Several spread betting providers will allow you to spread bet on the Helsinki stock market in Finland, and this gives you the opportunity to explore financial securities that you would otherwise not come in contact with. Tekla produces building information modelling software, and is currently listed on a daily rolling bet at 1451.4 – 1458.6.
If you think that this stock price is going to go down, you could place a short, or sell bet at 1451.4 for £7.25 per point. Even though the Tekla price is quoted in euros, this makes no difference to a spread bet. Suppose that the price did go down and you decided to collect your winnings when it reached 1396.2 – 1403.4. You close your short bet at the buying price of 1403.4.
Now is the time to work out how much you won. The point level you started that was 1451.4, and the bet closed at 1403.4. That means that you gained 48 points, as you had bet that the price would go down. The amount you staked was £7.25 per point, giving you total winnings of £348. Typically, against that you would pay a small amount in interest for each day that the bet was rolled over, but this usually does not amount to much unless you hold the bet for several weeks.
While we always try to win, sometimes you will find that the price goes against you. Suppose in this case the price went up after you had placed your short bet, you would need to close your bet to stop losing too much. Say you closed your bet when it reached 1473.2 – 1480.4. Again, the short bet has to close at the higher price, this time 1480.4. The point difference is 1480.4 less 1451.4, that is 29 points. For the size of bet you had, you would lose £210.25.
Nokia is another company that you can spread bet on the Finnish stock market, in fact it is far and away the largest stockholding on the market although it has taken a tumbling in the last few years. Nokia well they had it all and sat still saying they are the king of the castle, if you don’t move on then you can forget it. But let’s take an example. A futures based bet for six months out is currently at 494.0 – 500.0. The spread is six points, and in comparison the spread on a daily rolling bet is only one point, but with the futures bet you do not get involved with paying overnight interest.
You think that Nokia is going up, and place a £4.50 per point bet at 500.0. After a few weeks you find that the quote is 542.3 – 547.3, and you decide to close your bet. The bet closes at the selling price of 542.3.
The total number of points you gained is 542.3-500.0, which is 42.3 points. Because you bet £4.50 per point, you win £190.35.
If the price had gone against you, at some point you would need to close your bet and accept your losses. Say the price went down to 472.1 – 477.6. Your bet closes at 472.1.
In this case you lost 500.0-472.1 points, or 27.9 points. At your stake, this amounts to a total loss of £125.55.
How to Spread Bet Finnish Shares
Spread betting on the price of shares in Finland is something that may not have occurred to you, but it is one of the options offered by many spread betting companies, so is worth a look. Finland has progressively become more international in its stock market, based in Helsinki, and about one third of the largest companies listed there are a subsidiary of a foreign company, and at least more than half owned by foreign investors. The largest company is Nokia which represents at least half the value of the entire stock market. In fact, foreign subsidiaries tend to do better than domestic companies.
One of the positive factors influencing foreign investment is the adoption of the euro. Foreign investment is not without its problems, particularly as the Finnish companies are tending to underperform on the stock market. This encourages foreign investors to buy up the local companies at bargain prices. The main influences on the Helsinki stock market are Nokia and some Finnish wood processing companies, with the smaller companies which are virtually ignored by any analysts. So if you want to spread bet on Finnish shares, apart from a few “names”, you may be hard-pressed to find any professional expert opinions.
If you’re comfortable performing technical analysis, which after all is the basic tool of short-term trading, this shortage of information may not matter to you. But be warned that you will not find a plethora of advice. On the other hand, you may regard this as an advantage. You will not be faced with major corporate investors unduly influencing the market by their machinations, and you will be dealing purely with smaller traders and investors acting as statistically predicted by technical analysis theory.
The way to approach this market is to lurk on the sidelines, observing which shares seem to be fluctuating in a predictable manner. The volume of trading is an important parameter for you to review, as if trading is below a certain level the results will become less predictable. To some extent this is taken care of by your spread betting provider, as they are unlikely to list shares in which there is inadequate trading, as this would prevent them from hedging the bets that they take.
As shares in this market will react in a different way from those which you may be used to, it can be valuable to do a certain amount of paper trading, following your trading strategies and checking that they do not need adjustment for the different market in Finland. Only then should you start placing live bets, as until your trading plan is proved you may just be wasting your money.
When you are starting to feel your way spread betting Finnish shares, you should take care to establish defined stop loss positions for every bet that you take. No matter how good your trading system, some of the bets will fail, and you need to ensure that you do not allow losing bets to overtake the amount of capital that you can afford to lose.