Spread Betting Explained
What is spread betting? This is a type of betting mainly associated with financial betting but in theory can be used on any market. Spread betting rewards the accuracy of your prediction, the closer the result to your predicted outcome the more the pay off. This is different to fixed odds betting where you know what the payout will be when you place the wager
Caution should be taken with spread betting for the uninitiated. Loses in spread betting are not fixed but relative to accuracy of your prediction, this is unlike a fixed odds betting situation where the maximum you can lose is your stake. Poor prediction can therefore be costly and lead to high loses. Conversely rewards can be very high if you guess correctly. Most betting millionaires got there through spread betting rather than fixed odds!
Generally fixed-odds online bookmakers do not offer spread betting on sport and you may need to sign up with specific spread betting sports sites for this purpose. Betfair, for example, offer a service known as Tradefair for financial betting, but not for sports.
Financial Spread Betting
What is financial spread betting? This is actually one of the easiest ways to bet on financial stock markets and is a form of leveraged trading. Rather than buying or selling your own shares and commodities you simply bet on which way the price will move independently. This could be as simple as will the price of gold go up or down. Many spread bets are placed on currency prices.
One major benefit of spread betting vs stock trading is spread betting is classed as gambling and therefore any profit is effectively tax free (in the UK), there is no stamp duty to pay or capital gains tax. If you own your own shares and sell them at a profit however you would pay tax on your gains as this is classed as income.
Many people who spread bet already own shares and actually use spread betting as a tool to hedge against their own share portfolio. You can spread bet 24 hours a day on shares, markets, commodities, interest rates, currencies, etc. you name it if the price of something changes you could spread bet on it. In theory you could spread bet on the price of bread and milk, should you wish to.
Sports Spread Betting
If you do want to spread bet on sports here I will give you a couple of examples of how this might work. You can get sign up bonus and welcome offers for using some spread betting services, if you are going to try it you may as well take advantage of these offers. Some providers will also give demo accounts and I strongly recommend having a go on one of these first if you haven't done much spread betting before.
Spread betting in sports rewards your knowledge. Rather than offering a simple win/lose scenario you are betting on a range, you make a prediction where the result will fall in that range. If you know your stuff and you are accurate you can stand to win a fortune.
A simple(ish) example of a sports spread bet is a points based system. Let’s say you stake £10 on Liverpool to win, the win is worth 30 points, the draw worth 10 points and loss worth 0 points. The price you are quoted may be 15.0, for example. If Liverpool win the bet is (30-15) x £10, so you WIN £150. If Liverpool draw the bet is (15-10) x 10 and in this case you LOSE £25. If Liverpool lose (15-0) x 10, so you LOSE £150. You can further this by doing multiple spread betting, but you can see how this can become very complicated.
For a given spread bet sports market you are likely to be offered a "buy" price and a "sell" price. The difference between the buy and the sell price is known as the spread. So another example may could be Real Madrid against AC Millan and you are betting on the number of corners in the game. The spread betting bookmaker predicts there will be 8.5-9 corners, but you think there will be more than 9 corners and you "buy" at 9 for £10. Now you require more than 9 corners in the game to make a profit. At the end of the game for every corner over 9 you will win £10 and for every corner under 9 you are liable for £10 loses. If there are 13 corners you will win (13-9x10) £40, if there were only 5 corners you would lose (5-9x10) -£40.
The only way to know if you are going to like this type of betting is to give it a go. As I have said use a demo account for this purpose and only sign up once you are sure you have grasped the risks. I would also recommend you come up with an amount of money you are prepared to lose in a worst case scenario. For the bet example above if there were no corners in the game you could lose £90 in that one bet even though your stake is only £10.