Greece 20 Spread Betting | FTSE/ATHEX 20 index
You may be interested in spread betting on the Greece 20, particularly since recent problems in that country’s economy have brought its financial position into prominence in the news. The index most frequently quoted for the Greek stock market in Athens is the ASE, but that is also the acronym used for the Amman Stock Exchange in Jordan which has its own index of 70 companies. Because of joint ownership by the FTSE, it is clearer to refer to the FTSE/XA 20 index, FTSE/ATHEX 20 index or simply the Greece 20. There is another FTSE/ATHEX index which is broader-based, and includes more companies.
The fortune of the Greek economy is heavily driven by intervention at the present time, thus to spread trade on it requires attention to detail and a degree of luck in anticipating announcements. The Greece 20 has plummeted to less than half its value a year ago as Greece continues to suffer financial distress.
Surprisingly, you can see that the chart of the Greece 20 is relatively stable, despite the large drop that it suffered. Future changes are most likely to hinge on the German support for the Greek economy. Eight of the 20 companies currently in the index are Greek banks, which no doubt contributed to the dramatic fall in the value.
When you are considering spread betting on any financial security, after researching the fundamentals and looking at previous charts for information the next step is to go over recent price movement using technical analysis. The chart above shows interesting formations of the Bollinger Bands, and a further development occurring at the moment. One of the indications that you can derive from Bollinger Bands, apart from them embracing 95% of the price movement, is when a breakout is likely. When the bands narrow, it effectively puts pressure on the price which often breaks out in one direction or another.
You can see this above in early August, when a narrowing of bands was followed by a steep drop in price and the bands widening again; a narrowing in September was followed by a decline, but spread betting broker IG Index did not show some of these dates; and an extreme narrowing at the turn of the year was followed by about 30% increase in price. Right now, the Bollinger Bands are narrowing and the index is running along the lower band. This suggests that it is time for another major shift in value.
A spread bet should not be entered on the basis of just one indicator, and in this case is difficult to see whether the breakout would be to the upside or downside, even though the price is pushing at the lower envelope. To place a bet you would need to look at other technical indicators such as the relative strength indicator or the MACD, which should provide a clearer picture of whether the index is oversold or overbought, and give further clues as to which way you should look for the breakout. Many traders prefer to wait for the breakout to start before placing their bets, rather than taking a chance on an indicator and perhaps inviting a larger loss.
Spread Betting on the Greece 20
With the global economic crisis and the continuing European crisis, you might think that the Greece 20 was a sure bet to short – but of course if spread betting was that easy then everyone would be millionaires. The truth is that you have to watch carefully to see what steps are taken to bail out the Greek economy, and how effective they may be, in order to assess the continuing future for Greece. If the Greek economy is in the doldrums, and no one is buying anything, then the shares making up the index will lose value.
The current spread betting quotation for the Greece 20 is 307.0 – 311.0, up slightly from its lowest point a few months ago. If you think that the index will continue to rise, then you could place a long bet for, say, £20 per point and see how you get on. Perhaps the index will rise to a level of 338.5 – 342.5, and you will close the bet for a win.
You work out how much you have won by first calculating the number of points that you have made. Your bet was placed at 311.0, and it closed out at the selling price of 338.5. The difference between these is 27.5 points. With a stake of £20 per point, that amounts to a win of £550.
On the other hand, the Greek economy could tank further, dragging down the fortunes of the companies on the Athens Stock Exchange. Say the index went down to 301.6 – 305.6, and you decided to close the bet and accept your loss.
The bet went on at 311.0, and you closed it out at 301.6. 311.0 minus 301.6 is 9.4 points. Multiplying by your stake of £20, you have lost a total of £188.
Perhaps in the start you thought that the Greek economy would fail more drastically, and decided to place instead a short bet on the stock market index. Say you bet £15 for the index to go down. The price might have gone down to 257.0 – 261.0, a level it was at just a month or two ago.
Your short bet was placed at 307.0, and you closed it at 261.0, giving you a gain of 46 points. You bet £15 per point, therefore you won £690 on this bet.
Once again, you must be prepared for a proportion of your spread bets to fail. This is normal, and happens to the best of traders, and when it does you must minimize your losses by closing the bet quickly. Say the index went up to 317.5 – 321.5, and you decided to exit your trade.
Your bet started at the same way, with a short bet placed at 307.0, but this time the price rose up to 321.5 by the time you closed the bet. That means you lost 14.5 points. Your stake was £15 per point. If you multiply 14.5 times £15, then you find that the total you have lost is £217.50.
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