Close Brothers Group is a specialist financial services company headquartered in London. You can see from the daily price chart below that it has clearly defined trends, and this should make it eminently tradable for spread betting.
In contrast to many other financial services companies, Close Brothers Group was founded a long time ago, in 1878. William Close provided mortgages for farms in Iowa and for Alaska’s first railway. It now makes loans, trades securities and provides investment management to a large range of clients.
In 1978 there was a management buyout and the company was listed on the London Stock Exchange in 1984. This signalled the start of a large expansion through acquisition of many other businesses, including Winterflood Securities, a major market maker in the UK, Hill Samuel, and Rea Brothers. The expansion and acquisition continued in 2008 when the company bought Commercial Acceptances Group, but in 2009 it sold off the corporate finance business to a Japanese investment bank with the intention of concentrating on the lending, securities trading, and investment management side of the business.
The company now has three divisions, the Banking which provides specialist lending to businesses, the Securities which provides trading services to retail brokers using Winterflood, and the Asset Management which gives advice and investment management to institutions and private clients.
If you look at the daily price chart above, you can see that there are a number of trends that possibly could have been traded, although the MACD seems in some cases to have lagged the action too much to be worthwhile. In such a case, you need to look at other indicators to see which work well historically with this security, and make sure that you back check any that you intend to use to prove that they will be of the value for your trading.
Close Brothers Group Rolling Daily
You decide that it is worth taking out a long position on the Close Brothers Group, which is currently trading at 869.8 – 874.2 with IG Index. You decide to stake £22 per point, given the overall value of the shares and the size of your account.
Imagine that you have a winner, and that the price goes up to 896.7 – 901.1. You can close your spread bet at the selling price of 896.7, and work out how much you have won. The opening price was 874.2, so you have gained 22.5 points. With a stake of £22 per point, your winnings work out to £495.
Now look at the other result. Possibly after you placed your long bet the market dropped and you decided to close your trade and accept your losses when the quote was 853.66 – 858.06. The opening price for your bet was 874.2, and the closing price was 853.66. That means you lost 20.54 points. Multiplying this by your stake of £22, your total losses work out to £451.88.
It is not a good trading practice to have your losses nearly as large as your gains. You will have many losses, and one of the secrets of successful betting is that the losses need to be kept small. It helps if you use a stop loss order on your bet, as the bet will be closed as soon as it reaches the level that you have chosen for your stop loss. With a stop loss on this bet, the bet might have been closed with a quote of 861.73 – 866.13. The opening price would still be 874.2, but this time the closing price would be 861.73. 874.2 minus 861.73 is 12.47 points. Multiplying this by your stake of £22, you would find that you had lost £274.34.
Close Brothers Group Quarterly Futures
Taking a slightly longer view of the market, you might choose to place a futures style bet on Close Brothers, and the current quote for the far quarter is 873.2 – 883.7. Say you decide to go short, risking £12 per point. For this example, consider first that you might win, when the quote goes down to 832.85 – 843.35. Closing your bet at this time, you can work out how much it was worth. Your sell bet was placed at 873.2 and it closed at 843.35. That means you have gained 29.85 points. You staked £12 per point, so you have won £358.20.
The other possibility is that the price goes up after you place your bet, and you need to cut your losses and close the trade for a loss. Say the price went up to 889.34 – 899.84. Your bet was placed at 873.2. You closed your spread trade at a price of 899.84. You have lost 899.84 minus 873.2 points, which is 26.64 points. Multiplying this out by your £12 wager, your losses amount to £319.68.
It can work out well if you use a stop loss order on your spread bets. With a stop loss order, your spread betting provider takes care of closing a losing bet, and you do not need to know the market price at any particular time. All you need to do is tell your provider when you take out the bet at what level of price you want it to be closed, if it is losing. With a stop loss order on this bet, the position might have been closed at 881.27 – 891.77. This time from a starting price of 873.2, the price went up to 891.77, a gain of 18.57 points. Multiplying once again by your £12 bet, this amounts to a loss of £222.84.