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How to Spread Bet Following the US Presidential Debates

Oct 16 2012 12:00AM

Marketwire

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LONDON -- (Marketwire) -- 10/16/12 -- The next televised Presidential debate will take place on Tuesday 16th October, just three weeks before voters hit the polls.

The outcome of the debate will be of keen interest to financial spread bettors, who will be evaluating the impact on the markets the Presidential race has and how they can trade this impact for profit.

Spread Betting and the US Election

How can you use financial spread betting to make money after the US Presidential debates?

T. Rowe Price claims that, "Presidential election years have coincided with favourable markets, particularly when the incumbent wins."

In the article 'How political conventions affect stocks,' written by Jonnelle Marte for MarketWatch, Marte found that "since 1900, the S&P 500 stock index has gained an average of 8.4% annually during all the years the US had a Democratic president, compared to an average gain of 5.3% with a Republican president."

If you decide that Obama would win tonight's debate and potentially boost the S&P 500 Index, you could go long or buy the US stock index and you would profit £ 10 for every point the Index rises above your entry price.

However, if prices fall, you would lose £ 10 for each point the S&P 500 Index falls below your entry price.

Alternatively, if you believe that the S&P 500 Index will fall, you can decide to go short or sell, and you profit £ 10 for every point it falls below your entry point.

However, you would lose £ 10 for every point the Index rises above your entry point.

It is recommended that you consider risk management tools such as guaranteed stop loss orders (GSLO) to keep losses to acceptable levels, or you could lose more than the funds you have in your account.

Ensure you're familiar with the risks and never invest more than you can afford to lose. Check out the City Index site for a wide range of spread betting tutorials, features and tips before opening a trade.

About City Index:
We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.

Spread betting, CFD trading and forex trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.



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Source: Marketwire


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