Nikkei 225 Spread Betting Guide

Nikkei 225 Spread Betting Guide

Nikkei 225 Spread Betting Guide

With financial spread betting, the Nikkei 225 index is often called the “Japan 225”.

arrow_forwardLive Nikkei 225 Chart
arrow_forwardLive Nikkei 225 Prices
arrow_forwardWhere to Spread Bet on the Nikkei 225
arrow_forwardHow to Spread Bet on the Nikkei 225
arrow_forwardWhere to Spread Bet on Japanese Shares


Live Nikkei 225 Chart and Prices



16 November 2017: Caution – Nikkei 225 Could Give Up Another 10%

  • trending_downThe Nikkei has already dropped 1,000 (4.5%) points since last week’s high at 23,428.

  • warningAccording to Michael Hewson, Chief Market Analyst, CMC Markets, the index is looking susceptible to further losses:
If the market doesn’t stabilise in the next few days then more portfolio managers will want to lock in profits before the year end.

With the markets looking a little edgy, a further 10% drop is possible.

Nikkei 225 Chart for 2017
Nikkei 225 Chart for 2017
1,000pts Down in a Week…



13 November 2017: Nikkei 225 Down Another 1.3%

The Nikkei’s dropped 4.3% over the last 3 sessions. According to Ipek Ozkardeskaya, Senior Market Analyst, LCG, there doesn’t seem to be a key reason for this drop.

After hitting a mutli-year high of 23,382 on 9 November it looks like profit taking is the main reason for the drop.
At the same time, there has been some upward pressure on the Yen.

Japanese producer prices rose 3.4% year-on-year in October – that’s a very welcome sign of some inflation for Japan.

If inflation does start to take hold then Japan’s ultra loose monetary policy would need to be reined in = stronger yen = lower Japanese stock market.


9 November 2017: Japan 225 Seeing Volatile Swings

The Nikkei 225 shot up 2% past the 23,000 level… a level it’s had issues with for 25 years.

The index then dropped 1.8% and closed the session a negligible 0.20% lower.

Why? We saw some weak economic data, the core machine orders dropped 8.1% month-on-month (much worse than expected).

So it was the usual story of poor data = weaker yen = higher stock market.

And then a correction as the stock market a little carried away with itself…not an easy one to trade.

Japan 225 Bull Run
23,000 still elusive


23 October 2017: Tokyo Stock Market Gaps Higher

USD/JPY and the Japan 225 index are trading higher – see stock market index gapped after Japanese election.


11 October 2017: Tokyo Stock Market at 21 Year High!

The Japan 225 is not a popular spread betting market and that’s not surprising when:
  • arrow_forwardThe market hours aren’t that convenient, and
  • arrow_forwardIt doesn’t get that much in-depth press coverage, and
  • arrow_forwardYour average spread bettor, myself included, really doesn’t know much about the 225 companies in the index
It’s probably a good thing we don’t trade it more.

Japan 225 Bull Run

The Tokyo stock market has now closed at a 21 year high.

Here’s a quick look at the market since February 1996 (thanks to IG for having chart that go that far back).

Since November 2012 the market has risen sharply from 8,640 to the current level around 20,855, that’s a pretty cheeky bull run with a 12,215 point increase.

Japan 225 Bull Run
Nikkei 225 Index: 1996 to 2017


11 October 2017: Japan 225 vs USD/JPY Correlation

While the Japan 225 doesn’t get the same coverage at the FTSE, Dow Jones or DAX, the USD/JPY pair does get quite a bit of coverage in the forex markets.

It’s also interesting to look at the Japan 225 vs USD/JPY correlation.

The correlation is far from perfect but the two charts below give a nice view of the markets since November 2010.

Japan 225 Index: November 2010 - October 2017
Japan 225 Index: November 2010 – October 2017

USD/JPY: November 2010 - October 2017
USD/JPY: November 2010 – October 2017



Where Can I Spread Bet on the Nikkei 225?

A number of the more established brokers offer live charts & prices on stock markets indices including Nikkei 225, e.g.:

navigate_beforeComparison Scroll navigate_next
Company Index Min
Stake
UK
100
Spread
Germany
30
Spread
Wall
Street
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S&P
500
Spread
NASDAQ
100
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Japan
255
Spread
Apply
Financial Spreads Review £0.50 0.8 (5) 1 (2) 1 (4) 3 0.5 8 Apply

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City Index Review £1 1 (+) 1 (+) 1.6 (+) 6 1 (+) 8 (+) Apply

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ETX Capital Review £0.50 1 (2,6) 1 (2,6) 1 (2) 5 1 (2) Variable Apply

Review
IG Review £1-5 1 (4) 1 (5) 1.8 (5.8) 5 (9) 1 (3) 8 (30) Apply

Review



Where to Spread Bet on Japanese Shares

Very few firms offer trading on individual Japanese stocks, both IG and CMC Markets have in the past but that’s about it.


How to Spread Bet on Nikkei 225

For example, let’s imagine that you are thinking of spread betting on the Nikkei 225, so you look at a platform like ETX, and see that they are offering the current quote at:

Nikkei 225 Rolling Daily: 8613 – 8623

Here is what you can expect with a spread bet.

The Market: Nikkei 225 Rolling Daily
Price (Spread): 8613 – 8623
What This Means: You can take a position on the Nikkei 225 Rolling Daily market going:

  arrow_upward  Above 8623, or
  arrow_downward  Below 8613

This is a Rolling Daily trade and so there is no expiry date. If you haven’t closed your trade and the session ends then your position will automatically roll over into the next trading session.

Note: if a trade is rolled over then you will normally either be credited or charged for overnight financing based on the direction of your spread bet.

Also see what is a daily spread bet?
Trading Units: Spread bets on the Nikkei 225 market are priced in £x per point.

Where a point is 1 point of the stock index’s price movement.

E.g. if the Nikkei 225 moves by 45 points then you would win or lose 45 multiples of your stake.
Stake per Unit: You decide how much you would like to risk per point, e.g. £2 per point, £4 per point, £20 per point etc.
Brief Staking Example: As an example, if you have a stake of £3 per point and the Nikkei 225 moves 30 points, you would lose/win £3 per point x 30 points = £90.


Spread Betting Example | Taking a Bullish View of the Nikkei 225

Financial spread trading on the stock index to increase

You Decide Whether to Buy or Sell: The Nikkei 225 to go:

  arrow_upward  Above 8623? or
  arrow_downward  Below 8613?

Let’s Say You Want to Buy:   arrow_downward  Above 8623
You Decide Your Stake Size, Let’s Assume You Choose: £2 per point
So What Now?
  • You make £2 for each point the Nikkei 225 moves above 8623
  • You will lose £2 for every point the Nikkei 225 goes lower than 8623
If You Are Betting on a Market to Go Up Your Trading P/L = (Settlement Price – Opening Price) x stake per point
 
Trading Scenario 1 The Nikkei 225 goes higher and the spread trading market is revised and is set at 8692 – 8702.
Time to Take a Profit? At this point, you can choose to let your bet run or close it, i.e. close your trade for a profit. In this case you choose to settle your bet and sell the market at 8692.
Your Trading P/L = (Settlement Price – Opening Price) x stake per point
(8692 – 8623) x £2 per point
69 points x £2 per point
Your Trading P/L = £138 profit
 
Trading Scenario 2 The Nikkei 225 decreases and the market is revised and changes to 8558 – 8568.
Close and Restrict Your Loss? At this point, you could opt to leave your position open or close it, i.e. close your trade to restrict your losses. In this instance you choose to close your bet by selling the market at 8558.
Your Trading P/L = (Settlement Price – Opening Price) x stake per point
(8558 – 8623) x £2 per point
-65 points x £2 per point
Your Trading P/L = -£130 loss


Worked Spread Betting Example | Going Short of the Nikkei 225

Spread betting on the stock index to decrease

You Choose Whether to Buy or Sell: The Nikkei 225 to push:

  arrow_upward  Above 8623? or
  arrow_downward  Below 8613?

Let’s Assume You Go Short:   arrow_downward  Below 8613
You Decide Your Stake, Let’s Assume You Select: £1 per point
What Happens Next?
  • You will lose £1 for every point the Nikkei 225 increases higher than 8613
  • You make £1 for every point the Nikkei 225 decreases below 8613
If You Are Selling a Spread Bet Your Trading P/L = (Opening Price – Settlement Price) x stake per point
 
Trading Scenario 3 The Nikkei 225 drops and the financial spread betting market adjusts and moves to 8500 – 8510.
Close and Take Your Profit? You can opt to leave your position open or close it and take your profit. For this example, you opt to close your bet by buying at 8510.
Your Trading P/L = (Opening Price – Settlement Price) x stake per point
(8613 – 8510) x £1 per point
103 points x £1 per point
Your Trading P/L = £103 profit
 
Trading Scenario 4 The Nikkei 225 climbs and the spread betting market is revised to 8700 – 8710.
Close and Limit the Loss?At this point, you could decide to let your trade run or close it to limit your loss. In this example you opt to settle your bet and buy at 8710.
Your Trading P/L = (Opening Price – Settlement Price) x stake per point
(8613 – 8710) x £1 per point
-97 points x £1 per point
Your Trading P/L = -£97 loss


Nikkei 225 (Japan 225) Notes:

AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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