How to Spread Bet the Sweden 30
If you would like a change from the major indices, you might want to try spread betting with the Sweden 30, which represents the 30 largest companies traded in Stockholm on the Swedish stock market. The current spread betting quotation is 936.85 – 938.35 with IG Index.
Even though the index is based in Sweden, you can bet in pounds sterling, and make your bet for the amount per point of movement. Suppose you believe that the index will go down, you might place a bet for £6 per point, and as this is a sell bet it will be placed at the price of 936.85.
If the bet works out and the index falls, then you may want to take your profit. Say that IG Index is now quoting you 901.23 – 902.73, you can close your bet at the higher price of 902.73 and count your winnings.
The bet was placed at 936.85, and closed at 902.73. This means that the total number of points it moved was 34.12. That gives you a total profit of £204.72.
If you got it wrong, and the index goes up instead, then before too long that you should close your bet and accept that you have lost this time. Traders lose more money by hanging onto losing positions instead of closing them quickly, and you need to prevent that happening to you.
Say that you decide to close your bet when the quotation goes up to 941.67 – 943.17. Again, because it is a short bet, a bet that the index is going to fall, you must close your bet at the higher price of 943.17.
This means that the total number of points that the index has gone against you is 943.17-936.85, which is 6.32 points. You have cut your losses by exiting quickly, even though that may mean you miss a turn around in the price. You have lost £6 times 6.32 points, which works out to £37.92.
Finally, you might have decided in the beginning, when the quotation was 936.85 – 938.35, that you want to bet on the Sweden 30 going up. For a “long” bet, the bet will be placed at the higher price which is 938.35. You stake £11 per point.
If all works out, and the index goes up, then it will reach a level where you decide to take your profit. Say that this is at a price of 982.13 – 983.63, and this is where you close your bet.
Your bet is closed at 982.13, so the total number of points that you gained is 982.13-938.35, which is 43.78. As you bet £11 per point, that gives you winnings of £481.58.
Again, the index might have gone the other way, and lost value which would mean that your bet would lose. Say that it went down to 921.65 – 923.15 before you chose to close your bet for a loss.
The number of points that you have lost is 938.35-921.65, which is 16.7 points. Your bet was for £11 per point, so you lost 16.7 times £11 equals £183.70.
How to Spread Bet the Sweden 30
One of the lesser-known market indices, the Sweden 30 is based on the Stockholm stock market, and is a market value weighted index, otherwise known as a capitalization weighted index, of the top 30 companies. In this type of index, the total market value of the company is calculated from the share price and the number of outstanding shares, and the impact of that company’s price on the index is proportional to the market value.
Sweden has some large and well-known companies included in this index. Companies such as Volvo, the world’s second largest truck maker, and Sandvik which is the largest maker of metal cutting tools, are highlights of the list and known to many around the world. Those that have more than a 10% impact on the index include Ericsson which makes communication equipment, Hennes and Moritz in retail clothing, and Nordea, a banking conglomerate. Surprisingly, the “giants” Volvo and Sandvik each comprise less than 4%.
The Sweden 30 had been highly tipped for growth by 2012, having started with a 20% increase in 2010 which was the second biggest recorded gain in developed markets. However, it did not seem to live up to these hopes in 2011, when it gave back most of this increase.
The index is heavily into communications companies and manufactured goods, and because Sweden is dependent on foreign demand and exporting, the state of the world economy plays a big part on the performance of the index.
However, for spread betting it does not matter if the index is growing strongly, or failing, as this seems to be, as long as there’s strong movement in one direction or another. Because the Swedish economy is not very familiar to many commentators, this is an index that will be best bet on by concentrating on the technical aspects on the charts, and by ignoring most pundits.
If you want to spread bet on the Sweden 30, you should start by printing out and reviewing recent price charts for various time periods. This will give you a feel for what moves the market, and the speed with which the index can change. If you have a strategy in mind, it will also give you the opportunity to run through the indicators that you are familiar with and see which of them tend to work best with the Sweden 30 index.
When you are ready to start betting on the index, you would be well advised to start small and see how you get on. Some spread betting companies will place automatic stop loss orders for you, and if yours does not you should take care to make sure that you have clearly defined stop loss positions for every bet that you place. When betting on indices, you need to be particularly careful not to risk too much as they can be subject to volatility. While they will never go down to zero, such as the shares of a company could if it went bankrupt, indices are still recognized as subject to many influences and large fluctuations.
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