Spread Betting: Trading AUD/CHF
One of the lesser spread traded Forex currency pairs is the Australian dollar against the Swiss franc. Both economies have their unique features, and this is an appealing currency combination on which to spread bet. Australia has been through many changes in its comparatively young life, whereas Switzerland is regarded as especially stable and long-lasting.
Australia, along with New Zealand, is uniquely positioned to profit from the Asian markets, and in recent years has exploited this region more in its trading. It is named as the fastest growing advanced economy in the world, and Australians rank as some of the richest people in the world. In comparison to the population, Australia is a large country and it is rich in resources. However, the one thing it doesn’t have is much crude oil, and it imports about 80% of its requirements.
Australia’s major exports include its agricultural products, such as wool and wheat, which is understandable in view of the amount of land that is available. Although it does not have much oil, it has a good supply of natural gas which is liquefied and sent abroad, along with coal. But perhaps the most well-known export is in mining, extracting iron ore, gold, and other materials. Its mining focus is evidenced by the fact that the major mining companies BHP Billington and the Rio Tinto group are headquartered in Australia.
Overall, Australia has been growing steadily for years, and was somewhat disconnected from the global economic crisis of 2008, even though it inevitably affected its trade. Despite healthy signs, it still runs a modest trade deficit. Unemployment is not large, and the Reserve Bank of Australia which sets the country’s lending rate has not interfered much in the economy.
Switzerland has long been viewed as a very stable economic shelter for offshore funds, and anyone with knowledge of the Swiss would realize that they are indeed a stable if not staid race. They are perfectionists in all they do, and have rightfully gained a reputation for quality of manufacture. Swiss neutrality has aided the country in maintaining a stable economy, and its location, landlocked in the middle of Europe, has meant that it has had to trade extensively with neighbouring countries.
At present, the main downside to the economy is the fact that it depends on extensive trade with Europe, and Europe is going through economic difficulties. With a mere 0.1% of the world’s population, Switzerland ranks amongst the top 20 countries for exports. While the European economic crisis may not touch its banking operations as much as it affects manufacture, inevitably, Switzerland is being affected by world conditions.
Is also worth noting that Switzerland is vigorously involved in manipulating interest rates to maintain its import and export balance. Its present policy is to adjust interest to try and maintain an exchange rate with the euro of 1.20.
These two very different countries provide an interesting backdrop for foreign currency exchange. If you want to spread bet on the AUD/CHF, you need to study the charts for a few weeks to get a feel for the way the currency moves, then apply technical analysis to time your trades.
Spread Betting on the AUD/CHF
The Australian dollar and Swiss franc currency pairing can be volatile, and should be traded with care. While the Swiss keep tight control on their currency, this is with respect to the euro, thus the Australian dollar is free to find its own level. With Europe under financial strain, and Australia less affected by world conditions, this causes an inevitable imbalance. The current price for spread betting on the AUD/CHF is 9811.4 – 9817.4.
AUD/CHF Spread Betting Example
If you believe that the Australian dollar will continue to strengthen in relation to the Swiss franc, then you might place a long spread bet on this pair, betting £3.50 per point. If the price rises to 10,024.2 – 10,030.2, then you could close the bet and take your winnings. It is simple to work out how much you have won: –
- Your long spreadbet was placed at the buying price of 9817.4
- The bet closed at the selling price of 10,024.2
- You have gained 10,024.2-9817.4 points
- This is 206.8 points
- Your stake was £3.50 per point
- You have won a total of £723.80
if your forex spreadbet hadn’t worked out, you might have had to close it for a loss. Say the price dropped to 9786.2 – 9792.2 and you decided that it was not going to succeed and closed the bet. Figuring out how much you lost is just as simple as the win calculation above: –
- Your long bet was placed at the buying price of 9817.4
- The bet closed at the selling price of 9786.2
- You have lost 9817.4-9786.2 points
- That is 31.2 points
- Your stake was £3.50 per point
- You have lost a total of £109.20
Alternatively, you might have decided that the Swiss franc was the better bet compared to the Australian dollar, and wanted to place a long bet on that. Because of the order of the currency pairing, this is the same as a short bet on the AUD/CHF. You staked £2.80 per point that the Australian dollar would go down.
If this bet was successful, you might close it when the spread betting quote went to 9605.2 – 9611.2. Once again, you can work out how much you won: –
- You placed a short spreadbet at 9811.4
- Your bet closed at 9611.2
- You won 9811.4 less 9611.2
- Therefore you won 200.2 points
- Your stake was £2.80 per point
- You won 200.2 times £2.80
- This works out to £560.56
Always when you take part in financial trading and forex spread betting, you should be ready for an individual bet not to work in your favour. Perhaps after you placed a short bet, the price went up and you decided that you need to close it quickly to minimize your loss. Say the price went to 9836.5 – 9842.5, and you closed your forex trade.
- You placed a short bet at 9811.4
- Your bet closed at 9842.5
- You lost 9842.5 less 9811.4
- Therefore you lost 31.1 points
- Your stake was £2.80 per point
- You lost 31.1 times £2.80
- This works out to a total loss of £87.08
Join the discussion