Spread Bet the FTSE 100 as European Shares Fall Over Spanish Concerns

LONDON, May 21, 2012 /PRNewswire/ --

In early trading Friday morning, Spain's main share index fell over 2% and London's by as much as 1% as concerns over Greece and Spain heightened.

Investors spread betting shares with City Index would have been keeping a close eye on the European markets as investor confidence waned and opened up potential opportunities to profit from the falling share prices.

The Ripple Affect: Out of Europe and Into Asia

The negative effect of uncertainty in Greece and Spain has not been localised to just Europe, however; on Friday morning last week, a ripple effect saw Asian markets such as Tokyo's Nikkei average fall 3% - the biggest fall in a single day since August 2011.

The Asian markets took another hit following losses in New York where the Dow Jones closed 1% lower after investors were discouraged by two weak reports on the US economy the previous day [Thursday 18 May].

Spanish Banks Come Under Threat

Rating agency Moody's cut the credit rating of sixteen Spanish banks late on Thursday last week, citing the country's fall back into recession and bad loans in the property industry as two of several reasons for the downgrade.

Whilst they did recognise the progress made by the banks in improving their financial situation, investors were still left shaken; seeing them move their money into low-risk German bonds.

Profit from In a Falling Market by Spread Betting

With financial spread betting, you can potentially profit from the falling share price of over 12,000 financial instruments with City Index.

The act of spread betting itself is to take a position on the future share price of the underlying market.

For example, if you wanted to spread bet the FTSE 100, you could do so through the City Index trading platform, where you would take a position on their UK 100 DFT (daily funded trade) - which represents the underlying instrument.

Where you believe the FTSE 100 index will fall; you would choose to go short and sell. For every point the market moves in your favour, you would net a tax-free* profit.

However, if the market moves against your position, you would net a loss.

It is imperative that prior to placing a trade, you fully understand the risks of spread betting and have in place a comprehensive trading strategy.

Why Spread Bet with City Index

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting with City Index.

We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.

Free Spread Betting Articles

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*Spread betting is exempt from UK stamp duty and Capital Gains Tax. However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.

SOURCE City Index