Excerpt from: Understanding Spread Betting
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| November 07, 2007 | | Spread betting and perception | When placing spread bets, one factor to look at in deciding whether to short or favour a financial instrument should be investor perception. Perception has a way of becoming reality.
The troubled afflicting all things U.S. is a good example. The credit market crisis created a perception that the economy was weak. It limped along for a while, but successive rate cuts and investors fleeing to safe haven investments, like gold, bolstered the perception of a tanking U.S. economy. And as more people abandoned it, the States eventually succumbed, bringing the stock market down as well.
When deciding on spread betting, make sure to understand how perception is running. This can give you valuable clues as to where a market is heading.
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