Spread Bet on Weir Group plc
The Weir Group is an engineering company based in Scotland, with its headquarters in Glasgow. It works in the mining, oil, and gas industries. It was founded in 1871 as an engineering company, specializing in pumping equipment, and in the First World War even manufactured aircraft along with munitions. It now operates in more than 70 countries, employing 13,000 people.
It was first listed on the London Stock Exchange in 1946, and its pumps became virtually a standard item on ships around the world. It also made equipment for desalination and water treatment, a current popular topic, but it sold its interest in 2005. In fact this was the start of a refocusing of the group, as it sold its Glasgow pump business in 2007.
In 2008, the Weir group organized itself into three sectors. The first, Weir Minerals, deals with slurry handling equipment for use in mines, oil sands, etc. The second, Weir Oil & Gas, still makes pumps, but for oil and gas markets. The third, Weir Power & Industrial, engineers specialist equipment for rotating and flow control, and is qualified to produce specialist valves for the nuclear industry.
Such wholesale commitment to the oil and gas industry has led to recent problems. The share price has fallen, because with hydraulic fracking the price of natural gas has plummeted, and many orders have been cancelled. However, shale oil is looking more favourable than shale gas, and Weir may simply need to refocus again.
The above monthly price chart is interesting in the light of the history above. The reorganization of 2008 appears to have had a negative effect, with the share prices more than halving over that year. Steady growth since has been impacted by the recent problems with fracking, and this is an active stock that would be interesting to keep up with.
Spread Betting: Weir Group Rolling Daily
The current price for a rolling daily spread bet on the Weir Group is 1480.5 – 1483.5. The engineering group appears to have hit hard times, with a pronounced down-trend, and you may decide to spread bet on this, taking a short or sell bet out at £2.50 per point.
Suppose first that you are correct, and that the down-trend continues. You should watch for any signs that it is ceasing, but otherwise continue to add to your profits by holding the bet open. When you decide it has got as far as it reasonably may, then you could close the trade and take your profit. Say this occurs when the price is 1236.8 – 1239.8. As this was a short bet, it opened at the selling price of 1480.5. It closed at the buying price of 1239.8. That means you made 240.7 points. With a stake of £2.50 per point, you have a profit of £601.75.
However, many times the market will not run in your favour, and perhaps the price went up after you placed the bet, so you decided to close the spread trade and accept your losses when the quote was 1622.3 – 1625.3. To work out your losses for this sell bet, you take the opening price away from the closing price. The bet closed at 1625.3, and opened at 1480.5. That’s a difference of 144.8 points. At £2.50 per point, you would have lost £362.
Many spread traders use a stop loss order to avoid losses becoming too great. With a stoploss order, a losing trade can be closed automatically, and you do not need to keep such a close eye on the prices. Say a stoploss order closed your trade when the price went up to 1568.2 – 1571.2. Your starting price was, as before, 1480.5. This time your closing price was 1571.2. 1571.2 minus 1480.5 is 90.7 points, and that works out to a loss of £226.75.
Weir Group Futures Style Bet
Weir Group shares have been falling in value recently, as fracking for gas has become less worthwhile with falling natural gas prices and equipment orders have been cancelled. If you believe that this trend is over, then you may want to place a long bet for £3 per point on a reversal. The current quote for the far quarter future based bet is 1485.3 – 1497.3.
If you had anticipated the reversal correctly, the price might go up to 1637.2 – 1648.6, and you can close your spread trade and count your winnings. To work them out, simply figure out the difference in points and multiply by your stake. Your long bet was placed at the buying price of 1497.3. It closed at the selling price of 1637.2. The difference is 139.9 points, and this is how much your bet gained. Multiplying by £3, you have won £419.70.
Many times you will find that your bet will not win. That is just the way financial markets move. You must learn to accept your loss, close the spread trade, and move on. Perhaps the price continued falling, and you decided to close your trade when the quote was 1376.7 – 1386.3. The difference in points this time is 1497.3 minus 1376.7, which is 120.6 points. At £3 per point, you would have lost £361.80.
It is useful to know about stop loss orders. These require your spread betting provider to close your losing bet, even if you are not online or looking at the market prices, when it reaches a certain level of loss. Perhaps with this you may have got out of this losing bet at a price of 1429.7 – 1440.5, saving a few points. The difference in points is 1497.3 less 1429.7, which is 67.6 points. Multiplying by your chosen stake, you have lost £202.80.
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