The Basics of Spread Betting – What to do and What not?

The kind of popularity that spread betting enjoys pushes forward the idea that you may or may not have heard about it. As a special type of bet that is common in the world of betting, it has certainly come a long way and has evolved over the years.

So what is spread betting and what does it imply? Well, time to find out.

Spread betting – a popular derivative

Spread betting is widely known as a famous derivative that is used to speculate the financial market and look into its tools like forex, shares, commodities, indices and so on. Since speculation is carried on without taking ownership, you will be placing bets on whether you believe the price will rise or fall.

Apart from financial markets, spread betting is also used for sports betting and is a common tool that bookmakers use to even the odds between two uneven teams. By doing so, they hope to get equal action on both sides of a game as everyone would like to place bets they believe have the scope to become true.

For example, if a game between Liverpool and Burnley has the spread for total goals at 2.9 – 3.0 then you have two options. One, you can either buy, which means that you believe more goals will be scored or the specific range will be crossed or you can sell, implying that the range will not be crossed.

Assessing such situations is always done after analysing the game and the performances of two teams such as Liverpool and Burnley.

Spread betting – how does it work?

While the concept of spread betting remains the same for financial markets as well as online sports betting, there are other differences that you need to know about. The manner of approach and the entire system based on which it functions is completely different. So let’s divide them both and understand how spread betting works for both these worlds.

• Spread betting for the financial markets

Spread betting for the financial markets begins by tracking down the value of an asset. This is an important move as it helps you understand the asset and the kind of position that you need to take if you were to get involved in spread betting. By moving further, you would also have to know about short & long term trading, which are central to spread betting.

While short term trading refers to the fact that you are placing a bet with the speculation that the market price will decline, long term trading means that you are placing bets under the imagination that the market price will increase. Hence, with spread betting, you can speculate on both these aspects and look towards making it all count.

• Spread betting for sports betting markets

Spread betting for sports mainly involves the betting options that the bookies provide. However, you also need to be aware of the teams and their past performances if you were to accept the options that they provide. Checking out top online betting sites and various other places will certainly give you an idea of the spread and how they plan on moving forward with this type of bet.

In most cases, the two teams that are commonly involved in this type of bet will be an underdog and a favourite, who is tipped to win the title. So in order to even the odds between these two teams, bookies will bring in spreads and help you place football bets with ease.

So if you were to place bets, you need to understand their positions, past performances and the kind of form that has been carrying them. Moreover, such bets will only make sense to an individual who has been keenly following the sport and knows all about it.

Understanding the features of spread betting

The features of spread betting tend to describe the nature of the process and all that you will have to go through to complete it.

• The spread

The spread in this format indicates the difference between the buying and selling price, which again, is wrapped around the underlying market price. Hence, they are also called the offer and the bid

• The bet size

The bet size is the total amount that you want to bet per unit and you have the right to choose the size of your bet. For sports betting, it is called stake and is also known as the amount that you decide to place per point movement.

Benefits and Risks of Spread Betting

• Benefits

When it comes to the benefits of spread betting, the biggest advantage points to the fact that you will be rewarded more if you end up being right. With fixed odds being replaced, spread betting is more of a flexible approach and is known to come in handy.

For sports, it is also a way of going against the favourites by making the bet challenging for them and making it a bit easy for the underdog. This double effect has always been known to have an effect and can work wonders if you end up winning the bet.

It remains the same for every league, tournament or even country because the system works the same whether you are following UK sports betting or any other format of betting for that matter.

• Risks

With risk management being an important part of trading as well as betting, it is quite important to look into the same and ensure that you follow it to the fullest. Regardless there are specific risks associated with it and at times, are bound to come.

While the financial loss will always be the main headline, subheadings will indicate how spread betting is a leveraged product. Since leverage leaves you exposed, you can make a profit with the bet and suddenly come down to losses when quick changes in the market turn things around for the worse.

So it is all a gamble and you need to be prepared for the same. Moreover, spread betting for the financial markets where you will have to hold a position for quite some time might also require you to pay holding costs, hinting towards the possibility of additional costs and an overall loss if you end up losing the bet.

On the other hand, sports like football are unpredictable and instances where an underdog overtakes the favourites without crossing the specific margin are always possible. Hence, anything can happen and you need to be prepared for it.