Spread Betting Types

Spread betting involves different types of bets and different types of orders. Understanding what these are and how they work is extremely important because you are staking your capital.

One type of a spread bet is a daily bet. A daily bet is a bet made on a trade, but is closed out by the trader before the close of the market. The profits or losses are then calculated and awarded or deducted. The investor closes out this trade and the daily bet is complete. Daily bets are designed for the short trader who doesn't want long term trade positions.

A rolling bet is an extension of a daily bet. When a daily bet isn't closed out, it rolls over to the next day. As the market price changes constantly, a rolling bet is subject to that change. For instance, if an investor bought at 351 expecting the market to increase and at the end of the day the ending market price is 353, a profit has been made. The investor doesn't close out his bet so the bet rolls over to the next day. However, since the market price ended the previous day at 353 this is where the investor's new buy price begins.

Quarterly bets always have a future expiry date. This date is when the bet will close automatically unless it is closed prior to this date by the investor. A quote for a quarterly bet is determined by the underlying market value and taking into consideration financing and dividends. Financing is not charged nightly; instead the anticipated costs up to expiry are factored into the quote. Ultimately the quote price may look very different from the underlying market value because of financing and dividends.

Other types of spread betting include spread betting orders. One order is a limit order also called a stop loss. A stop loss limits the amount of money a trader is willing to lose on a particular bet. In addition to placing a stake by either going long or short, the investor can put an amount of money as a stop limit. If his bet reaches this level, the bet is automatically closed. Limit orders are similar except they work in the reverse. A limit order closes out a bet once the maximum profit level has been reached. These can help guarantee your profits.

Different types of spread betting are available and as an investor it is important to know and understand what the types are prior to trading. Knowing the spread betting types can help investors develop their trading plan and strategy which is essential to spread betting success.

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