Brexit’s starting to feel a bit like the blind leading the blind…

Its the blind leading the blind with UK politicians

Seems its the blind leading the blind when it comes to Brexit!

I don’t know about you but Brexit’s starting to feel a bit like a drinking game. Like when you’re watching a crap horror movie or old Star Trek episode and you have to decide if you think if a new character is going to live or die. Then you drink a shot for every one you get right. Simples.

I’ll show you what I mean.

Opening scene of Carnage Flick – a pretty girl sits chatting on the phone wearing an entirely unnecessary negligee? Dead!

Scotty and Captain Kirk decide to beam down to a planet with an unnamed colleague in a red shirt, you say? Dead!

Annoying ex-boyfriend character gets a less-pretty-than-the-heroine girlfriend? Dead and, oh, dead.

A property fund in London after Brexit? Oh, that’ll be fine… Who are we kidding? Dead! A few more of them? Dead, dead and dead.

Who’s next? Who’s next? The pound? (cue side-splitting laughter as it falls into a black abyss from which there is no return and knock back a whiskey on me)

So what the actual heck has gone on? Markets globally have decided to go on some kind of crazy rollercoaster with prices rolling back over 30 years in some cases. Has anyone seen Michael J Fox in a DeLorean or something?

It’s kind of like this. The British public wanted out of the local ‘hood gang and go it alone, despite being warned that the financial equivalent of concrete boots and a trip to the bottom of the Channel were on the cards. To be fair, during the campaign they had more chance of learning the truth about Area 51 than what Brexit really meant. Let’s put it this way – I haven’t seen as much blatant propaganda since I studied World War 2 in high school.

It might not have been a complete car crash but the problem is no-one believed they’d actually have the balls to do it. There couldn’t have been more heavyweights warning those tea-drinking, flat cap wearing Englishers not to jump. And I mean everyone – from the US President, China and the governor of the Bank of England to the head of the IMF and numerous academic experts all saying Noooo, bad plan, step away from the red button. But the Brits can be a tad… contrary… and if someone tells them no, guess what’s going to happen.

So what it boils down to is this. Politically, Plan A was to have a referendum as the electorate had been promised one. This would keep the masses happy but nothing more. Then the powers that be would pat the masses on the head when the results came in and basically carrying on as before. It was a shoo-in.

But… and it’s a big but… there was no Plan B. I’m not kidding. But it gets worse.

This bit will make you laugh – everyone who might have made a plan has quit. The Prime Minister. The head of the Leave campaign. The guy who backstabbed him. The other racist nationalist guy who stirred it all up. Seriously. There is a fresh new government in the UK right now and guess what, the country just hit an iceberg.

Singing Rule Britannia while the Titanic goes down

Singing Rule Britannia while the Titanic goes down

So we’re pretty much left with a mob rowdily singing Rule Britannia in victory while standing on the Titanic as it goes down.

It’s a mess.

Happily, here at SparkProfit we don’t actually trade stocks and shares. We just predict where the markets are going so we win when markets go down as well as up. Phew!

So all you have to do now is decide which currencies, exchanges and commodities are getting in the lifeboat. Think Asian markets, US dollars, and financial organisations with a big presence in Germany. And which are going down with the ship. I’d be looking at the pound, the FTSE 250, the Euro and UK-based financial institutions like Lloyds, who I reckon are secretly fighting just to keep their heads above water as their passport to European banking was just given away.

Keep in mind that when you’re looking at markets news, you’ll see a lot of EU chiefs are beating their chests like a gorilla defending its territory as they’re desperate to stop any other countries copying the Brits. And the entire City of London banking industry is debating whether or not to pack a weekend bag and elope to Frankfurt. This is going to cause tsunamis for some time to come.

1.35 is a key level on GBPUSD

1.35 is a key level on GBPUSD

Any announcements from the Bank of England, European Central Bank or news about Brexit details are likely to send waves crashing over the markets so there’s plenty of chances to cash in. Hop over to SparkProfit and see what’s happening right now.

 

Disclaimer: All views, opinions or analysis in these articles are those of the author and do not represent the views of Nous. Neither the author, TIQL, Nous nor SparkProfit provide financial advice and these articles should not be construed as such.

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Watch Out For That Bear (Market)!

bear MarketStock markets across Europe and the US have fallen as investors begin to fret about the chance of Britain exiting the EU. The fear has also started to weigh on the US markets with the S&P index falling for four days straight. In the UK on Tuesday, the FTSE index lost 2% and closed below the key psychological 6000 level.

So, what has got the markets so jittery? Investors are starting to worry about brexit – the possibility of the UK leaving the EU – and markets are starting to price this fear in. There is also the ongoing worry about the global economy and the fear of interest rate rises by the US Fed. Throw in the outside chance that Donald Trump could be the next US president and you have two things the markets hate: fear and uncertainty. Ok, maybe The Donald is not driving the fall in the markets, but its scary none the less!

The risk of Brexit has started to move some markets, so which markets are traders looking at to participate in these moves? Right now traders are in ‘risk off mode’. Lets take a look at the technicals – and they don’t look pretty.

The Pound Takes a Hammering

The GBPUSD has firmly broken through two trend lines and if 1.4050 breaks, we may expect the shorts to push this to the February lows. For now, the 1.4050 may give some support and stem the short flows; if this level breaks with any force, retests from below may see the shorts reload on this pair to drive it to 1.38.

Brexit weighs on GBPUSD

Brexit weighs on GBPUSD

 

EURUSD supported for now, but watch for the break

The EURUSD has been hit by the fear of brexit and the asset purchasing by the ECB. The technicals show this pair in a weak bullish channel but more downside looks likely.

The EURUSD is supported by a trend line for now..

The EURUSD is supported by a trend line for now..

Stocks take a tumble in the US

Stocks have been tumbling off of the highs for four days straight in the US. The Dow has dropped below its 50 day moving average and the S&P is not far off. The chart below illustrates how strongly the S&P index has fallen off its highs. The 2060 level is a key support zone but a deeper correction could be on the cards for this market

The S&P index has dropped for four days straigh

The S&P index has dropped for four days straight

 

Gold finds its shine again with risk off

Gold has spent the last three weeks climbing the page as buyers bought the shiny metal amidst the market turmoil elsewhere. The chart below demonstrates the strong buying pressure on Gold and the supporting bullish technicals. There is strong resistance ahead though at 1310.

Money flows into Gold with risk off

Money flows into Gold with risk off

 

No Risk with SparkProfit

Which ever way you think these markets are going to go, you can play these and other markets risk free with SparkProfit.

Please note our disclaimer on all of this.

Guaranteed Stops: The Cost of Trading

trading experience

Keeping risk to a minimum in trading is always a good thing and guaranteed stops help you do that and should form a part of any sensible trade plan. However, they can also impact your profits over time. What do we mean by this? Guaranteed stops are great for setting an absolute limit on the risk for a trade but traders should be aware of the cost of this type of stop order.

Guaranteed Stops are mostly used in spread betting. But what is spread betting?

Just like the players on SparkProfit, spread bettors don’t actually buy and sell shares or commodities. Instead they bet on whether a market is going to rise (go long) or fall (go short).

So how is spread betting different from trading with a regular broker?

Regular Brokers

When a broker quotes you a price for a commodity or an FX pair they will give you two figures: the Bid and the Ask. The Ask is the price you can buy the share at right now from your broker (think: the price your broker is asking you to pay) and the Bid is how much you can sell it back to the broker ( or how much your broker will bid you to buy it).

For example, if a share is trading at 56/57 cents, this means you can can buy this share from your broker at 57 cents or the broker will buy it from you at 56 cents. This result of this is that if you buy this share from your broker at 57, you are immediately 1 cent down as your broker will only buy it back from you at that moment in time for 56.

This difference in price between the Bid and the Ask is called the ‘Spread’ and the size of the spread is caused by the difference in opinion between buyers and sellers.

It’s this difference of opinion that causes movement in the market; some people think the market is undervalued, some overvalued and so they want to either buy or sell. But if you don’t have enough money to actually trade commodities and FX with a broker, what can you do?

Spread Betting

Instead of actually buying and selling shares, the spread bet provider enables their customers to bet on the direction of the market. You don’t need as much capital as normal investing to get started as your spread bettor provides you with something called leverage; leverage allows you to get exposure to large amount of a stock or commodity at a fraction of the cost of say a regular stock broker.. but the risks are huge.

Note that a spread-betting provider normally offers a slightly wider spread than a traditional broker. Hence the name spread bet.

The bettor makes money for each point the market travels in the direction they predict. For example, if they bet $10 long, they will receive $10 for each point the market rises and if they bet $10 short, they will receive $10 for each point the market falls. And just like SparkProfit, if you are good at predictions, you could make a lot of money. Let’s look at some examples.

Say you buy Brent Oil which is quoted by your broker at 4091/4095 (thats $40.91/$40.95); this means you can buy Brent Oil from your broker at 4095 or sell it to him at 4091. You put $10 a point on and you are now long Oil.

You predict right and Oil rises to 4115 so you decide to close out. Your profit is calculated as follows:

4115-4095 = 20 x $10 => $200

You make a profit of $200. That’s $10 a point over 20 points. That’s a good result, you made $10 for every cent Oil moved in the direction of your prediction.

Or did you?

trade oilIn fact, the market had to travel 24 points to get you your $200 payout as the spread imposed by your broker actually put you in the market at 4091; so you would have begun your trade down by $40. Although you bought at 4095, your broker will only buy back your Oil contract from you at 4091 so you are effectively four points down.

short trading oil futuresYou can also bet that the market will do down – or ‘go short’. If you go short with $10 at 4091 (the Bid price, which is what a broker will buy Oil from you at) and Oil falls to 4071 so you decide to close out, you also make a profit of $200 (4091-4071 = 20 x $10). Again, because of the spread, our Oil trade had to travel 24 points for you to get your 20 points of profit.

This is generally accepted by the trading community as the cost of doing business and, like any business, the trick to being profitable is to keep your costs down.

Slippage On Your Stops Takes All Your Money Over Time

This all makes it seem reasonably easy, doesn’t it? Going ‘long’ or ‘short’ on the markets and making money for each price movement in your favourite market. But it is high risk because you can easily lose a lot more than you put in. Much more in fact.

Take the first example again and go through a scenario where you lose the trade. You went long but the market dropped instead of rising. Let’s say you had a stop loss at 4071, which your broker managed to fill at the price you requested. For each point it drops you lose $10. With the same starting point, you are out of pocket by $200 (4091-4071 = -20 x$10). Bad result for you; the market moved 20 points in the opposite direction than you predicted. What adds insult to injury is that the spread actually reduced the distance price had to travel to hit your stop. With a spread of 4 points and a 20 point stop, you are only 16 points away from your stop, not 20.

Hopefully your broker got you out at the price you set for your stop loss but in a fast moving market, there is a very good chance that this is not the case. There is nearly always some difference, however small, between the price you wanted to get out of the trade at, and the price at which your broker managed to close the trade for you. In the case of your Oil trade, your stop order might have triggered at the price your requested ($40.71) but by the time the order gets filled by your broker, the price may have moved to $40.66. You just lost $250 rather than your planned loss of $200. 

This is considered another cost of business and is termed ‘slippage’ by traders. Slippage is the difference in the price you wanted and the price you broker fills your trade at. And slippage can occur when you are trying to get into a trade at the price you want, and when you are trying to exit a trade. Slippage is common place and can be far worse than the example given above.

Slippage kills a trader’s profits over time.

Slippage does not need to be small; you could end up losing all your money on deposit with your broker if the markets really move.

This is one reason why putting a guaranteed stop loss on your bet is a good idea. If you want to limit your losses, the providers will make it sound like a no-brainer. With a guaranteed stop, your broker guarantees that the price you request for your stop loss will be the price that they get you out of your losing trade.

Guaranteed Stops

Stay safe – use a guaranteed stop… well, its not that straight forward. It’s not cheap.

To guarantee your stop loss, the provider will widen the spread of the market. So instead of, say, 4 points it could become 8. Just look at what that does to your profit margin.

trading oil guaranteed stopIn the regular spread bet before you’ve started you are 4 points down – that’s how the provider makes their money. You could say a regular spread is like starting a 100-metre sprint 4 metres behind the start line, and you need to work a bit harder to win. But with a guaranteed stop on an 8 point spread you’re a whopping 8 metres behind the start line and it’s going to be an uphill struggle to break even let alone cross the finish line ahead!

A guaranteed stops does give you safety, you will never lose more than you have staked on the trade; but what is the cost? Let’s look at the numbers and see what happens when you use a guaranteed stop.

Starting spread quoted by your broker for a guaranteed stop trade: 4091/4099

Market moves to your target: 4129

Stop loss at: 4070

Gain: $300 (4129-4099=30 @$10 per point)

Great result – you just made $300. To earn your payout though, you had to travel 39 points to hit your target not the 30 you may have assumed when getting into the trade. Also, if the trade had gone the other way on you and hit your stop, the price would only have had to have moved 21 points before you were stopped out rather than the 30. This is as a result of the wide spread imposed by brokers for guaranteed stop losses.

The odds have just been skewed well out of your favour.

guaranteed stop loss oil futuresThat’s not your only problem. The price at which you can place your stop loss order gets pushed right back. To guarantee your loss, your provider will insist on you placing your stop loss further back than you might want. The end result of this is that you might have to place a larger trade than you might want to avail of the guaranteed stop.

So, with a guaranteed stop you are paying a lot extra with an increased spread and the distance you place your stop loss has increased. This increased cost of trading will eat into your profits over timee

When Guaranteed Stops cost so much and Stop Loss Orders don’t actually limit your losses to the amount you want, what is the small trader to do? For now, we think you should play it safe on SparkProfit. Even though you can’t trade your own money, you can win some. And we promise you can’t lose any with us either.

Sensible trading is all about reducing your downside risk as much as you can and guaranteed stops have their place in any trading plan – just be aware of the cost on your trading profits. Its more important not to over leverage on your trades, don’t risk too much on a single trade and have sensible stop loss distances; these are the keys to surviving in the long term as a trader. In general, if your risk on any one trade is over 3% of your total trading equity, you are risking too much. Some might even say that 3% is too much and many full time traders would recomend only risking 1% of equity on a day trade

Final thought – wouldn’t it be great if there were a way to trade that didn’t risk losing more than you decided to put on? Somewhere you could have serious fun without serious risk.

Look out for an exclusive invite in your email.

We’re so excited that we can’t keep it quiet any more. All the amazing skills you have developed in SparkProfit now have a chance to make you even more money with our innovative new real money platform launching very soon. And in true SparkProfit style it’ll be something the world has never seen before!

Our coders have been busy bees over the last few months building a platform that gives you a way to trade in an ultra safe environment, with none of the nasty hidden fees and surprises other apps spring on you. We like to do things properly, so it’s still in the final stages of checks with the regulator, but we can say it’s on the launch pad and the countdown has begun. The date for your diaries is:

APRIL 19th!

Want to know more about the app? We hope you’ll have some serious fun trying it out. Here’s some reasons why you’ll want to join:

Ultra Low Investment Options
shutterstock_33560722You will be able to invest as little as $0.10 on each trade – no matter what price targets you set. This means that a deposit of just $10 could get you 100 trades!

Now, that is an ultra low risk way to trade.

Transfer and Trade

transfer money inYou’ll be able to transfer any money you make on SparkProfit over to the new platform to trade the markets.

So you never need to reach into your own pockets (unless you want to!).

 

Ultra Low Risk

we're so good

You may have seen our posts about the risks associated with traditional trading and spread betting. Well, we promise you will never lose more than you have deposited with us. This is unique.

But we made it even stronger! We guarantee you can never lose more than you’ve put in the tradeNot “some of the time”, not “most of the time”, but always, and forever.

Quick And Simple

point and clickHave you seen other trading apps?! It’s like you need a degree just to learn how to use them. This will be the simplest trading platform in the world – just point and click. No need to worry about margin, spreads, pips, leverage or all that other stuff.

Simply point where you think a market is going to go, where you think it won’t go, then decide how much you want to invest in your prediction. Done.

Great Returns

up to x20

You can get payouts as high as twenty times your original investment.

That’s 2,000%

And it can happen in days,..

or even hours.

Zero Stop/Start Fees

costs nothing

For small trades we won’t charge anything to start a trade. What you see is exactly what you’ll get – unlike other apps. This is a revolution (especially when you notice that you don’t have to “cross the spread” either, another hidden fee our competitors often forget to mention). 

Stopping a trade is free too after a few minutes, so we’re not hiding anything there either. If it was any cheaper we’d have to pay you!

What Happens Next?

We plan to start sending out exclusive first round invitations for the new platform from April 19th. At the beginning we can only let 50 people join each day, so keep an eye out for your email to see if you’re one of the lucky ones!

All That Glitters Is Not Gold

Gold futures posted a one year high last week as gold bugs dived headlong into the shiny metal; in fact, last week was the best weekly gain in Gold since the crisis in 2008.

If we look at Gold priced in terms of Oil, the metal has never been more expensive according to Jim Reid of Deutsche Bank. Gold is now 44 times the price of Oil. “The previous high of 41 in 1892 has just been exceeded,” according to Reid. “For perspective, the ratio was at 6.6 in June 2008 and only 12 in May 2014. The long-term average is 15.5.”

What is driving this demand for Gold?

There may be a few things driving the demand for Gold:

  • Dropping equity markets. Global equities have dropped almost 20% according the to FT.
  • Negative interest rates.
  • Possible delay by the US Fed in raising interest rates.
  • Fears of deflation.
  • Mistrust in central banks not to debase their currencies.

The rally has also been supported by global buying of Gold ETFs. At least in the short term, Gold will probably see buying pressure due to its status as a ‘safe haven’ as risk aversion remains strong in these uncertain markets. However, any increases in interest rates and improvements in the global markets, could see the buyers cover their longs quickly.

The Technicals

We’ve seen a slump in Gold over the last year as traders shorted Gold amid fears of interest rate increases. The sentiment has changed in the last few months with fear of negative interest rates across the world dominating traders minds.

The chart below appeared in our blog earlier this year and shows a possible demand zone which we can see from the next chart has held.

Gold finds support and symetry

Gold finds support

 

gold is having a great year

Gold has climbed strongly this year

In addition to picking up buyers at the historic demand zone displayed above, we have also broken a key resistance level and are now trading outside of a descending trend line – indicating the change in sentiment for this market.

Gold has broken some resistance levels

A change in sentiment for Gold

Retests from above of the trend line and the broken support level may see the buyers reload their long positions on this market. We can see from the chart below that we have had impulsive looking price action of the last two weeks or so.  The recent high of 1190 might see some buying pressure and the 1130 price which has acted as previous demand may also be of interest to buyers.

Gold has been impulsive

Some possible demand zones

No Risk with SparkProfit

Which ever way you think Gold is going to go, you can play it risk free with SparkProfit.

Please note our disclaimer on all of this.

Some Markets To Watch going into 2016

Its the start of a new year of trading with Spark Profit and we thought we’d begin with some charts examining where the markets may go over the next twelve months.

Oil – we are at a significant demand level but more downside is possible

Everybody seems short this market now and the consensus amongst market commentators is for more downside; and that is certainly reasonable given the moves we have seen on this market historically and the fundamentals presently.

However, its normal (and healthy) for markets to retrace and markets love to confound the majority.

Oil is at support - there may be more downside

We are at support but more downside is certainly possible.

We are presently at a price point which has acted as both supply in the past and significant demand. We can assume that this level may be well defended.

If we look at the price drop in 2008 and map this swing from the recent monthly highs, this give us a price target of just over $17 and coincides with a historic demand level. At this price, there’d be more oil on the streets than blood.

Gold – we are back at an old high

And as the trading adage goes – ‘the old high becomes the new low’.

Gold finds support and symetry

Gold finds support and some symmetry

This may be a level of interest to buyers.

  • Gold is at a level that was a significant historical high for this market.
  • When price broke and then retested this level, we saw a significant bull run on Gold.
  • We have some price symmetry around this level – possibly indicating a repeat in the behaviour of the participants in this market.
  • Should the current support level fail, the next real line in the sand for the bulls is around $690 which has acted as both a supply and significant demand level in the past. Gold bugs beware!

AUDUSD – is the bear run over?

Well, probably not.. Not if the commodities continue to take a hammering. The Aussie Dollar (as the AUDUSD pair is termed) tends to track metals and the metal markets have taken a battering from the short sellers of late. There is a thesis for a bullish outlook on this pair technically and we’ll take a look at that – its flying in the face of the fundamentals though.

The FunnyMentals say sell, the technicals say buy, at least in the short term

The FunnyMentals say sell, the technicals say buy, at least in the short term

This level has a few things going for it to position for a retrace:

  • We are near a possible ascending trend line.
  • We are at a level which has seen significant buying pressure in the past. This level is near the 61.8 fib retracement from the move up from the start of this century.
  • We have moved about an equidistance compared to the drop in this pair in 2008.
  • Should this level breach, it does not get sticky for the bears until $64.

EURUSD – will we see sub $1?

If we keep going the way we are, we may do… Probably.. Briefly.

More downside for the EURUSD?

More downside for the EURUSD?

After the fall of in this pair in 2014, we saw some consolidation between 1.0450 and 1.17 during 2015. The 2015 lows will be keenly watched this year.

Bitcoin gets its shine back

We have ended 2015 with Bitcoin at its yearly highs having broken through and then finding buying support at some significant resistance levels.

More upside for bitcoin?

More upside for bitcoin?

Things are looking bullish for Bitcoin but we are currently at significant resistance and there are still challenges for this new store of value.

  • We broken the $310 resistance level in the latter half of 2015 and found buyers at and above this price.
  • We are currently near the 2015 highs.
  • A break of the 2015 highs (around $500), the next level to watch is $550 which is close to the half way back of the move down.

No Risk with SparkProfit

Which ever way you think these markets are going to go, you can play them risk free with SparkProfit.

Please note our disclaimer on all of this.

Oil and Bitcoin – Some Levels To Watch

It has been an interesting couple of weeks for Bitcoin with this market breaking out of the year long range and getting bid to over $500. Bitcoin has started this week down and has come off of the early November highs of $500. Bitcoin broke through $350, which was a significant recent support level. The next level of interest is $305. Should this breach, $285 provided resistance in the past so may become a new support level (old highs become new lows) and the $250 marks will certainly attract some market participants.

For now, $305 remains a key support level for BTCUSD.

Bitcoin has dropped from $500

Bitcoin find support at the $305 level.. For now..

Brent Oil is trading within last week’s range and is all chop at the moment. We are near a demand level at around the 46.50 level which may attract some buyers. Any stop runs on the lows around this level with the buyers picking up some liquidity and we may see this market bid higher to the top of the range at around $50.

Brent approaching a potential demand zone

Brent approaching a potential demand zone

The S & P futures have been trading strongly recently and we are at a potential supply level. A break out of the channel and any retests of support now turned into resistance may see the shorts taking a position. Certainly a retrace to the half way back of the recent move could be on the cards before the buyers come back in.. Or, it might just keep going – this market is still very strongly bid and may have further to go.

Which way now for the S&P?

Which way now for the S&P futures..

 

No Risk with SparkProfit

Which ever way you think these markets are going to go, you can play them risk free with SparkProfit.

Please note our disclaimer on all of this.