Ferrexpo is a mining company founded in 1960. The daily price chart below shows the volatility that you might expect from a mining company, which is why many traders look to this sector for spread betting opportunities.
The company is headquartered in Switzerland, though it was founded to exploit iron ore reserves in the Ukraine. Most of its output goes to Eastern Europe. It was privatized by the Ukrainian government in 2001, and the founder, Kostyantin Zhevago, still holds 51% of the shares.
Zhevago was the first Ukrainian to arrange for a company to be listed on the London Stock Exchange, which was in 2007. He is also the youngest Ukrainian billionaire, according to Forbes magazine, with $1.8 billion.
The company has two divisions. In the Ukraine, it functions for both mining and the sale of iron ore, whereas in Switzerland it is concerned only with the sale of iron ore.
There was an interesting development in October 2012, and this may have some impact on trading and certainly on investing in the company. A statutory notification was issued of a major interest in the shares in the amount of 24.99%, and this was acquired by the BXR Group, which is a private investment company headquartered in Amsterdam. Private investment companies generally have more knowledge about particular investments than any individuals, as is their business to research opportunities. Therefore it is likely that, at the least, shares in Ferrexpo will continue in a good uptrend.
Looking at the chart, the price performance has been mixed, with short-term trends of a few days as well as longer trends. It may be that the shares will settle down to a steady uptrend now, as would seem to be indicated, even though the MACD is now narrowing. If the price reverts back to short-term trends, it may be worth looking at a shorter period chart, such as a two-hour or four-hour chart.
Ferrexpo Rolling Daily
The current price for a rolling daily bet on Ferrexpo is 248.38 – 249.62. With the rolling daily bet, your spread betting provider will roll over the bet automatically each evening until you decide to close it, and may charge a little in interest when he does so. Unless you intend holding the bet open for months, this usually does not matter. Say you think that the share price is going up, you might choose to place a long bet at the buying price of 249.62, staking perhaps £14 per point.
Suppose that in a little while you decide to close your bet and collect your winnings when the quote is 280.38 – 281.62. The bet would close at the selling price of 280.38. That means that your bet opened at 249.62 and closed at 280.38, for a total gain of 30.76 points. Multiplying this by your stake of £14, your winnings would work out to £430.64.
Of course the price might have gone down after you placed your bet, and you could choose to close it and accept your loss when the rolling daily quote fell to 229.18 – 230.42. With the same starting price of 249.62, this time the closing price is 229.18. That means you have lost 249.62-229.18 points, which is 20.44 points. For your size of wager, this works out to £286.16.
It is common to use a stop loss order to save yourself from large losses if you are not able to watch the market all the time. Your spread betting broker will close your bet if the losses amount to a certain level, whether or not you are online. Suppose with a stop loss order your bet was closed for you when the quote went to 238.78 – 240.02. Taking the closing price of 238.78 away from the opening price of 249.62, your loss works out to 10.84 points. At £14 per point, your total loss is £151.76.
Ferrexpo Futures Style Bet
Unlike the daily rolling spread bet, you will never get any account charges on a futures bet, which expires on a date certain several months away. The current price for a far quarter futures bet is 249.29 – 252.30. If you see a bearish future for this stock, you might choose to stake £10 per point on a short bet, which would go on at the selling price of 249.29.
Perhaps you have a winner, and the price drops to 201.29 – 204.30, at which time you close the bet and collect your profit. Your bet would close at the buying price of 204.30. 249.29 minus 204.30 is 44.99 points that you gained on this bet, so multiplying by your stake of £10 your winnings amount to £449.90.
While figuring out the possible profit is a happy exercise, you might also have to figure out a loss if the price goes up after you placed your bet. Perhaps the price would go up to 268.49 – 271.50, and you choose to close your bet and cut your losses. The opening price was 249.29. The closing price is 271.50. Therefore the number of points you lost is 271.50 less 249.29, which works out to 22.21 points. Your stake was £10 per point, which means you would have lost £222.10.
Many spread traders use the stop loss order to prevent losses from running away, particularly if they are not full-time spread betters, and cannot keep an eye on the markets. The stop loss order is usually placed when you open the bet, and with many spread betting providers is automatically offered on the betting screen. In this case, a stop loss order might have closed your bet at 258.89 – 261.90. Your loss in this case would be 261.90 minus 249.29, which is 12.61 points. For your size of stake, this works out to a loss of £126.10.