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Last update : July 2010
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| A grey market is an unofficial market on a share before it has been listed on the London Stock Exchange. Here's an example - |
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- The government wants to sell one of its utility companies
- Investment banks will be appointed to sell shares to the public and in turn they will set a price and date for the first day of trading, for example
- 2nd March and £2.50 per share
- And around 1-2 months before the official listing date a grey market will develop where traders can buy or sell the shares before they're actually listed
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| Spread Bets are well suited to grey markets |
| When you trade a share using spread bets you're not buying or selling the physical shares. Instead you're betting on a number (the share price) rising or falling.
Therefore spread bets are perfect vehicles for trading grey markets because the trader doesn't have any interest in actually owning the shares, just profiting from their movement.
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| Summary |
| Grey market trading used to be much more common that it is today, mainly due to the government's policy of privatising many of its assets in the 1980 and 90s. But most if not all the large assets have now been sold.
Still, if there's interest in the market for a certain new issue the spread bet brokers are sure to offer their clients a 2-way dealing price. Also, note that Grey markets can be traded on any share which is about to be listed, and not just government privatisations.
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| The importance of getting the right spread bet broker |
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There are good spread bet brokers and bad ones. Having a good broker won't guarantee you profits but a bad broker will probably lead to losses as a combination of their gamesmanship and suspect software takes its financial toll.
So who do I recommend? Simple, the 2 brokers I personally use for my own spread betting. Read this page for more details.
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FREE Report - How to Learn Spread Betting and Prosper
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How to build the all-important trading experience
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Where to get trading help and advice
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Which broker to use and why
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Simple 2 month training plan to follow
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Download the FREE report |
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Read more in the Spread Betting section:
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