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UK Spread Betting Guide


Spread betting differs from traditional fixed odds betting in the way that you can back teams/individuals/horses to perform well OR badly. It gives you the chance to take on the bookmaker's view any way you want which includes being able to oppose a favourite without nominating who will beat them.

A spread betting company quotes a price on a given market. This price, as with a traditional equity, is made up of a bid and an offer price. The difference between these two prices is what is known as the spread.

If you think the price of the instrument will rise above the bid price, you buy, if you think the price will move lower than the sell price you sell.

For every point you feel the market will move you wager a desired amount of money.

Spread betting is both innovative and traditional. It has taken the age old philosophy of market trading and combined it with modern thinking towards sports betting and financial indices. In reality the bets are very simple to understand but their implications to the gambler are often complex.

Some terms put off the casual or traditional punter but it is really quite simple - you'll see a short glossary of terms in the next paragraph .

Remember that spread betting is volatile intentionally to give a wide range of possible outcomes that the Spread Firm can more readily judge than the average punter.

To make money, you must be better than the average punter .

Most of the time the results will be sensible but just occasionally they will be extreme. Always consider the extreme case when betting and bet within your limits.

Buy - This does not mean purchase in the conventional sense. It means you are betting that the higher value of a quote will be exceeded.
e.g. Hussein cricket innings runs 40-45. You buy at 45 in the belief that Hussein is likely to score more than 45. Your win is his final score minus 45. Thus if he scores 98 your result is a win of (98-45) x £stake. If he was out for 28 your result is a loss of (45-28) x £stake. In these cases if you staked £1 you win £53 in the first and lose £17 in the second.

Sell - This does not mean selling something you already own in the conventional sense. It means you are betting the lower value of a quote will not be reached.
e.g Hussein cricket innings runs 40-45. You think he is out of form and Sell at 40. If he is out for 2 you win (40-2) x £stake. But if bats well and hits 67 then you lose (67-40) x £stake. In these cases if you staked £1 you win £38 in the first and lose £27 in the second.

Spread - The difference between the Buy and Sell prices.
e.g. Lennox Lewis K.O. Rounds 3-4. The spread is 1.

Mid Point - The point value exactly between the Buy and Sell prices. This may be used as the make-up of a market when an event is stopped prematurely or there is a withdrawl.

Make-up - The point value attributed to a player/team/fantasy-index at the conclusion of the event. This is the value to calculate your final win/loss with from your Buy or Sell position.

The Single Index - One player index, not dependent on another score. e.g. One cricket batsman's total run score in an innings.

The Multiple Index - Several or many players/teams competing in an event chosen to create a market. The highest player/team at the conclusion is awarded the highest point value to calculate the resultant win/loss. The second place is awarded a lesser point value to calculate the win/loss. variable on the number in the market. There may be more places paid with lesser values.

Let's now take a look at a financial spread betting example.

Buying Legal & General .
1. Legal & General is trading at 100 - 100.5.
2. You think that the price of Legal & General is going to rise so you buy at 100.5 at £10 per point.
3. The price of Vodafone rises to 105 - 105.5 so you sell at 105.
4. In this instance you would have made a profit of £45.00 as Legal & General moved 4.5 points.
5. £10.00 x 4.5 = £45.00

Conversely,
1. Legal & General 's price drops from 100-100.5 to 97-97.5. You sell at 97 to close your position. In this instance you make a loss of £35.00 as the price moved 3.5 points against you.
2. £10.00 x 3.50 = £35.00

Selling Legal & General .
Again using Legal & General as an example:
1. Legal & General is trading at 100 -100.5
2. You think that the price of Legal & General is going to fall so you sell at 100 at £10 pounds per point.
3. The price falls to 96-96.5 so you buy back Legal & General to close your position.
4. The price fell by 3.5 points so you made a profit of £35.00

Conversely,
1. Legal & General is trading at 100 - 100.5.
2. You sell Legal & General at £10.00 per point
3. The Legal & General price rises to 104-104.5
4. The price therefore moved 4.5 points against you resulting in a loss of £45.00
5. The more you are right the more you can profit from your judgement. Of course however the more you are wrong the more you may lose.


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