{"id":15982,"date":"2010-11-28T22:42:25","date_gmt":"2010-11-29T03:42:25","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=15982"},"modified":"2010-11-28T22:42:25","modified_gmt":"2010-11-29T03:42:25","slug":"quantitative-easing-and-trading-the-stock-markets","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/11\/28\/quantitative-easing-and-trading-the-stock-markets\/","title":{"rendered":"Quantitative Easing and Trading the Stock Markets"},"content":{"rendered":"

By Thomas Bainbridge<\/strong><\/p>\n

After the US Federal Reserve announced an extra $600bn in quantitative easing, stock markets around the world saw strong rallies. In Europe the fresh liquidity caused the FTSE 100 to reach a 52 week high.<\/p>\n

Mining stocks had a particularly good time of it. As a FinancialSpreads.com report on quantitative easing stated: “However you look at it, and whatever your view of more quantitative easing, it equals a weaker Dollar. The result is that investors are looking elsewhere to put their money. This means putting it into the emerging markets and that in turn means stronger mining stocks. Of course, with this kind of action, the risk of more bubbles increases.”<\/p>\n

Where next for the stock markets? Well, the FTSE 100 is taking on resistance levels and the bears are getting squeezed. This could produce a breakout, but it looks like spread betting account<\/a> holders are continuing to sell into the strength as they believe that the 2010 highs will remain in tact.<\/p>\n

This appears to be a dangerous way to trade given that we are now just above the yearly highs. Not only that but the FTSE 250 has been forging ahead since the beginning of October. Of course, this could just be the traditional end of year rally.<\/p>\n

Whatever your view of the markets, with spread betting you can speculate on the markets to go up or down. All good investment news stories, blogs and articles will tell you that when speculating on the financial markets there are ever present risks, irrespective of the investment format. When share trading, using CFDs or ETFs, you are likely to lose some of your trades.<\/p>\n

But where can you find a convenient, flexible investment option which also offers risk management tools, tax benefits and access to thousands of global markets? For many UK, European and Australian investors, spread trading is a solution.<\/p>\n

Note that it is crucial to understand that investment does come with risks. As with all investments such as trading shares, funds, pensions, housing etc, you can lose money. With spread betting you can lose more than your initial investment.<\/p>\n

There are a few other points which the following warning suggests you consider, ‘Spread betting does carry a high level of risk to your capital. Ensure that spread betting matches your investment objectives. Familiarise yourself with the risks that are involved. Where necessary, seek independent advice’.<\/p>\n

There are many advantages with spread betting<\/a> though, chiefly that it gives you access to a wide variety of global markets that you can speculate on including foreign exchange, indices, commodities and equities markets.<\/p>\n

Also, spread trading can help keep your costs down. If you are trading stocks and shares then you will normally incur brokers’ fees or similar commissions. When spread trading, there aren’t any such fees.<\/p>\n

Not only that but unlike normal share trading, investors can take short positions; spread betting lets you trade in both directions. This means that if your research leads you to think that the FTSE 100 is going to increase, you can spread bet on it to increase. On the other hand, if you think that the Dow Jones is likely to struggle, you can short the market, ie speculate on the market to drop.<\/p>\n

Finally, there is no exchange of any shares, assets or resources; you simply speculate on the future value of a given market. Therefore, spread trading profits are not subject to income tax, capital gains or stamp duty. This is based on UK tax law, note that tax laws may vary if you live outside of the UK and can change from time to time.<\/p>\n

About the Author<\/h3>\n

A leading financial author based in the heart of London’s Canary Wharf. Thomas Bainbridge is a respected commentator on the financial markets including the Financial Spreads<\/a> markets.<\/p>\n","protected":false},"excerpt":{"rendered":"

After the US Federal Reserve announced an extra $600bn in quantitative easing, stock markets around the world saw strong rallies. In Europe the fresh liquidity caused the FTSE 100 to reach a 52 week high.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-15982","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/15982","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=15982"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/15982\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=15982"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=15982"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=15982"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}