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What Is Spread Betting?
In standard fixed odds you are either right or wrong and you win or lose a set amount on that basis. In spread betting you have to predict if an outcome is going to be bigger or smaller than the bookies think and you are rewarded more the more you are correct about an event and outcome. However, you also lose more the more you are wrong about an event and outcome.
5 Reasons to Spead Bet
- The more you are right the more you are rewarded
- Increase the betting options available to you
- Spread Betting offers some great value markets
- The traders make mistakes
- You can close your bets easily to lock in a profit, even before the event starts
What Is A Spread?
A spread is a range of results that the traders think are the most likely outcome in an event. A spread is normally presented as two numbers with a hyphen in between. For example, the spread for Manchester United points in a Premiership season might be 80-82.
How A Spread Is Decided
First of all the traders of the spread betting firm have to decide what they think the most likely outcome of each event and market will be. This is a lot of work as there are many markets, some of which are very specialised, in each sport. Once the most likely outcome has been determined the traders have to build a safety margin around that likely outcome which is normally between 2% and 10% of the likely outcome, depending on the event and the market. This margin is the spread. The tighter the spread, the better it is for the punter.
The punter is then left with the choice or buying or selling that spread.
Buying
If you think the spread the traders have created is going to be smaller than the likely outcome then you will want to buy on that spread. For each point, goal or any other that goes over the spread you win your unit stake. However for each point, goal or other unit that goes under the biggest outcome in the spread you will lose your unit stake.
Spread Bet Buying Example
You buy Manchester United premiership season points at the spread of 80-82 for £10 a point
Because you are buying your bet will be at the HIGHER spread IE at 82
=> If get 85 points you will win £30 (85-82 x 10)
=> if they only get 75 points you will lose £70 (82-75 x 10)
One of the advantages of buying is that you know exactly what your maximum loss is. It is always the biggest number in the spread multiplied by your unit stake. Becuase of this and the bigger excitement which can often be gained in seeing a bet going well rather than being negative, buying is far more popular than selling.
Spread betting companies are of course aware that buying is more popular and its likely that this is factored into many spreads. Its possible that some markets are poor value for the buyer.
Selling
If you think the spread the traders have created is bigger than the likely outcome then you will want to sell on the spread. Every point, goal or other unit that the real outcome is under the spread you will win your unit stake. For every point, goal or other unit that the real outcome is over the lowest outcome in the spread you will lose your unit stake.
Spread Bet Selling Example
You sell Manchester United Premiership season points at a spread of 80-82 for £10 a point
Because you are selling then your bet will be at the LOWER spread IE at 80
=> if they finish the season with 76 points you will win £40 (80-76 x 10)
=> if they finish with 83 points you will lose £30 (83-80 x 10)
The disadvantage selling is that you are potentially open to any amount of loss.
Spread Bet Selling Limits
You sell goals in a football match at a spread of 2.2-2.4.
The max you can only win 2.2 times your unit stake BUT there is no limit on how many goals can be scored in the match so you cannot predict your maximum loss.
Because less people tend to sell spreads than buy, it may well be easier to find a value spread bet as a seller. Be careful as the risk can be higher but if you are clever you may find some markets where you can make money by opposing all the buyers.
What Can I Spread Bet On?
Spread betting applies to most sports although the markets that are available are sometimes quite different to those available in fixed odds betting. In football popular markets on matches include goal minutes (the cumulative number of minutes in which there are goals), shirt numbers (the cumulative number of the shirt numbers worn by each goal scorer) and player goal minutes (the cumulative number of minutes a selected player scores in). Horse racing markets tend to revolve around winning distances although performance betting is also available.
Spread betting is not only popular amongst sports punters. There is also a massive market for Financial Spreads. It is very much like playing the stock exchange except bets are made against a spread rather than actual stocks and shares being bought and sold.
Trading out
Spread betting also presents the opportunity to trade out on bets that are already placed. The more right you have been so far about an outcome, the more profit you can lock in at an early stage. Likewise the more wrong you have been, the more loss you will have to accept if you want to end your bet.
More experienced spread bet players make spread bets with the specific plan to trade out at an early stage because they think a team or player will have a particularly good or bad start. For example, the spread on a mid table Premier League side's total points at the end of a season might end up being correct. However, they may have a particularly easy or hard start to the campaign. If they have an easy start you could buy their points and after a few wins the spread is likely to get bigger allowing you to trade out at a guaranteed profit.
Spread Betting Risks
There can be much greater risks with spread betting and many novice punters can expose themselves to far greater potential losses than they understand. Make sure that you are fully aware of exactly how much you can lose on a spread bet before placing it. In spread betting you can lose a lot of money very quickly.
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