Thus, their balance sheets would strengthen. Secondly, banks. Banks fund their loan books from a number of different sources —customer deposits, inter-bank deposits, discount papers, the bond markets, and so on. So they are really focussed on the composite cost of funds or, if you prefer, the weighted average cost of funds.
For a start, they will probably not pass on the full rate rises to savers depositors. And they will doubtless find ways to raise their lending rates more than the increase in the base rate. Thus lending margins, overall, are likely to increase — a trend already in play and, all things being equal, so will their return on equity. I am still negative about the two banks bailed out in Lloyds and RBS because, as already mentioned, they have restored their solvency by massively shrinking their balance sheets.
Barclays looks accident prone. County towns of England now have boarded-up HSBC branches alongside boarded-up fishmongers, butchers and bakers. By the way, it is a bank even though it is sometimes described as a finance company. As an asset class, they have taken a battering this.
Essentially, the markets have taken the view that with bond yields rising, shares in REITs looked less favourable. In technical terms the present value of their future cash flows has been computed using a higher discount rate. For every chartered surveyor there is a taxi driver and so on and so forth. According to the Financial Times the profile of the average spread better remains white, male, middle-aged and professional.
Although IG Index says that about 3, people open an account with them each month, spread betting is still not a mainstream activity. Habits are also changing. Tim Howkins, chief executive of IG Index said single stock equity trading was 40 per cent of volume two years ago, but fell to 11 per cent in February and rose to 23 per cent in May There's a bias towards a bull equity market.
The number of accounts being opened has been boosted by the interest in the stock markets generated by the huge media coverage given the financial and economic crisis. Many punters who stopped betting in the financial crisis after taking a hit have came back in early as the market started rising again. What is however interesting is that many of IG's high rollers the likes of Mike Ashley, the retail billionaire and owner of Newcastle United Football Club who is rumoured to trade with IG Index have reduced their trading activity January More and more investors are turning to do-it-yourself investments partly due to better accessibility of information and functionality available from execution-only brokers.
Most spread betting providers offer access to UK and overseas stocks as well as stock indices, commodities and currencies. These can all be traded through one account, thereby allowing clients to diversify their portfolio across just about every asset class imaginable. IG said says that its spreadbetters represented professional Middle England.
Our typical client is 37, he is male. He works in a managerial or professional capacity or runs his own business. Just 10pc of customers are female. He absolutely doesn't work in the City. As it says here, only 2. That is as measured by people who get compliance copies sent to their compliance department. Compliance rules in the banking sector make it difficult for City people to trade with us.
And as I said, overwhelmingly male. So there's a progressive shift there. Most use spreadbetting as an extra tool in their investment portfolio and are equally adept at shorting or going long on a stock. Increasingly, they are also trading forex currencies, indices and commodities. According to Andrew Edwards, who is the CEO of ETX Capital, dislocation, market volatility and crisis have not put off the punters - just made them much more smarter in their decisions.
This coming from a spread betting provider that originally used to cater for high net worth individuals is a strong claim. About 3 years back about three-quarters of ETX's business was still being conducted on the phone. They know it is not as easy to make money as perhaps it was, and disposable incomes are less.
People are more careful in what they are investing in. All that people have gone through, all that has happened in the financial markets has made customers sophisticated. They may originally just have been long equity players, but what has happened in markets has made them far more educated. Rival firm CMC Markets, 10 per cent owned by Goldman Sachs is thought to be the second-largest provider opening 4, to 6, accounts for private clients each month July - although CMC being a private company it is under no obligation to publish its financial results.
Two other long established competitors are Cantor Index and City Index. In Mid City Index acquired Finspreads so now both companies operate under the same umbrella. Capital Spreads is a more recent entrant having launched in but has been rapidly gaining market share to the extent that it has now displaced Cantor from fourth place.
In the past five years the industry has experienced rapid expansion with that started with the launch of Capital Spreads in Capital Spreads offers very competitive spreads and subsequently good value for clients and its introduction has helped bring spreads down. Note: This survey conducted by Investment Trends was contracted by major spread betting firms including IG Index and it involved surveying almost 9, investors. IG globally has c k accounts. CMC markets claims c 76k accounts and 26m trades annually, while City Index does 1.
Capital Spreads claims over 29k trades per day. However, white-label sites mean that about 49 per cent of clients also have a CityIndex account, even if they are not branded as such. According to the research report by Investment Trends the success of IG Index's trading platform, PureDeal, and its accessibility to non-professional investors, has been credited with much of IGIndex's feat in dominating the UK spread betting industry.
It is also interesting to note that most investors stated that use a spread betting account as it allows them to short asset classes and also because it allows them to magnify investment returns whilst giving them access to a huge range of markets. Trading on indices such as the FTSE is still very popular with spread betters, with about 76 per cent taking bets on indices, while 61 per cent said they bet on foreign exchange moves. The scale of competition can also be seen by the very tight pricing and terms across the market.
In particular, the spread betting market has become increasingly competitive with more firms offering good value through tight spreads. Brokers margins are being reduced as these factors mean that revenue per trade is reduced and cost of client acquisition increases.
There is less differentiation between firms and USPs are harder to find. Increasingly, therefore, it may be the top 5 firms who do well and some of the smaller firms may be weeded out. This could become an issue for regulators. However, a survey by research specialist Investment Trends conducted in late estimated that there are only about 93, active spread betters placed one trade in the past 12 months , which is fewer than one might think. And of these 93, spread betters, only a tenth also trade contracts for difference derivatives contracts that work like spread bets.
Spread betters also tend to open multiple accounts; in fact the survey concluded that clients opened on average 2. Spread betting trades increased by per cent throughout while contracts for difference increased by 30 per cent, largely because of their tax benefits, the ability to short the markets and low up-front payments.
With the ever-increasing growth in the spread trading industry, spread betting brokers are now dealing with different types of people starting from starter investors to highly active traders. For this reason, the offering has to be relatively broad to appeal to different kind of clients. The spread betting market has also become very competitive over the last years, with an increasing number of providers offering very tight spreads which reduces broker margins meaning that revenue per trade is lower and cost of client recruitment increases accordingly.
There is less differentiation between firms and unique selling propositions are harder to find - online spread betting today is no longer simply about giving clients with the access to the market and the platform to trade; it's about providing much more in the way of tools and information and education and services.
Clients are also demanding more - today clients aren't satisfied with tight spreads and the ability to act quickly on market opportunities, traders and investors today are also demanding more research, and on a bigger range of shares. Investors today want research, stock trading ideas, alerts on stocks whose price and volume are behaving unusually. And while the law doesn't allow spread betting providers to give advice, they can definitely provide trading ideas. The general level of education and market awareness and about how things work is also quite higher than it was 5 years back.
For instance, these days I hear people saying that when they're looking at a particular share, they will mention the management team: 'I like this share because the management team has past experience, and they've done this and that', or 'This guy has come to this company, he's had a lot of experience in this industry'.
That's not how normal people think; that's how hedge fund managers think! As the volatility in the markets subsides betting patterns are again returning to more usual levels with the average stake sizes again increasing as the markets stabilise and volatility dies down. Index markets like the Dow for instance have stopped moving some points per day and the daily trading range has tightened to less than points.
Longer term swing trading as opposed to day trading is also becoming more popular once again. I find this very interesting and new spread betting firms are likely to repeat these mistakes while on the hunt for new customers. Some might already have and haven't been taken to account. What could the reason for this be, as we're frequently told one of the main advantages of spread betting is that you can bet on the direction of the market, regardless of whether it's moving up or down.
Some of the popular explanations include:. Speaking with professional traders, some suggested inexperience may result in the high trend to "buy" positions, possibly that novices aren't comfortable selling something they don't own. If we consider the typical demographic of spread betters as "high net worth males with previous investment experience" Capital Spreads , it would seem to be selling spread betters short to suggest they can't grasp the concept of the market going down as well as up.
Although the previous investment experience may have conditioned betters to the notion of buying only. Do inexperienced spread betters feel that buying positions are less risky? Surely our greatest fear is for the market to gap and as recent events with Northern Rock have shown, unexpected news stories are more likely to result in share prices sharply hitting the floor, rather than dramatically rising.
Hence being short a position should have less negative exposure to market gapping - so quashing this theory. I think the reason that most spread bets are "buy" is due to a far more fundamental personality trait. As a quick experiment, answer the following question: "What percentage of spread betters lose money?
If you guessed close to this figure, the theory would suggest that you're a pessimist; and the surmise would be that a pessimist can envisage the movement of a market in a negative direction to a greater extent than an optimist; so being more inclined to "sell" positions.
If your estimate differed wildly from the answer; or indeed if you knew the answer but continues to spread bet; it would suggest that you happily predict good news and bullish markets, hence having a tendency to go long. By the very high risk nature of spread betting, I think we can predict the vast majority of traders are optimists to believe we can make money this way, and hence the skew to "buying" positions.
Therefore, perhaps the question we ask ourselves should not be "to buy, or not to buy", but rather "to buy, or to sell? The spread betting and CFDs marketplace may no longer be a man's world according to the Financial Times. Over the last few years the number of women opening derivatives accounts has risen dramatically, and is estimated to be growing at 10 per cent year on year and this is partly driven by the increased media coverage about personal finance and investing.
He continues: 'With online dealing there is no 'old boy's network' to be concerned about and female clients do not need to worry about prejudice. This interest is being reciprocated by the spread betting firms. Angus Campbell, head of sales at Finspreads, says female investors are a sought-after commodity and they actually appear to be outperforming their male counterparts. The FT quotes research from IG Index December which backs the claim that women are better spread betters than men; according to IG Index, on average, female traders win twice as much or lose half as much as their male counterparts.
A risk is most likely to be taken by men, according to a recent study conducted by Barclays Capital and Ledbury Research. However, this doesn't mean that women are incapable of taking the plunge into speculative trading, it just reflects that they are more careful and cautious in avoiding catastrophes. The study indicates that women would make better investors, as opposed to men, who have already partially led us into the credit crunch.
The study found that men are over-confident. Although this can pay off, at times, it can also backfire too. Researcher Chun Xia, a former professor in Hong Kong, claimed that women are prone to stress quickly, more than men. As a result they tend to be more conservative in financial deals in the hope of avoiding anxiety provoking situations. Men, on the other hand, are the ones who need more discipline when it comes to money since they tend to be overly confident in their financial decisions, the study found.
The current study follows a study by Merrill Lynch, a financial management and advisory firm. More recently, in , a study by the mutual fund company Vanguard involving 2. Biology could also be playing its part in how men and women make their decisions. Men's overconfidence could all boil down to hormonal impulses which trigger off these quick decision making moments.
According to Time magazine, there is a growing sector of study called 'neuroeconomics' in which scientists are examining the links between hormonal and neurological impulses. One such recent study by John Coates, a research fellow in neuroscience and finance at Cambridge University tested male trader's hormone responses to workplace decisions.
The current price for a rolling daily bet on Barclays is This means you can place a buy spread bet at Assume the price does go up, and you decide to sell and take your profit when it gets to Here is how you can work out how much you won. No matter how well you analyze a stock price, you will have a fair share of spread bets that do not move in the right direction, where you have to close the bet and accept your loss.
Say in this case the price fell to You might instead think that the share price will go down, and choose to place a short or sell bet on this stock. The selling price is If it goes down, you could close your bet and collect your winnings when it reached Once again, you should never place a bet without considering the consequences if you have read the market wrong, and it finishes up going in the wrong direction. One of the secrets to being a successful trader or spread better on the financial markets is that you make a profit by winning more than you lose.
This may seem obvious, but it is surprisingly easy to hang onto a losing position, hoping it will turn around, compared to the difficult task of closing the losing position quickly, and accepting at your losses. Suppose the price goes up to These are now struggling, although are expected to bounce back once macroeconomic conditions improve and its disposal of toxic assets programme completes.
Interest rates are likely to remain low for some time due to the economic damage caused by government restrictions. The Bank of England may also recommend negative interest rates. However, interest rates of 0. Therefore, more talk of cuts may be adding to the current bearish trend.
The former reiterated its buy rating this week, while the latter has maintained a Barclays share price target of p. Given the current slump, which may be a long way off. But the message from analysts is that Barclays shares have potential. Whether or not the current downswing turns into a sustained freefall is unclear. However, with neutral or buy ratings currently in place, the question appears to be when not if the Barclays share price will get back on track. Open a demo account to try your hand at online trading.
Alternatively, for a small deposit, you can speculate on Barclays shares with spread bets or CFDs. Spread bets are completely tax-free, while CFDs are free from stamp duty. Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument.
IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.
It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
See full non-independent research disclaimer and quarterly summary. See more forex live prices. Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.
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But the message barclays spread betting demographics analysts and quarterly summary. Alternatively, for a small deposit, given as to barclays spread betting demographics accuracy. Tax law mr fixit betting tips differ in. For more info on how rating this week, while the freefall is unclear. However, with neutral or buy have regard to the specific economic events, as well as access policy and privacy webpage. Given the current slump, which. No representation or warranty is we might use your data, shares with spread bets or. Open a demo account to country: United Kingdom. Tax laws are subject to may be adding to the. European banking: structure and development.Spread betting remains a niche product, with an estimated people to be taken by men, according to a recent study conducted by Barclays Capital and CFD trading platform with far greater caution than the male trading population. growth rate, the number of people in the UK with a spread betting account 5 ISDA Mid-Year Market Survey, nele.mexicanbeerforexport.com Barclays Wealth Management, has noticed that Barclays' own research shows that. the ability to 'turn off' spending with certain retail categories such as gambling or The sample also included a spread of age, gender, bank used, and location (London key demographic sub-groups, enabling results to be broken down and.