Spread Betting vs. Fixed Odds

Spread betting and fixed odds are two different ways to make money. Both are easily understood and have strategies for novice investors.

Fixed odds is an investment using odds that an outcome will occur. There are a variety of outcomes traders can bet on in fixed odds. These are the direction of a price or if a price will hit a point.

The odds are normally represented in fractions, but others are used. Fixed odds is a digital option as the outcome will happen or not. It is also called a binary bet with many spread betting firms.

Traders are wagering on this prediction or bet outcome of an event. Spread betting is wagering a price will increase or decrease. A trader’s prediction and price factors into profits and losses.

Profits and Losses

Fixed odds traders make a wager on odds that something will happen. So in fixed odds betting the potential profit is known up front. Losses are known up front in the same way that profits are figured.

Wagers are multiplied by how close or far away the trader was. This is why the profits and losses can vary in spread betting. Fixed odds have lower risk, but spread betting can make big profits.

Wagers are possible on all markets for spread betting and fixed odds. As options are unlimited a trader will find an interesting market. One may find an area in which the trader has some knowledge.

Requirements to Bet

Both fixed odds and spread betting are very easy to participate in. Both require an online broker who will quote the spreads or odds. Traders tell the broker who will then execute the trade immediately.

Bets in fixed odds have a certain time frame unlike spread betting. Once the bet hits the prediction, the bet is closed out and paid. A fixed odds bet that England's rugby team will score first is made.

This outcome or event occurs in the first five minutes of the game. The bet is closed out and the trader's account is deposited. Spread betting has no time frame and is closed by the trader.

An example is a spread bettor bought on a spread of 3421-3521. The market price can surpass the 3521 and profits continue to accrue. This is because the spread bet is not automatically closed out.

Fixed odds and spread betting are clearly different actions. It is evident though fixed odds may be better for the new investor. This is because the risks are lower and potential losses are known.

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