Some appoint public relations firms to raise their profile, but others don’t afford themselves that luxury. It’s certainly a different challenge from trading in large blue-chip stocks, where there is an overload of information.

With some small cap companies they can also be the question of liquidity in the market. Whenever you want to buy or sell shares, you rely on liquidity in order to achieve a fair price, and if there is little trading going on you may have to pay over the odds, or when selling accept what you can get. Many investors in small companies have taken an initial position and have no intention of selling. In particular, AIM shares can move rapidly on good or bad news and because of their very limited liquidity sometimes it is difficult to close a trade near to the prevailing market price if the position is held in any significant size.

The third issue with this market is the uncertain prospects that many of these companies have. They are difficult to trade because, generally speaking, investors take positions and are prepared to hang on through wild fluctuations for the potential reward of being in at the start of another large conglomerate. Traders don’t find this a friendly environment. Couple this with the fact that the tax incentives are designed to encourage long-term investing, and short-term trading on the AIM market can be described as challenging.

If trading in bigger sizes or trying to deal in a small cap share with a wide bid-offer spread it can be worth the extra effort to contact your broker’s dealing desk as they may well be able to negotiate a better deal on your behalf. When dealing in AIM stocks it is also good practice to always ask for a price and size without stating whether you are a buyer or seller. Note that I don’t personally recommend relying too much on technical analysis for smaller (particularly AIM) companies during a bear market and even in a bull market TA can throw you, with minnows.

The traditional approach of investing is to learn about a company, check the accounts, assess the management and think through the potential market, and then get into it for the long term if all looks acceptable. But today it seems the greatest force in the AIM market is sentiment and herd instinct in the short term so you really need to be ready to wait-it-out. Sadly AIM is high risk and especially in a bear market and if the FTSE were to hit 4000ish within 18 months, you can only imagine how that will affect some AIM firms let alone the larger ones.

With spread betting on AIM shares there are two things that should be avoided, entering stops and running out of margin so that you are forced to close out. Spread betting companies encourage stops as you can take more or bigger bets using the same capital but that is precisely the behavior that loses money for the punter. In fact buying stops in these situations just encourages buying high and selling low. I’ve become quite good at buying low but still have difficulty in selling high

Having said that, if you’re up to the challenge and prepared to do your research, there is no doubt that these companies represent the most dramatically swinging values, which to the trader means potential profit. High potential returns are usually found with high risk prospects, and AIM shares comply with this concept.

Trading AIM Shares: Company Analysis and Examples

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>> Trading FTSE Small Cap Shares