Trading General Electric

General Electric Company (GE) is a major US corporation, so is available for spread trading with most spread betting providers. Reports vary, depending how it is figured, but GE is the sixth largest company in the US according to Fortune 500, and the third largest in the world according to Forbes. It is the original company founded by Thomas Edison, called Edison General Electric in 1890, and changed simply to General Electric in 1892 when it merged with Thompson-Houston Electric Company. It is the only company currently on the Dow Jones Industrial Average index which was also there at the start of the index in 1896 (although it was off the index for a few years early in the 20th century).

GE is not the same as the General Electric Company which used to exist in the UK, before it was taken over by Marconi.

Over the years there have been many changes both by acquisition and merger, and although GE is known primarily as an appliance manufacturer, the majority of its income now comes from its financial services operation. It is also a partner in NBC, the major US TV network, together with Comcast, the cable TV provider.

Spread Betting General Electric Shares

Other areas where General Electric is active include power generation, oil and gas, and for the last 10 years wind power. It has a well diversified portfolio of operation outside the electrical appliance field for which is generally known.

You can see from the price chart above, a recent daily chart, that the overall trend is upwards, even though there are several consolidations and retracements in evidence. Note particularly how the narrowing of the Bollinger Bands in September led to a breakout move, which is as would be generally expected from such a formation. The uptrend was signalled by the MACD soon after it commenced. The stock appears generally well behaved, and not overly volatile, although active. Prior to the global economic crisis, it traded at well over 4000 so there is plenty of scope for an increase.

Spread Betting General Electric Rolling Daily

The current quote for a rolling daily spreadbet on General Electric on the USA market is 2290 – 2295. It has been generally trending upward, with periodic retracements. If you think it is ready for another surge, you might want to place a long bet for £1 per point. With the rolling daily bet, your bet is “rolled over” each day, and there may be a small charge to your account when this happens if you are on the long side of the bet; however, this charge is usually relatively small, particularly nowadays when interest rates are low.

For the sake of this example, assume that the price goes up to 2652 – 2657, and that you decide to close your spread bet and cash in. You can work out how much you won by first calculating the point difference. Your long bet was placed at 2295, the buying price, and it closes at the selling price which in this case is 2652. That means you have made 2652 minus 2295 points, which is 357 points. At £1 per point, you would have won £357.

As a lot of the time your spread bet will not go in the direction you want, you should also be able to calculate the size of your losses. If the price drops to 1985 – 1990, you might close the bet for a loss simply to avoid losing more if the price falls further. The bet was placed at 2295, and it closed at this time at 1985, for a loss of 310 points, or £310.

Should you have trouble watching the markets all the time, you might consider placing a stoploss order which will close a losing bet automatically for you, without your intervention. Perhaps with one of these you would have found the bet closing earlier at 2025 – 2030. This would have kept your point loss down to 2295 less 2025, which is 270 points, so your losses would have been £270.

General Electric Futures Based Spread Bet

General Electric is a large company with many years of trading history, so its stock price tends to be stable compared with younger start-ups. You might want to place a futures based spread bet on it if you think that the price will fall over the next weeks or months, but are not sure whether it will start going down this week or next. The current price for the far quarter is 2286 – 2314, so say that you staked £1.50 per point on a short bet.

If you are correct, you might find the price drifts down to a level of 1852 – 1871, when you decide to take your profit. Your bet was placed at the selling price of 2286 and closed at the buying price of 1871, which means you have gained 415 points. As you staked £1.50 per point, you would have won £622.50.

Some of the time, the price will not go in the direction that you hope and you need to learn discipline to close your bet before the losses get out of hand. Suppose that the price went up after you placed your short bet, and you closed it when it was 2579 – 2604. Then your points difference, which counts against you this time, would be 2604 minus 2286, or 318 points. For your chosen size of stake, you would have lost £477.

Many spread betters decide to use a stop loss order to help protect them from large losses. With a stoploss order, your losing bet would have been closed for you by your broker when it reached a level you chose, even if you were not watching the market. You could save some money – perhaps it would have been closed when the price was 2492 – 2515, for a loss of 2515 less 2286 points, or 229 points. This would have cost you £343.50.