Trading the French Stock Market

Trading the French Stock Market

A recent blog by BetOnMarkets revealed how the French leading Index, the CAC 40, and the German leading Index, the DAX 30, had lagged behind other stock markets like the Dow and the FTSE 100. Interestingly, the two European stock markets had lagged:

a) From the post credit crunch low, and
b) During the recovery 2010

Part of the reason for this is the fear that Germany and France would be dragged into a Euro-wide mess if Greece were to leave the single currency or if Germany pre-empted a Euro collapse by leaving itself.

Other theories have surfaced recently which might also explain the performance of the CAC 40. One argument is that France could be in serious trouble due to its huge exposure to the so called PIGS economies of Portugal, Ireland Greece and Spain.

It is actually quite easy to speculate on the French stock market to go up or down. For example, you can financial spread bet on the CAC 40 (the top 40 French stocks) to rise or fall.

Before I go further though, note that there are downsides to all forms of investing and with spread bets you need to be careful because you can lose more than your original stake.

Having said that, there are steps you can take to minimise your downside. You could use a Guaranteed Stop Loss Order to help reduce your risk. If you were to start to lose on a trade and the market continued to move in the wrong direction but hit your Stop Loss then, even if the market were to ‘Gap’, your trade would be closed and you wouldn’t lose any further funds.

I can remember a number of occasions when a Stop Loss restricted my losses as the markets took a quick turn for the worse.

Apart from risk management features though, spread bets are useful because they let you speculate on a wide range of international markets. That still includes the French and German Stock markets but it also includes UK and US shares, gold, crude oil and foreign exchange rates.

Also when the closing bell sounds at the end of the normal trading day, not all spread betting markets close. So whilst the Paris, London and New York stock exchanges close, many important spread betting markets remain open with companies like and CMC Markets.

Furthermore, because you are trading directly with a spread betting company, and not through a brokerage, there are no broker’s fees or commission charges.

Note though, whilst there are many positives, you must also understand the negatives. Spread bets carry a high level of risk. Ensure that spread betting matches your investment objectives. Familiarise yourself with the risks that are involved. Seek independent advice where necessary.

Peter Jones is a seasoned commentator on the UK financial markets including the spread betting and share trading markets.