Finance Sorell

Archive for March, 2011

Finding the right broker is not always a straightforward task, you should know that, if you are a beginner in spread betting. There is a big chance that you get tricked by the superficialities like being attracted to brokers that offer spread betting bonuses, trading offers instead of one that offers good execution, if you lack the proper experience and ambition sometimes. A very high competition in this field makes you to pay attention and compare spread trading brokers before actually deciding to work with one. Taking into consideration the spread you might pay for every trade should be first. Since it is already part of the spread, making the comparison process very difficult, especially as the sizes of the bid-offer spreads differ for every market, a broker will never charge you per commission. Considering the margin requirement which can range from 5% to some 75% for some markets meaning that you only have to come up with a percentage of the whole value for each trade is needed. Remember that at the end of the day more margin equals more borrowing and you don’t really want to gear yourself to the maximum, though you want to have good margins. Not only for each market but varies greatly from one broker to another, if the percentage deposit margins different is more.

Somewhere between 3 and 30 percent, it should be normally. Most providers will offer all the major markets like the US, UK, Europe, Japan equity markets but few will quote small or AIM listed companies or even companies in emerging markets, you may compare trading brokers by the number of markets they deal with as well. You also need to consider another variable if you intend to hold trades overnight because in such cases a financing interest fee is payable which can range from just 2% to 4% over Libor at some trading houses. As it will greatly affect the costs of trading for holding longer term positions, consider it. Last and probably most important, check out the spread betting reviews for the brokers you are interested to. People tend to share their experiences although here it worth pointing that people are more biased to exposing unpleasant and unprofessional providers than posting good reviews.

Let’s see a few top trading brokers and people’s view, as you know what criteria to look after before opening an account at a spread betting provider ETX Capital is one of the better spread betting providers in the world, It is not a big spread betting company but it quotes all the major markets and provides a decent all-round service. For the less experienced ones who are afraid to involve themselves with small, unknown markets, it is a good starting place. On the other hand, Capital Spreads covers more markets and offers competitive spreads and margins. In the past in City Index another good provider, the trading platform was somewhat unstable and used to time-out or result in screen freezes – however they have now released a new version of their trading platform that has solved most of these issues. Though IG Index is the oldest, grand-daddy of spread betting and quotes all the markets doesn’t excel on a particular field precisely, but it just has a little of everything, decent platform, with good graphs, not too simple and not too advanced either. These four names are among the dozens out there, the customer service is decent, fast and reliable.

As you need to be aware of the risks of margin trading, spread betting might not be suitable for all traders and investors. Compare trading brokers and their spread betting reviews in order to be able to reach a better informed decision and never throw your money off the window for the first broker you encounter, as not all spread betting providers are created equal. Though it is an investment for you, for some this may be business.

There seems to have been a rapid shift in sentiment in the oil market towards a belief that supply-demand might be moving into balance faster than expected.

Crude oil prices hit a two week high last week and the differential in New York compared with London’s Brent crude eased.

New York oil traded around $US46 a barrel overnight.

There’s now a feeling that the output cuts promised by OPEC, are happening and sticking for the moment.

OPEC will cut supplies by 5.4% this month to 26.15 million barrels a day, according to early figures from consultant group PetroLogistics Ltd.

And other analysts are more confidently claiming that a lot of the oil surplus will disappear in the next few months because of the OPEC cuts.

The price contango between the current month in the futures market and the out months is still high, indicating that some buyers believe prices later this year will be higher as the output cuts work their way through the system.

That of course assumes that the global economy doesn’t worsen any further and demand from China stabilises.

Starting this month, OPEC members with production targets, all except Iraq, have a combined quota of 24.845 million barrels a day.

According to PetroLogistics, the cuts have forced output below the quota limit, a sign of the determination some in the organisation have towards enforcing the production chop.

It is generally accepted to be Saudi Arabia which has been reported as making it clear that it will push its output even lower to make the cutbacks work in the marketplace.

The country is expected to cut output to below 8 million barrels of oil a day (b/d) next month, down from about 9.7 million b/d in the northern summer.

Iran, Venezuela, Nigeria and Ecuador were reported to be cutting output, instead of cheating by pushing more oil into the market than allowed.

How long this newly found discipline lasts is another thing as the whims of the rulers of these countries and their need for cash will make them unstable supporters of the cuts if the global economy slows even further, as it could very well do.

Mexico said that its 2008 output was the lowest in 13 years as it fell to around 2.3 million b/d.

That 9% fall was the biggest in 50 years and Mexico, like Nigeria, Iran and Venezuela, are paying the price for under investment, poor maintenance and aging fields (and keeping out foreign companies with the know-how to boost output).

Russia, the biggest non-OPEC country, is in the same boat and will be under growing pressure this year to maximise oil income to offset a sharp slowdown in the domestic economy and rising instability in the financial sector.

Oil traders last week reported that the oversupply of crude (which had seen major oil companies chartering tankers to store crude for delivery later this year to try and take advantage of the contango effect) was easing.

In fact the Financial Times reported late last week that oil tanker loads, which a month ago were proving unsaleable because of the glut in the physical oil market, were selling relatively quickly as refiners look for supplies to replace the oil they are no longer being offered by OPEC countries such as Saudi Arabia, Iran and even Venezuela.

The paper said some refineries in Asia were looking for oil to replace shortfalls from OPEC suppliers.

We will get two timely reminders of the downside from the oil price crunch when US giants, Chevron and Exxon Mobil report 4th quarter and 2008 figures this week.

For both it will be a year of two halves: boom in the six months to June, slump in the December half.

We saw that 4th quarter bust impact the  giant Schlumberger oil services group which Friday reported that it would cut its staff by 5,000 worldwide after producing a 17% drop in earnings.

The company made clear it saw even tougher times ahead this year as demand for oil, oil services and supply are cut by the economic downturn.

Andrew Gould, chairman and chief executive of Schlumberger, said that oil companies had been curtailing their business faster as oil prices collapsed in the past months quicker than during the last such contraction in 1998.

The company employs about 87,000 people and has already said it would cut 1,000 jobs in North America. Mr Gould said that he could not rule out more job cuts in the first half of this year.

Mr Gould also warned that the recent sharp decline in the price of oil was making some fields uneconomic.

Media reports saw lots of so-called ‘stripper wells’ in the US (which produce a few barrels a day) are being closed down because they are not economic at current prices. That will add to the growing constraints on supply talked about above in this story.

Schlumberger said net profit, including charges and credits, was $US1.1 billion, in the last quarter of 2008, compared to $US1.3 billion in the last quarter of 2008.

The company’s profit margin plunged from 40% to just 15% in the quarter from the September quarter.

Figures from the US Department of Energy last week showed that US fuel demand averaged 19.4 million barrels a day in the four weeks ended January 16, down 4.7% from the same period of 2008.

When the world’s biggest user of oil and gas is slowing, everyone is hurt.

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At one time, the only people investing in the stock market were those who were already well off. They could afford to hire their own personal stock broker who would guide them and help them to make the most of their money. Discount brokers are available too though, which mean that just about anyone is able to invest if they so choose. Yes, even you! The only real downfall is that you’ll need to know a little bit about what you’re doing. Discount brokers don’t give a full-fledged service that includes personal counseling and guidance as normal brokers do. But still, this is one way you can get started investing without much of a cost.

Options house

Option house is an online discount broker option available to traders new and seasoned. They charge a low commission when in comparison to many other online discount brokers. They offer a streamlined, professional trading platform and customer service that can hang in there with the best of them. Now, let us talk about its pros and cons.

Pros

Options house charges only a $2.95 fee, which is at 50 % discounted price against popular online discount brokers like Scottrade. It has also a web based trading platform, which acts more like standalone platforms. This platform is filled with a lot of functions. Options’ house offers real time streaming quotes. They support ACH fund transfer. They provide interactive web 2.0 features like virtual account, which is used in practicing stocks and options trading. They offer a wide range of stock research tools to their customers. They have a great customer care and support department. They reimburse a full fee which is charged by any other broker while moving account to options’ house. They also provide affiliate/referral program similar to first trade. You can get as much as $50 for referring a single friend! They also offer periodic promotional offers.

Cons They have a requirement of minimum balance for opening an account. 1000 $ minimum balance is required, which is very high when compared to other online discount brokers. In an options’ account application form has to be submitted before you can activate your account. You can’t use the real-time quote before making $1000 deposit. You cannot change your account information (such as your address or phone number), which is a major drawback. You cannot reinvest dividends.

Verdict: It has more features at less price, but be aware of some serious drawbacks.