Financial Betting Explained
Financial betting features two alternative methods of placing wagers, those being spread betting and fixed odds betting. While both of these are based on the outcome of an event, they are different in terms of what exactly you’re wagering on.
Fixed odds betting is basically as the name suggests, a wager with fixed possible outcomes. Before you even place a fixed odds bet, you’ll know beforehand what you stand to gain or lose and all the possible outcomes of such a wager. Fixed odds are often used when it comes to sports betting, for example, and there are three widely used means of quoting odds – fractional, as used in the UK and Ireland, decimal, as used throughout Europe, and money line, favoured by American bookmakers. For example, in the financial market, odds of 4/1 on a particular currency pair, say EUR/USD, moving up would imply that the player would win £400 profit from a wager of £100 placed, should it move that way.
Spread betting is based on the accuracy of the wager placed, rather than a standard win or lose outcome. A spread features a range of outcomes and the bet is usually placed based on whether the outcome will be above or below the spread. It is riskier than fixed odds betting, with players having the chance not only to win a lot, but lose a lot as well. So, taking the EUR/USD example, if you place a spread bet of £10 for every point the currency rises, every point it does so will give you £10 in profit. However, every point it falls in this instance, you lose £10. Basically, you’re predicting a direction that a certain financial item will go from its current position. The more it moves in such a way, the more money you make. You’re not limited by simple odds.