Spread Betting Strategy for Trading Tesco Shares
LONDON, August 7, 2012 /PRNewswire/ --
On Monday, 6 August, Tesco launched its mortgage offering through its Tesco Bank with the aim of using its Clubcard loyalty scheme to judge whether or not to grant a loan to customers.
Following the announcement of their new offering, the Tesco share price rallied from 319p (close of trading on Friday 3 August) to 322.30p (Close of trading on Monday 6 August).
Below, we offer you a spread betting strategy for trading Tesco shares with a spread betting account from City Index.
Spread Betting Strategy
Below, we offer you a basic spread betting strategy that should be used as a guideline when placing a spread bet. Full research and analysis should be included, as well as risk management orders.
Step 1. Research
Chief Executive of Tesco Bank, Benny Higgins, revealed plans to use data derived from the UK supermarket's Clubcard loyalty scheme to rate its customers through their new mortgage offering.
With more than 15 million households signed up to the scheme, Tesco Bank is hoping to make use of this comprehensive information to decide whether or not to grant loans based on spending habits.
According to Bloomberg.com, Higgins stated that by using this data to assess customers' suitability for home loans, they can make 'a better assessment of risk', adding:
"It's about simplicity, about transparency, about rewarding loyalty."
Step 2. Plan your Trade
Having researched your market, you will now want to plan your trade.
Through thorough market research and analysis, you will decide whether or not you wish to go long and buy or short and sell your chosen market, which in this example will be Tesco shares.
If you believe that following news of Tesco's latest mortgage offering that their share price will continue to rise, you would go long and buy the market.
In the event you are correct and the Tesco share price rises, you will profit for each penny that Tesco's shares price rises above your buy price. However, if you are wrong and the share price falls - going against your position - you will incur a loss. As spread betting is a leveraged product, there is the risk that losses could exceed your initial deposit.
Alternatively, you may expect that the Tesco share price will start to fall and therefore decide to go short and sell the market.
If you are correct and the Tesco share price falls, you will profit for each penny the share price falls below your sell price. However, if you are wrong and the Tesco share price rises - going against your position - you will incur a loss that could exceed your initial deposit.
With this in mind, it is important that you utilise the range of risk management tools available to you through the City Index spread betting platform in order to limit your potential losses.
Step 3. Place a Trade
To place a spread bet you must first have a spread betting account with City Index - you can find out how to open an account below.
Once your account has been opened, you can start spread betting across a range of trading platforms.
These include an online trading platform and mobile trading app, City Trading™ - available for iPhone™, Android and Blackberry devices.
Start Financial Spread Betting
To start spread betting across a range of trading platforms - including the City Trading mobile application - you can apply for a spread betting account with City Index through their website: http://www.cityindex.co.uk
Read More Spread Betting Tips
If you found this article helpful, you may want to read more just like this. You can access a range of free spread betting tips, guides and articles through the City Index website.
Spread betting is a leveraged product which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
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About City Index:
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.
We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.
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