A Guide To Spread Betting

Title: A Guide To Spread Betting

Author: Jim Robertson

Article:
Spread Betting comes in the form of two distinct flavours;
sports and financial. However, the principle of spread betting
is the same regardless of the types of market or bets involved.

The spread betting firms quote a spread on the future prospects
of a share or index, or the predicted outcomes of a sporting
event. The investor/gambler can then decide as to whether they
believe the price will rise or fall.

Don't worry if this makes no sense. By the time you have
finished reading this short guide to spread betting you will
have a good understanding of how spread betting works.

Spread betting is most easily explained through an example. We
will use the market of 'Total Freekicks' in a football match as
this is easy to relate to. This market is based on the total
number of freekicks accumulated by both sides in a game.
However, the same principle applies to all spread bets, both
sporting and financial.

Example

Match: Arsenal Vs Southampton Quote for freekicks: 10-11. The
spread of 10-11 for this market states that the spread bet firm
believes there will be between 10 and 11 freekicks taken during
this game.

Buy Example You believe there will be more than 11 freekicks
(perhaps you think this will be a very dirty game - unsuprising
considering Arsenal are playing!). So, you buy £20/point at 11.

Profit: You were right. The final number of freekicks was 15,
i.e. 4 more than 11, the number of freekicks you bought at. You
win 4 x £20 = £80 (tax free)

Loss: You were wrong. The final number of freekicks was 8, i.e.
3 less than 11, the number of freekicks you bought at. You lose
3 x £20 = £60

Sell Example You believe there will be less than 11 freekicks.
So, you sell £20/point at 10.

Profit: You were right. The final number of freekicks was 8,
i.e. 2 less than 10, the number of freekicks you sold at. You
win 2 x £20 = £40 (tax free)

Loss: You were wrong. The final number of freekicks was 15, i.e.
5 more than 10, the number of freekicks you sold at. You lose 5
x £20 = £100

You will notice that 'buy' transactions are made at the top end
of the spread and 'sell' transactions are made at the bottom
end.

So there you go - it may seem complex, but Spread Betting is
relatively easy to pick up. Good luck!

If you want to try your luck try signing up with Betfair where
you will get a free £20 sign up bonus.

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