What is Spread Betting?
Spread betting is a simple way of leveraging the financial markets. Usually Spread Betting companies predict that where the price or score of anything like from a share to a commodity even a cricket game will stand at a particular time in near future. The prediction is formed as a spread and ranged between the high and low estimates.
Spread Betting is not just restricted to stocks or shares of any corporation. There are many other market instruments that have spread and give us a chance to bet on. The financial instruments for a spread bet can vary from common stock, stock indices, currencies or even commodities.
Basics of Spread Betting
In order to start up with Spread betting, it is necessary to be aware of the basics of share trading:
- A share will rise or either it will fall in value.
- Shares are bought expecting that they will rise in value and to be sold later resulting in profit. This is called “Going Long”
- Shares are only sold with the expectation of preventing loss which can be caused by the fall in value of the shares.
What is the Spread?
The Spread is the difference between the selling price quoted by the Spread betting companies and the buying price. While placing a bet, bettor has to wager on an amount that he will pay or that he may earn for every point change in the value of stock.
Every Spread Bet is tax-free and runs for a fixed time period, but sometimes the trader chooses to close the bet before time if it seems beneficial for him to do that. Similarly, the trader sometimes closes the bet to cut down his loses if the market goes against him. When the closing date arrives, the trader has two options either to close the bet or pay to roll the bet over.
Finally, to save themselves from watching the markets continuously, traders may also arrange a “stop loss” function into their bet. This allows them to close their bet once the bet has gone in the wrong direction. This strategy is essential in limiting the amount of risk that a trader is taking while making a spread bet.
Understanding Sports Betting
Apart from Spread betting on the financial markets, we can spread bet on sports matches also. It is quite similar to spread betting, but involves a prediction about the match by a betting company and then a bet against that prediction.
There are different zones of predictions that the sports betting company can make which includes the time of goals, total score or points in a game, or even on the best player.
Closing the bet early
One aspect of spread betting on sports that is different than other types of sports betting is that you are able to place bets and close bets during the match. This enables you to place bet during the live matches.
Spread Betting Conclusion
Before getting into Spread Betting, it is really important to do some appropriate research and learn about it. Having the knowledge for spread betting is not enough but knowing about the broker or spread betting company is also necessary. Apart from this, you should be aware of how the function exactly works. Whether you are betting on shares, commodities, foreign exchange or some sport, the basic principles of Spread Bet are same. Once you find a strategy that works best for you, you can stick with it for long.
Be prepared for losses, because you will certainly lose money at some point. Make sure you have the financial means, do not trade with money that you have put aside for emergencies; you need to have capital to spare. Take steps to limit your losses and you can enjoy it at its best and you can also make some huge profits. Good Luck!