Spread betting is a type of betting where you wager on the outcome of a trade rather than on the price movement of a stock or index. The odds of winning are much more favorable in spread betting because you are not relying on the luck of the market price but are rather playing on the outcome of a trade. Most people have heard of traditional sports betting, where teams compete in a game and the betting on the outcome of the game. Spread betting is similar to that, except you are wagering on the outcome of a trade instead of a game. If you are new to spread betting, here is a basic introduction to what this type of betting is and why you might want to consider it.
History Of Spread Betting
As the name would suggest, spread betting came about because people wanted to spread the risk of making a wager. Suppose you are a stock trader who wants to short a stock but does not want to put all of her capital on the line at once. She could simply make a spread bet for a small investment where she is only responsible for laying the bet for a certain amount of shares. In that way, she is not risking the full amount she is applying for shorting because she has someone else covering her back. If the price of the stock drops, she can get out of the position with minimal financial loss because she has someone else taking the other side.
This kind of betting spread began in the 1930s during the Great Depression. Back then, people did not have plenty of money to spend on luxuries. They had to make careful financial plans in case something happened and they needed to supplement their income. During that time, a lot of people became interested in stock speculation. At first, it was mostly a hobby for the wealthy. However, during the later stages of the 20th century, it became a popular way for people to make money on the side. If you want to speculate on the stock market, you either have to do it yourself or find a broker to take the risk for you.
Key Differences Between Traditional Sports Betting And Spread Betting
Traditional sports betting is mostly a one-way bet. You either win or lose, depending on how the game turns out. In cases where there is a draw, you simply break even. In spread betting, you are laying multiple bets. You are not necessarily getting all of your money back, but you are reducing the risk of loss. For example, if you have a $100 stake and the price of a stock falls by 10%, you would lose $10 on that single bet. But if you were to lay 10 such bets, you would still be ahead by $5 because you reduced the risk by half. In cases where the stock price rises by 10%, you would win $100 on each of those 10 bets – $1,000 in all. Risk-adjusted winnings!
Another major difference between traditional sports betting and spread betting is the time frame in which the event happens. In most cases, you are betting on the outcome of a single game. With sports betting, the event takes place during the entire season. You can’t enter a single game and expect to come up with a winner. With spread betting, you can make wagers on upcoming game(s), as well as, previous game events that happened months earlier.
Types Of Spread Betting
When someone decides to spread bet, they have three options for how they want to structure their wagers. They can either bet on the result of an event (i.e. a specific game or contest), they can bet on the current price movement of a stock or index, or they can combine the two and bet on the outcome of a trade. The first two options are called outright bets while the last one is called a lay bet. Let’s take a closer look at each.
Event Bet
An outright bet is simply betting on the outcome of an event. This could be anything from who will win the game between the New York Yankees and the Boston Red Sox to whether or not David Ortiz will get a hit in a specific at-bat this season. The odds of winning are usually readily available and easy to find because most bookmakers set the odds before the season starts and there is rarely any fluctuation during the season. If you are looking for an easy way to place a bet, this is the perfect choice. You can find plenty of information online regarding the odds of different sporting events. Just choose your favorite team or player and the event you are interested in betting on. The best part is you can usually get these odds easily and quickly from websites that specialize in sports betting without having to go through any type of gambling addiction therapy.
Movement Bet
A movement bet is simply betting on the price movement of a stock or index. This kind of bet only gives you information regarding the direction of the price movement. It does not matter who wins or loses the game, all that matters is the price movement in relation to some other currency. For example, let’s say you want to bet on whether or not gold will be more or less than $1,250/oz. during the next month. You can do this by placing a movement bet on AH.com regarding the Gold price. Every time the price changes, you will be notified via email and you can either take the winning side or avoid the loss by getting out of the bet before the deadline expires. You do not necessarily need to have money on hand to make a movement bet. You can get the information you need from online gold price trackers such as Kitco.com or MarketWatch.com, as well as, from the binary options that let you bet on the direction of a price movement without needing to know exactly where it will settle or what the current price is.
Combined Bet
An combined bet is simply taking a bet on the outcome of an event and also betting on the price movement of a stock or index. This is the most popular type of spread bet because it combines the excitement of betting on a game with the predictability of the price movement. Depending on how you want to hedge your bets, you can either choose to lay all of your combined bets on a single event or you can make separate calls concerning the outcome of the event and the direction of the price movement for each stock or index. The nice thing about combined bets is you can usually get the best of both worlds – the excitement of betting on a game with the security of knowing the price will always be there when you need it.
Hopefully, this article has helped you understand the basics of stock spread betting. If you want to continue your education, you can either read reputable books about the subject or consult with a professional stock trader via email for guidance. With any luck, this article will also inspire you to try out stock spread betting and allow you to enjoy the thrill of the game with the security and peace of mind that comes with knowing you did all of your homework before placing your bet! Good luck out there.