In watching the news, you have developed an interest in UBS, the Swiss banking giant that has been forced into revealing the owners of overseas accounts. It seems that there is the probability of significant fluctuations, and following your analysis, you decide to place a short bet (sell) with a bet of £5 per point. The current quote is 1004 – 1007, so your bet goes on at 1004.
A little while later you check and find that the quote has fallen to 953 – 956, and you decide to collect your winnings. Your bet closes at 956. You can work out your winnings from your stake and from the number of points that the price has moved. The price moved from 1004 to 956, and that is a point change of 48. As you staked £5 per point, you have won a total of £240 from the fall in price.
Despite your best endeavours and research, sometimes the price will go the other way to the way you bet. Say that the price rose on the UBS shares, and when it reached 1021 – 1024 you closed your bet and accepted your losses. This is a level that you had already decided meant that your reasons for taking the bet hadn’t worked out, so you had to cut your losses.
Working out how much you lost, while more painful, is just as simple. Your bet closed at the buying price of 1024, and you put it on at 1004, which means the number of points you lost is 20. Your stake of £5 per point still stands, so you lost £100.
For another example, consider the Swiss watch company Swatch. The current quote for a daily rolling bet is 5944 – 5956, and you might decide to go long on this one at £3.50 per point. A long bet is placed at the higher number, 5956.
The price increases, and when it reaches 6054 – 6066 you decide to close your bet and see how much it is worth. The number of points that you have gained is from 5956 to 6054, which works out to 98 points. Your stake was set at £3.50 per point, so if you multiply that out you find that you have won £343.
Once again, you must consider the possibility that the price could go against your bet. This doesn’t necessarily mean that your bet was a bad one, as even the best of traders have losers. If you have stuck with your trading plan, then it was a good bet, and you are just playing the averages to come out on top. Suppose the price drops to 5913 – 5925, and you close your bet to prevent any more losses.
The amount you have lost can be worked out by subtracting 5913 from 5956, which is 43 points. As your stake is £3.50 per point, again you can simply multiply to see how much money is involved. 43 times £3.50 comes out to a loss of £150.50.
How to Spread Bet Swiss Shares
It is not for nothing that Switzerland has a reputation of being a tightly controlled economy. If you’re interesting in spread betting Swiss shares, you will find that country’s affairs are run very differently from many others. Taking just some economic indicators of the present time, the inflation rate is -0.1%, and the unemployment rate is at 2.9%. The main Swiss stock exchange is based in Zürich, although there is another in Berne. It was the first in the world to have fully automated trading, and that was more than half a century ago.
The Swiss economy runs a surplus, still finding a high demand for Swiss watches among other things, despite all the cheaper worldwide alternatives. If you have worked in Switzerland you will know the reason for this is the Swiss obsession for perfection. For example, despite Japanese manufacture of the same marine diesels, ship buyers will insist on a Swiss-made Sulzer engine, which must be totally disassembled after testing before shipping out of this land-locked country to the destination shipyard. Because of its geography, Switzerland imports large quantities of raw materials and turns them into finished products.
The great thing about Switzerland and its economy is that because it is so export oriented, you are likely to have heard of several of the manufacturers. Swatch is one that springs to mind, but Nestle is also a major name outside of the country. When you are looking to spread trade on individual companies, there is no substitute for having a good knowledge of the products and how they are viewed in the world.
To successfully spread trade on Swiss shares, you may need to forget your preconceptions of how the economies around the world are doing. The amount of control that the Swiss exercise over their country, while not guaranteed to make them flourish is a major influence on how the nation performs. The notion of a “Swiss bank account”, while dated, is still extant in the consciousness of the world, and reflects the respect that Switzerland commands around the globe.
Your first step should be to follow a few of the major companies that you know of, and know what their business is. Certainly, not every company presents opportunities for spread trading all the time, and all share prices seem to go through phases of meandering, with no defined trends. As your betting can be either up or down, you are not as restricted in your choices as a traditional investor who looks for the value to increase. Therefore you can look for either signs of strength or weakness.
Once you have identified appropriate candidates, then you need to check your trading strategy against their historic values, and refine your entry and exit points to suit the way that they move. You should pay particular attention to the volatility of the price, so that you have a reasonable stop loss position without risking being stopped out of a winning trade too often. Then you are ready to start spread betting on the Swiss stocks, with the best chance of making a profit.