Spread Betting in a Bear Market

LONDON, December 30, 2010 - In financial spread betting, 'bear market' is the term given to a
financial market which falls over a period of time. If you are a spread
bettor, it is imperative that you know how to deal with bear markets. Here,
spread betting provider City Index (www.cityindex.co.uk/) looks at one
of the biggest bear markets in history - and at how spread betting traders
like you could tackle it today.

Black Monday

In spread betting and financial trading in general, October 19th 1987
will be forever remembered as Black Monday - the day that the stock market
fell by 23% in just 24 hours.

Though drastic when viewed in isolation, the 23% loss in investment value
was only a 23% loss for those who closed their positions and bailed out of
the market completely. In fact, the market did begin to climb back from that
low point and actually entered (barely) positive territory before the year
was out.

Spread betting in a bear market

One important aspect of surviving a bear market is preparation. Around
the time of Black Monday, spread bettors who employed technical analysis and
charting knew that bear markets tended to occur every few years, and
consequently chose to keep their spread bets open. This would prove to be the
right decision. Ultimately, if a trader opened a spread bet on the first
trading day of the year, January 2, and was able to keep it open throughout
Black Monday all the way to December 31, they would not have lost a single
penny.

Similarly, many spread betting traders opened positions with the markets
at their lowest point, clearly realising the opportunity that would present
itself as the markets recovered over the subsequent years. This shows the
value of completely understanding the movements of the markets on which you
are spread betting.

One of the best-known advantages of financial spread betting
(www.cityindex.co.uk/spread-betting/) over standard share trading is
that spread betting allows you to profit in a falling market as well as a
rising one - a feature which clearly lends itself to trading in a bear
market. Fundamentally, if you are able to interpret the signs and then react
quickly enough to spread bet accordingly, a bear market does not necessarily
mean a disastrous loss.

As technology has advanced over the years, the introductions of
innovations such as iPhone spread betting (
www.cityindex.co.uk/trading-platform/iphone-trading-platform.aspx) and
guaranteed stop losses have added greater flexibility and security to spread
betting. Not only can you now react wherever and whenever you want, you can
also give yourself guaranteed protection against market gapping in volatile
conditions when you do so.

The most recent bear market occurred between October 2007 and March 2009.
By learning about the risks and how to manage them, you can ensure that your
spread bet strategy is in the best possible shape to survive the next bear
market.

Learn more about spread betting on the financial markets with a free City
Index seminar. Visit www.cityindex.co.uk/learn-to-trade/seminars.aspx
for details.

Alternatively, open a free demo spread betting account in minutes at
www.cityindex.co.uk/learn-to-trade/demo-account.aspx

Spread betting carries a high level of risk to your capital with the
possibility of losing more than your initial investment and may not be
suitable for all investors. Ensure you fully understand the risks involved
and seek independent advice if necessary.

Contact: Joshua Raymond, City Index Group, Tel: +44(0)20-7107-7002, Email: joshua.raymond[at]cityindex.co.uk, Jonathan Smith / Alex Nekrassov, New Century Media, Tel: +44(0)20-7930-8033, Email: jsmith[at]newcenturymedia.co.uk / alexnekrassov[at]newcenturymedia.co.uk