Alliance Trust Fundamentals
Alliance Trust is a long-established firm specializing in financial services and investment, and headquartered in Scotland. Although its price chart below is unexciting, when spread betting it can be useful sometimes to have interests in reliable rather than impetuous movers.
As you can see, there are still several tradable moves in this daily chart, together with some long candles.
The company was first established in 1888, and currently operates the largest investment trust in the UK. It is the 10th largest company in Scotland. It was formed from a merger of mortgage companies, two of them set up for Scotland mortgages and investments, and one of them set up to provide loans for ex-pat farmers on the West Coast of the US. As such, it attracted a lot of high-profile investors.
It formed an informal alliance with another company which invested in the sugar planters in Hawaii in 1918, and the companies became known as The Second Alliance Trust, even though this name was not legally ratified until 2006.
Alliance Trust diversified into stocks and fixed income investments in the first half of the 20th century, tending to move away from mortgages, and started a savings division in the 80s to offer pensions and other investment products. It was not until 1929 that shares in Alliance Trust were offered.
The formalizing of relationships in 2006 resulted in a drastic increase in valuation, which catapulted Alliance Trust into the FTSE 100 early in 2008. Of course the global economic recession hit all financial companies, and Alliance Trust was not immune to these effects. Consequently, nowadays it is listed in the FTSE 250, which it entered early in 2011.
For spread trading, you can see that there are many periods of sideways movement at the moment, but with occasional defined moves. To profit from this stock, you will need to identify the best indicators for these moves.
Alliance Trust Rolling Daily: How to Spread Bet on Alliance Trust shares?
The current price for a rolling daily bet on Alliance Trust is 369.27 – 371.63. With a rolling daily bet, your account may be charged a small amount each evening when a long bet is “rolled over”. In theory, you may receive a credit to your account if you hold a short bet open, but given the low interest rates at present, either of these amounts will not be significant.
Suppose you believe that Alliance Trust will be going up in value, you could place a long bet buying at 371.63, with a stake of £5 per point. If you are correct, you might find that you are able to close the trade and collect your winnings when the quote is at 403.92 – 406.13. It is easy to work out how much you have won. Your bet opened at 371.63, and went up to 403.92, as a long bet closes on the selling price. The difference between these values is 32.29 points. Multiplying by your stake, you will find that you took a profit of £161.45.
On the other hand, if you are not correct and the price falls after you placed your bet then you may be faced with cutting your losses and closing the trade before the price drops too far. Perhaps you close your losing bet when the price is at 348.22 – 350.46. With a starting price of 371.63, and the closing price of 348.22, your loss is 23.41 points, losing you £117.05.
Many spread betters use the stoploss order to contain their losses – it requires the spread betting provider to close your losing bet, even if you are not watching the markets, once a certain price is reached. With a stoploss order, you might have found your losing bet closing at a price of 354.79 – 356.91. 371.63 minus 354.79 is 16.84 points, at a cost of £84.20.
Alliance Trust Futures Based Spread Bet
If you are considering spread betting on a share where you think the price may take a few weeks or months to go in your direction, you may be interested in a futures based bet. With a futures based spread bet, your bet once placed will not have any further cost or adjustment to your account, and can be left open until the expiration date or closed at any time.
The far quarter futures style bet on Alliance Trust is priced at 370.12 – 374.59 at present. You might choose to stake £3.50 per point on the short side, betting that the price will fall. If this turns out to be correct, you could find that you are closing your bet for a profit when the quote is 329.63 – 333.49. You opened your bet at a price of 370.12. The bet closed at 333.49. The difference between these is 36.63 points. Multiplying by your stake, you would have won £128.20.
But you might also have found that the price went up after you placed your short or sell bet, putting you in a losing position. You would need to close your trade and accept your loss, in order to avoid further loss. Say it went up to 396.52 – 399.88. Your sell bet would close at 399.88, the “buying” price, which is 29.76 points about the opening price. For your chosen size of stake, this amounts to £104.16 lost.
A lot of traders and spread betters use the stop loss order to protect themselves from large losses. The spread betting company has to close your losing bet when it reaches a certain level, without you needing to contact them. With a stoploss order, your bet might have closed at 389.19 – 393.25. 393.25 minus 370.12 is 23.13 points, for a cost of £80.96.