France and Greece Elections

Credit-Crunched

All,

What impact do you think that the new austerity avoiding new socialist governments will impact the markets at the bell tomorrow.

I predict an inevitable drop on open due to the uncertainty of Greece's commitment to debt reduction and euro inclusion, the same with the French.

Hopefully only short term, will be interesting to see if the French, more Labour method of removing a country from a recession by spending works, I am sure Ed and Ed will be watching nervously!.

I will be increasing my exposure to Gilts as these have performed really well for me over the past few years as weirdly people see sterling as a more secure than the dollar.

pqrdef

I'll be sorely tempted to short the Footsie, unless it plummets too far before I get in. It's not the change of policy, it's the fact that after a fairly quiet year in Europe so far, we're now in for months of political turmoil.

A sinking euro won't do Britain much good either.

boltneck123

I've never shorted before, however I'm tempted. But I wont do it through limited understanding about shorting at the moment.

But could someone give me an idea of the amounts you may need, to place a short on the FTSE 100?

Thanks

srcandas

Interesting to see France, Belgium, Holland and Spain headline indices in positive territory

If you look at Hollande's words they can be interpreted as a change of emphasis as opposed to a change of direction. As for Greece it could be months before anyone there can form a government; and how long it will last who knows.

I'm waiting for civil unrest in Spain and other places to trigger a crash. My Spanish mother-in-law wants me to deposit money in the UK as the other day a major Spanish bank refused to give depositors their money. That and 50%+ youth unemployment tells me the revolution is not far off.

:beer:

Martian_Lewis

Given that the FTSE tanked on Friday, I'm not sure it will immediately drop much further by any large amount. Longer term though its probably squeaky bum time again, and my monthly HL investment will be going into defensive funds for the forseeable future.

jamesd

If you want to short, financial spread betting through a company like IG Index is the way that is most likely to be easiest. It's also the way that is most likely to be worst because if the price rises on a spread bet your potential loss is unlimited.

Safer ways include:

1. Options, including those available at IG Index.
2. Covered warrants.

Each of those has a fixed initial price and your loss cannot be more than the price you pay at the start. That makes them far safer.

It's unlikely to be sensible to be considering this unless you have at least a few thousand Pounds available and you should not consider using more than about 5% of that as a maximum for any single deal. for spread bets, don't use more than 5% for all open bets combined, because one way to lose a lot of money quickly is to face a margin call and be unable to meet the request for money quickly enough. 5% means that you might have enough spare equity to avoid a margin call.


To illustrate the spread bet case, assume you buy £10,000 nominal value of the FTSE index with 0.5% deposit required. That's something like £1.60 per point at the moment. Say your deposit requirement is £50, 5% of £1,000 available funds. Easy, you might think. Now the FTSE drops 5%. You have now used £50 deposit plus 5% of £10,000 nominal value, £500. That's 55% of your money used already and the FTSE can still drop more.

If you'd ignored the don't use more than 5% and put in £100 worth of bet instead you'd have faced a margin call because you'd be down by £1050, more than the £1,000 you have in the account. And at that point lots of newcomers to spread betting lose the £1050 and either realise that they screwed up or feel hard done by. Lots meaning 85% or so of everyone who opens an account.

Stops can help to protect you but for the FTSE if you're after long term money you need to be allowing at least 5%, better 10-20%, for normal volatility. be sure you have enough cash in the account to avoid a stop even if the market takes all of your positions to their credible stops at the same time. Credible because it's not credible that both long and short positions in the same index will trip at the same time, though if they are tight they might fire sequentially.

I've used a long trade not a short one for this illustration.

CLAPTON

seems odd to me

surely the results are exactly what was expected?

Credit-Crunched

CLAPTON wrote: »

seems odd to me

surely the results are exactly what was expected?

51% to 49% victory was a close run thing in France

Credit-Crunched

Martian_Lewis wrote: »

Given that the FTSE tanked on Friday, I'm not sure it will immediately drop much further by any large amount. Longer term though its probably squeaky bum time again, and my monthly HL investment will be going into defensive funds for the forseeable future.

I am in

Invesco Latin American
Aberdeen Emerging Markets
JPM Natural Rescources
Abderdeen Asia fund exc Japan
plus a range of AIM oilies which to be fair are so volatile (expected) vary by 50% if britains got talents viewing figures reduce!

So hopefully my exposure to Europe woe is reduced.

boltneck123

And they all went down.......

CLAPTON

Credit-Crunched wrote: »

51% to 49% victory was a close run thing in France

but as expected so why didn't the masters of the universe anticipate the results ?