FTSE 250 Stock Renishaw Plc Shares
Renishaw is a low key engineering company headquartered in Wotton-under-Edge in Gloucestershire. You can see from the relatively calm daily price chart below that it has stable growth, and would be relatively risk free for the newcomer to spread betting to trade, with no unexpected surprises.
The company is focused around developing innovative patents for engineering measurements. It started in 1973 when Sir David McMurtry needed to measure components on a prototype jet engine. He invented a probe device using a stylus, and patented the invention. The company was launched on to the London Stock Exchange in 1983.
The 21st century has seen several acquisitions, even though this is not the company’s chief form of expansion. In 2006, it bought a precision styli maker from Germany, and in 2010 it took a controlling interest in Measuring Devices Limited. It expanded its manufacturing capabilities by buying a 400,000 square-foot plant in Wales in 2011 from Bosch.
The company was hard hit by the global economic recession in 2008 with the price going down as low as 240. In addition, Renishaw suffered a further setback in the second half of 2011 when the price went down from about 1800 to about 800. However it has recovered strongly since then, doubling its orders within the last year. There is little sign of this earlier turbulence on the current daily chart.
This engineering field is a stable specialist environment, and the steady growth that you can see in the chart above is what might be expected of this company. Over time, the company will thrive through more innovation, but the existing products are sufficient to ensure a consistent future. The products include probes and calibration systems for CNC machinery, encoder systems, dental systems, and even devices for neurosurgery, and the diversified range of products developed in-house form a solid basis.
Renishaw Rolling Daily: How to Spread Bet on Renishaw Shares?
Before spread betting, you should perform a technical analysis on any stock you are considering, and determine which are the better indicators to point to future performance. The current price for a rolling daily bet on Renishaw is 1927 – 1937, and from your analysis you might decide to make a buy bet for £5 per point. This would imply that for every point the price of Renishaw stock rose, you would make a tax-free gain of £5. Obviously, if the market moved against you, you would incur a loss of £5 per point.
First, suppose for the sake of example that you watch the price go up until it reaches 2023 – 2033, and decide then to take your profits. Your bet would have opened at 1937, and in order to cash your profits you would close it at 2023, netting you an 86 point gain. Your stake was £5 per point, so that would amount to a win of £430.
Secondly, you might have watched as the price dropped after you placed the bet, until it reached a point where you decided that it was not going to turn around so you closed the trade, say when the quote was 1869.4 – 1879.4. With an opening price of 1937 and a closing price of 1869.4, you would have lost 67.6 points. For your chosen £5 stake, this would amount to a loss of £338.
Many spread traders do not have the time to watch the market continually, and so they use a stop loss order to ensure that any losing trades will be exited in a timely manner, and not go on to increase the losses. In this case a stop loss order might have taken you out of the losing trade earlier, say when the quote was 1898.2 – 1908.2. One of the secrets of succeeding at spread betting is to ensure that you keep your losses small. The starting price was 1937, as before. This time your bet was closed for you at 1898.2. The difference is 38.8 points, which for a £5 per point wager would amount to a loss of £194.
Renishaw Futures
Say that you think the price of Renishaw shares is too high, and that it will come down over the next few months. You might be tempted to place a sell or short bet on the stock, and the current quote for the far quarter futures bet is 1940 – 1952. You decide to stake £3.50 per point.
If you are right, you might find that the price comes down to 1796 – 1808, and decide to close your bet and collect your profits. The opening price for your short bet was 1940, and the closing price is 1808, giving you a difference of 132 points. 132 times £3.50 amounts to a gain of £462.
Understand Leverage & Risk
It is important to appreciate the risks involved in trading leveraged products. With spread betting you control a much larger position than your deposit would normally permit you to trade in the cash market. The obvious advantage of this is that potential returns can be much bigger however this also increases the risk. This is why risk management is so important when trading.
Whenever you trade on the financial markets, there is a fair chance that you will lose. One of the secrets of succeeding at financial trading is to keep your losses small relative to your gains, as then you will come out on top overall. Say for this bet the market moves against your position to 1997.6 – 2009.6, so you decided to close the bet and accept your loss. The starting price was 1940. You closed your losing trade at 2009.6. 2009.6 minus 1940 is 69.6 points lost. Multiplying this times £3.50 gives you a loss of £243.60.
It can work out even better to use a stop loss order, as then your losing trade will be closed as soon as it reaches a limit level that you set, and you do not rely on keeping your eye on the market. With a stop loss order on this bet, it might have closed when the futures price was 1968.8 – 1980.8. This time the trade would close at 1980.8, so taking away the opening price of 1940 you would have lost 40.8 points. With a stake of £3.50 per point, that amounts to a loss of £142.80.