When you consider how deep-seated the word “Google” is in our language now, it is astonishing to realize that the company was first incorporated in 1998, and did not go public until 2004. Since that time, spread betting has been one of the favourite ways to profit from its successes and failures. Google is best known as the search engine provider, with lesser competitors Yahoo, Bing, and others, but the company has continued development of other technology items such as productivity software, the Android mobile operating system, the Google Chrome Internet browser, and the Google Plus system which is a type of social network.
This daily price chart shows fairly steady progress in recent months, but Google has proved to be a volatile share over the years, including cratering around the time of the economic global crisis. Even today, many of the shares are held by Google and its employees.
Almost all of Google’s profits come from its advertising revenue with the well-known AdWords product, where advertising can be bought, and the accompanying AdSense creation which allows any webmaster to incorporate advertisements which are automatically related to the website’s topics.
As with all technology companies, the price of Google shares will fluctuate and can be influenced rapidly by news items, such as the release of new software by Google or its competitors. Google has fallen out of popularity with many users since it upgraded its search engine in 2012, as a result of which many users are finding sporadic results. Upgrades to the search engine are frequent, because of the importance to webmasters of coming high in the listings so that their websites are visited, and therefore the constant attempts to “game” Google with tricks of word placement or usage.
Of course this will pass, and it is expected that Google will remain a major player within search engines, while exploring other high-tech income sources. The volatility in the pricing means that you need to be careful to control your exposure to loss when you spread bet on the price.
Google Rolling Daily Spreadbet
While in a general uptrend at the moment, shares of Google fluctuate in price and you may find both long and short opportunities for your spread betting. The current price for a rolling daily bet is 75,402 – 75,444. As this is a large number, reflecting the fact that Google shares are trading at $754 each, you should find that your spread betting provider allows you to bet less than £1 per point on this stock. For this example, assume that you will spread bet 24 pence per point on a long position, expecting the price to go up.
First, if we assume that your bet works out you might find that you are able to close your bet and collect your winnings at a price of 76,183 – 76,225. Despite the large numbers, you still work out how much you have profited in the same way, by calculating the points gained times your stake. Your bet was placed at a price of 75,444, and it closed at 76,183, for a profit of 739 points. For your chosen size of stake, that amounts to £177.36.
Secondly, we look at the losing situation. Suppose the price went down after you placed your long bet, and you decided that you had to cut your losses by closing the bet when the price dropped to 74,916 – 74,958. The difference in points now is 75,444-74,916, a total of 528 points. Multiplying by your bet size you find that you have lost £126.72.
Many spread traders find that they do not have time to watch the market during the day, so the stop loss order is useful, as it closes a losing bet whether or not you are online. With a stoploss order, your losing bet might have been closed earlier at a price of 75,052 – 75,094, for example. Working out your losses again, 75,444 minus 75,052 is 392 points, which at 24 pence per point works out to £94.08.
Google Futures Spread Betting
If you’re looking beyond the next few days in your spread betting, you may choose to place a futures based bet on the price of Google stock. Looking at IG Index, their quote for a spread bet for the far quarter is currently 75,777 – 75,829. This bet does not expire for another nine months, but you are of course able to cash it in or cut your losses at any time before that, and you do not have to wait for the expiration date.
If you have a bearish view of Google over the next few months, you might want to place a sell or short bet, staking perhaps 48 pence per point. Working out the winning case, if the price drops to 74,597 – 74,649 you could collect your profits. The opening price was 75,777, and the bet closed at the buying price of 74,649. This means you have made a total of 1128 points with your sell bet, which for this size of bet works out to £541.44.
It is the nature of the markets that you cannot win all the time, and you must expect and plan for many losses. Perhaps in this case the price went up after you placed your short bet to a value of 76,457 – 76,502, and you decided to close your bet and cut your losses. Starting at 75,777 and ending at 76,502, you have lost 725 points. Multiplying by your stake, this amounts to a loss of £348 even.
If you had used a stoploss order, which typically you would place at the time of making your initial bet, you would not have needed to watch the markets and may have found that the bet was closed earlier, once it was clear that it was a loser. Perhaps the bet would have closed at 76,212 – 76,251. The starting price was the same as before, 75,777, but this time the bet closed at 76,251, for a loss of 474 points. This amounts to a total of £227.52 lost.