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It is a truth universally acknowledged that a man (or woman) wanting to be in possession of a good fortune needs the services of a reliable spread betting brokerage company. Yes, I’m paraphrasing Pride and Prejudice but with the current state of the Sterling, savings rates at their lowest since 1960, the continuing volatility of the stock market, “hard Brexit” seeming to be the preferred government option and to top it all the possibility (albeit increasingly remote) of a Trump presidency choosing profitable forms of investment has become like Harry Potter chasing the golden snitch.
How low can it go?
The pound, since that June day has plummeted to its lowest exchange rate with the US dollar since February 1985 when it bottomed out at $1.05. The current predictions by spread betting companies such as CMC Markets is that Sterling won’t stabilize during the remainder of 2016. Mark Carney, governor of the Bank of England, however, continues to be perceived as a safe pair of hands who when he speaks inspires confidence in the pound.
The annual average saving rate is the lowest it has been in the last fifty years and with such a fragile economy the Bank of England may hold off raising interest rates for longer than planned. Employing a wait and see policy there is a chance that if there is no sign of stabilization then interest rates may indeed be lowered.
Stock Market Volatility
The continued uncertainty is placing some pressure on the UK’s top companies resulting in a stock market which although strong in comparison to the currency is still not in the best of places.
It was sometimes thought that although the UK had voted to leave the European Union it would still want to keep its place in the single market accepting a degree of free movement in exchange for this concession. As time has gone on and positions have become more entrenched this degree of rapprochement is looking exceedingly unlikely. The “hard brexiteers” seem happy to forego the benefits of the single market in exchange for maintaining the sacrosanctness of the UK borders.
Brexit would be a ripple in the pool compared to the hurricane which could hit the financial markets if Donald Trump was elected to the White House. Where Hillary Clinton could be regarded as a safe pair of hands the loose cannon which is Trump could throw everything to the four winds.
Why spread betting?
What is the difference between spread betting and the more conventional trading? When a conventional trader buys shares, currencies or any other type of asset they are speculating that the price will rise enabling them to sell at a profit. A spread better trader recognizes that they have the potential to profit from both rising (going long) and falling (shorting) prices as long as they correctly predict which it will be, providing many more opportunities for trading. For instance, a company such as Talk Talk is about to publish their annual report and the spread better trader considered opinion is that the information contained in the report will be detrimental to the share price. They can place a trade based on their opinion and have the added advantage that spread betting is tax free. The degree of accuracy in the prediction determines the potential profit or loss.
A further advantage is that since spread betting is a leveraged product it can allow the spread better trader to make a deposit of as little as 1 to 10% of the total trade value. It should be remembered however that while this does allow for any potential profits to be much higher than those gained by more conventional methods of trading the same holds true for any losses incurred. The importance of choosing a reliable spread betting broker or company which adheres to a regulatory authority and with a competitive range of commodities therefore cannot be over emphasized.