WEXFORD’S SPREAD traders are the sharpest in the Republic, while their rivals in Dublin, the centre of the State’s financial services industry, are among the worst, generating returns well below the overall average. This is according to figures released at the weekend.
The statistics show Wexford residents top the State’s financial spread betting league, getting returns of almost 4.91 times, almost 500 per cent, what the average client earned on a year’s trading. This is the second year in a row that the county has finished in the number one spot.
The figures, from Irish financial spread trading firm Delta Index, cover their customers’ performance in spread betting on the movements in share and commodity prices, stock market indices, and foreign exchange.
Wexford’s performance contrasts with that of Dublin, home to the biggest banks, stock brokers and financial services firms in the Republic, which finished 22nd of 26. The capital’s traders could only manage a return of 2.21 below the average.
In other words, for every €221 earned by the average trader, the Dubs could only manage to make €100. However, their finishing position this year is an improvement on 2009, when they could only make it into 25th place.
Kildare traders finished second with a return of 3.48, or 348 per cent, above the average, meaning they were the most improved performers in the State, as they finished 15th last year.
Financial spread betting or trading is a means of speculating on the movement in various financial instruments. It is a “highly leveraged” activity, which means that those involved risk losing as well as winning multiples of the amounts that they stake.
For example, a €1 bet that the Iseq share index will increase over a certain point or spread would earn €10 if the index were to increase by 10 points, but could lose €10 if it were to fall 10 points below the spread. Traders generally use various methods to limit risk.
Financial spread trading has no direct impact on the price or movement of the instruments involved.
The actual risk taken depends on the instruments themselves.
Delta’s clients place funds on deposit with the firm and leverage that. For example, €5,000 will get a position equivalent to €25,000 worth of Bank of Ireland shares or €200,000 worth of exposure to the Dow Jones index. The average amount deposited was €30,000.
Clients in Clare risked up to eight times the amount held on deposit, meaning that if they had €30,000 on deposit, they risked up to €240,000. However, this did not translate into gains, as traders from the county made returns of 1.72 times less than the average.
They also favoured the more volatile currency and commodity trades over reasonably safer shares and indices.
Wexford traders were relatively cautious, risking 2.2 times their deposit, and they went for less volatile trades on shares and indices.
Delta Index managing director Michael O’Shea said the results showed that “taking the big risk does not guarantee the equivalent return while taking the steady path, as demonstrated by Wexford, is often the best way to generate profitable returns”.
