What is Spread Betting ?

29 06 2010

WHAT IS SPREAD BETTING AND HOW DOES IT WORK.??

Spread betting is a great way of betting,particularly for sports fans and bettors – no matter how unequal a sporting contest is you can still enjoy a bet – with the opportunity betting from the first minute right through to the very end.Not only can you bet right through any sporting event you can change your mind,and adjust your bets at any time !.

The best way to explain the principle is firstly to use whole number examples(many punters are baffled when they see fractions of goals or similar when first looking at spread betting – how can there be 2.3 goals?(we will explain later).

Lets choose cricket,or any sport where runs are made.The spread betting companies may decide that a batsman should make about 30 runs.They would therefore offer a spread of say 29 – 31.If you think that batsman would score more than that you would BUY,if you did not rate the batsman and thought he would score less you would SELL.(You would keep your stakes low in this market due to volatility.)

IN THIS EXAMPLE THE BATSMAN SCORES 51

If you BUY for $1 – you will win $20 (you bought at 31,result was 51 – the batsman scored 20 more runs than buy offer)
if you SELL for $1 – you will lose $22(you sold at 29,result was 51 – the batsman scored 22 runs more than sell offer)

The beauty of spread betting is the odds change all the time,so you can close a bet at any time and take your profit,or cut your losses,or alternatively sit back and watch your profits grow(or losses)right through till the end.

Now to look at fractions in spread betting – this can be,and can remain baffling to many players- lets look at a soccer match – TOTAL GOALS.- that is the number of goals in a football match.

The spread betting firms are offering total goals spread of 3.5 – 3.8 goals.Obviously you can not have 3.5 goals.What the odds imply is the estimate is between 3 and 4 goals,with a slight prefernce for 4 goals(the spread is closer to 4 than 3).Your stakes in this market will be higher as there is less volatility.

IN THIS EXAMPLE THE SCORE IS 2 – 0 – TOTAL GOALS = 2

If you BUY for $100 you will LOSE $180 (you bought at 3.8,result was 2 – the total goals were 1.8 less buy offer- $100 times 1.8 = $180)
if you SELL for $100 you will WIN $150(you sold at3.5,result was 2 – the total goals were 1.5 less than sell offer – $100 times 1.5 = $150.

The spread betting firms make their profits from the gaps between the buy and sell figures – if they get it spot on,they get a small profit from BOTH the buyers and seller.

Something to bear in mind when spread betting – human nature means most players have an inclination to BUY – they do that because there is no upper limit for profits,unlike selling,when you know your maximum win.Buyers are always hoping for that freak high scoring game for that elusive big hit.

Of course the spread betting companies know this and always pitch there spreads a little higher than they want them to be(they cannot go too high as the big hitters would step in and sell aggresively),so always approach a market with a view to SELL ,and only consider buying after selling has been discounted after careful thought.

As alway there is a particular warning for punters before they start spread betting – be very careful.It is an extremely volatile form of betting,and you should always be aware of your liabilities at all times,also play one market at a time and closing before opening another.

However spread betting is great fun with ingenious betting opportunities on offer – with such a vast range of bets try to find a niche where you can become experienced and knowledgable.with an edge over the market makers who have to cover thousands of different markets.

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