What is Spread Betting?

Everyone wants to make more money, but investing is such a gamble. Sports betting is also a gamble because it is difficult to predict.

Initial investing costs can be high in trading on the stock exchange. A trader must be very knowledgeable in the market or hire a broker. This broker will take a portion of your earnings as commission.

Sports betting is never a sure thing since anything could happen in a game. Investing and sports betting are risky since they are unpredictable. Both require a great deal of knowledge of the game or share.

Spread betting is easier and an understandable way to make money. It gives the bettor more control of the outcome which minimises risks.

How to Bet in Spread Betting

In Spread betting, two prices of a share are presented in a spread. One number is the bid price and the other is the offer price. It looks like this: 159-160 when presented by a spread betting firm.

In traditional investing, money is made when share prices increases. Spread Betting can make money when share prices increase or decrease. The trick is in choosing what a trader thinks the price will move.

If one believes the price will decrease, one bets at the bid price. One is not buying the share, but betting on the movement of shares. If one believes the share price will increase, one bets the offer.

A Spread Betting Example

A trader has been watching the price on a particular computer share. The spread is 116-117 so the bid is 116 and the offer is 117. The trend for this computer share is a decreasing trend in value.

Another company just came out with a newer and faster computer model. Therefore, one predicts the price of the share to continue declining.

This signifies a buy bet is most appropriate to make a profit. The trader can choose any amount of a wager for the buy bet. This spread betting example will begin with £5 per point on the bet.

For every point this share falls below 116, the bettor earns £5. The share falls to 110, a difference of 6 points in the spread. The trader has thus made £30 in profits in this spread bet example.

Spread bets work in the opposite direction as well with a sell bet. If one believes the share will increase, then one bets on the offer. A bet can be any amount one decides and one use a stop loss.

Spread betting is less risky than buying shares because of choices. A trader gets more choice in betting because one picks the bet price. This gives a trader the control of how much one is willing to lose.

Stop losses give control over losses and one can close a bet. Spread Betting is easier to understand over traditional investing. Even people with no experience in investing can be successful.

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