Taylor Wimpey is one of the largest house builders in the UK, and also has operations in Spain. You can see from the daily chart below that it is an active stock, and has provided many opportunities for spread betting in recent times.
As you can probably guess from the name even if you missed the event, Taylor Wimpey resulted from a merger of two major builders, George Wimpey and Taylor Woodrow. This marriage of similars happened in 2007, just before the global economic meltdown, and the peak price of more than 400 has never been seen again. As you can see from the chart, the stock is trading around 60 pence right now.
The original Taylor Woodrow company was founded in 1921 by Frank Taylor with the building of two houses in Blackpool. Woodrow was an uncle, included in the company as Taylor was too young at 16 to form his own company.
George Wimpey founded his company in 1880, and on his death in 1913 the family sold the business. The purchaser, Godfrey Mitchell, decided to retain the name. In the 70s and 80s it became the UK’s largest private homebuilder, and also had operations around the world. Whereas Taylor Woodrow was involved in all types of construction, Wimpeys always tended to build residential properties.
There have been various takeovers and selloffs over the years, and Taylor Wimpey is still a major force in the UK, though it has divested itself of other interests such as those in North America and Canada.
The daily price chart above shows some classic traits, with the MACD providing a good reflection of the prevailing trends. Note also how the Bollinger Bands narrow before a major move, another expected feature of technical analysis. Given the price volatility, you may find that this is an attractive stock to spread trade with plenty of opportunity for profit.
Taylor Wimpey Rolling Daily
Taylor Wimpey is on a general uptrend, so if you see a short-term trading opportunity where you think the price will increase, you would be betting with the prevailing trend, which is usually preferred. If you think a price is going up, you may choose to wager £20 per point, as the price is relatively small. The current quote for a rolling daily bet is 58.00 – 58.30, so your long bet would be placed at 58.30.
For the sake of this example, assume the price goes up to 72.46 – 72.76 and you decide to close your bet and collect your profits. Your bet would close at the selling price of 72.46. The starting price was 58.30, so you have made 72.46 minus 58.30 points with this wager, which amounts to 14.16 points. Multiplying by your stake of £20, your winnings work out to £283.20.
However, no matter how carefully you select your trade, there will be bets that are losers. Say for instance that the price fell to 46.30 – 46.60 just after you placed your bet. If you closed your bet and accepted the loss, you would have lost 58.30 less 46.30 points, which is 12 points. It is a simple calculation that this bet would have cost you £240.
Often it works out better to use a stop loss order. A stop loss order is placed when you take out the original bet, and tells your spread betting provider to close the trade for a loss if it reaches a certain level of price, rather than letting the losses get larger. You do not have to be watching the market, which is very useful for part-time traders. In this case a stop loss order might have closed your trade when the price fell to 51.25 – 51.55. The difference in points this time would be 7.05, so your loss would be £141.
Taylor Wimpey Quarterly Futures Bet
If you like to hold a bet open for a few weeks or months, but do not like the daily charges of a rollover, then you might want to look at the quarterly futures style bet. The current price for the far quarter on Taylor Wimpey is 58.14 – 58.84. Although these do not expire for eight months, you can close your bet at any time if it suits you.
Say you want to place a long bet for £15 per point. This would go on at the buying price of 58.84. If the price goes up, then you may consider cashing in your bet and collecting the profit. You need to judge the best time to do this, because if you take your profit too early you may not maximize your winnings; but if you wait, the price may come back down. Say you closed your bet when the price was up at 75.37 – 76.07. Your bet was placed at a starting price of 58.84, and it closed at 75.37. Taking one away from the other, you have made 16.53 points. At £15 per point, that is worth £247.95.
But if the price went in the other direction, you would have to judge when to close the bet and accept your loss, so that you did not leave yourself open to the losses increasing. Say you closed your bet when the price dropped down to 45.92 – 46.60. With the opening price of 58.84 and the closing price of 45.92, you would have lost 12.92 points, which would cost you £193.80.
To save you watching the markets you might have placed a stop loss order when you took out your bet. This could have closed your position earlier, when the quote was 48.62 – 49.28. This time the bet closed at 48.62, so taking that away from 58.84 you would have lost 10.22 points. For your chosen size of bet, this would cost £153.30.