Capital Spreads offer a wide variety of financial markets which include indices, shares, currencies, commodities, interest rates and bonds. LCG will not quote any markets outside of its opening hours which are generally Sunday 23:00 to Friday 21:15, UK time.
An index is the value of a particular market that is made up of a certain number of stock prices. The value is expressed as a price that has changed from a base value allowing investors to perceive how a particular stock market has performed. Indices measure and represent a value of a basket of shares and for the majority of the world's major indices there are future prices as well as the specific cash price. See our Trading Glossary for more information.
The spot currency market, also known as forex or FX, is different to other financial markets in that it is not traded on a formal exchange. Volumes traded in the currency markets are vast totaling some $2 trillion every day and as a result FX makes up the largest and the most liquid markets in the world.
Not only are participants in the FX markets governments and banks, but they are individual companies and even retail investors all of whom are using price fluctuations to profit from movements in exchange rates or to hedge themselves against exposure to other currencies. The forex markets are open 24 hours a day and Capital Spreads quotes the major FX pairs overnight allowing you to trade outside of our core opening hours. See our Trading Glossary for more information.
Capital Spreads offers quotes on a wide range of commodity markets including soft commodities such as corn and soyabeans, energy markets like crude and heating oil, to metals like gold and silver. Each of our quotes reflects the real underlying future contracts allowing you to take the view that a commodity, oil or metal is overvalued or undervalued.
Trading commodities can be exciting, but at the same time risky due to their nature. Whilst the majority of these markets are electronically traded, the majority have different trading hours from each other and are priced slightly differently. See our Trading Glossary for more information.
STIRs are interest rate prices based on the bench mark interest rates set by an individual country's central bank. For example, Short Sterling prices are based on the interest rate set by the Bank of England and the Eurodollar (not to be confused with the FX pair EUR/USD, which is also called the euro/dollar) prices are based on the interest rate set by the US's Federal Open Market Committee (FOMC).
The prices for all STIRs are calculated by taking the market's expected level for the 3 month London Interbank Offer Rate (Libor) set by the major lending banks and subtracting them from 100. So, if Short Sterling for June next year is trading in the market at 96.50 this means that the market is expecting the 3mth Libor to be around 3.50% (100.00 - 96.50) at that time.
The reason STIRs are priced like this is due to their correlation with bonds, so when central banks are expected to raise interest rates, bonds and STIRs should fall in price. Therefore, if you buy a STIR, you believe that interest rates are going to fall. See our Trading Glossary for more information.
Usually referred to as fixed income securities, bonds are similar to shares whereby a government or company will issue debt as a form of raising money, which investors will then buy in return for interest income and the promise that they'll be paid back at some point in the future. The difference between bonds and shares is that the investor in shares is a part owner of a company, but an investor in bonds owns debt that is owed to them.
Also, like with shares the price of bonds rise and fall according to the demand for them. Capital Spreads provides quotes for the major government bonds trade in the UK, US and Europe. See our Trading Glossary for more information.
Rolling contracts provide a cost-effective solution for short to medium term trading. They do not expire and simply roll over from one day to the next trading day, along with any corresponding orders that might be attached. An overnight financing rate is applied for every night that you hold a rolling contract open. With rolling positions, because you have only a small percentage of the full value of the trade as margin on deposit, your account incurs a debit or credit for each day that the position is held overnight. Similar to a mortgage on a property, you can put down a deposit and the rest remaining balance you can pay for with an interest only loan from the bank.
Futures are slightly different to rolling contracts in that they are derived from a live underlying future that will expire. The future contracts can be closed at anytime before they expire, just as you can with a rolling contract. Futures prices take into consideration interest rates and any future dividend payments due between now and the time of expiry. This means that different future contracts trade at different 'fair values'.
Capital Spreads is a brand name of London Capital Group, which is authorised and regulated by the Financial Services Authority and a member of the London Stock Exchange. Registered Address: 12 Appold St, London, EC2A 2AW. Registered Number: 3218125.
