If you’re a betting enthusiast, chances are you have participated in regular betting on sports. You bet a fixed amount of money on your favorite soccer team to win before the match started. If your prediction becomes true, you win that money, and if your prediction was wrong, you lose that money. That is how regular betting works. Spread betting is a little different.
Spread betting can take place in sports and the market of shares, indices, commodities, and cryptocurrencies. Unlike regular bettings, spread betting pays you accordingly to the accuracy of your prediction and charges you accordingly too.
Now let us take a deeper look at what spread betting is and how you can make money from it.
What is Spread Betting?
Spread betting mainly refers to betting on the financial market. Spread betters analyze the movement of the financial indicator curve and predict future movements of the curve. One benefit of spread betting is that you can make a profit out of the market without actually purchasing any financial commodity/ security.
So, how does this work?
The spread betting company shows two prices: the bid price and the ask/ spread price. You simply have to determine if the price will go higher than the asking price or go lower than the bid price. Also, you have to predict by how much it will go up or down. The more accurate your predictions are, the more money you get.
One more thing, you are not purchasing any security/ investment in spread betting. You need to observe its price movement and place a bet for either the price going up or down and profit from it.
Some Basic Terms of Spread Betting
There are some terms that you must understand before getting involved in spread betting.
Long betting
Long betting is addressed as going long. It means that the investor is placing a bet in the market for the price to go up/ rise.
So, going long in spread betting means that you are betting for the price to go up.
Short betting
Just like long betting, short betting is also addressed as going short. When an investor is going short, it means that he/ she is placing a bet for the price to fall.
Pounds per points
Spread betting is different from other bets. You win and lose money based on the accuracy of your bet. That accuracy is generally counted as pounds per point.
For example, you, as an investor, may have decided to go long in the share market. You have chosen a share of Apple electronics and placed a bet for the price to go up by 20 points. After placing the bet, the price movement of Apple’s share will start counting. If the share price goes up by 5 points from the asking price, you win 5 pounds. Also, if the price goes down by 5 points, you lose 5 pounds. Your earnings and loss will be recorded until you have closed the bet. After losing the bet, the numbers of gains and losses will be calculated, and you will see your result.
Bull market
A bull market is a market in which the price is going upwards, just like the bull’s direction of attack.
Bear market
In a bear market, the price is falling/ going down, mimicking the direction of a bear’s attack.
Spread Betting Platforms
Spread betting usually takes place on the share market or forex, commodity, and cryptocurrency market where the price fluctuates. But some sports betting companies have introduced it in the sports industry where you state the number of goals, runs or scores a team will make.
Spread betting on the trade market is conducted online. So, the only platform for spread betting is online brokers. There, you can spread bet on shares, commodity, cryptocurrency, and forex pairs.
If you ask us about some of the best online brokers for spread betting in the Philippines, we would recommend Pepperstone, FxPro, IG, CityIndex and Spread ex.
How Do you Generate Money in Spread Betting?
Spread betting is different from regular betting. That’s why you will get your pay-offs differently from spread betting. So, how do you earn money?
Usually, spread betting pays you in pounds per point. It could be one pound per point or 5 pounds per point or more.
Suppose you are spread betting on the value of bitcoins in terms of dollars. For your understanding, let us assume that the price of one Bitcoin is $100. So, you have speculated on Bitcoin and placed a bet that the price of Bitcoin will rise to $150. The payoff of this bet is one pound per point.
Now you have opened your bet and the price of Bitcoin has become $105. So, you have gained 5 pounds for 5 points. After that, the price went down to $95. Meaning, it had fallen by 10 points. You will lose your gained 5 pounds, plus you have to pay 5 pounds more for the loss. The value of Bitcoin will rise and fall continuously.
You have closed your bet when the price of Bitcoin is at $135. This closing price is important. This is what decides your payout. Now, the price is $135 – 35 points higher than the entry price of $100. So, you have gained 35 pounds. That’s how you generate money from spread betting.
Things to Consider When Placing a Spread Bet
There are some things you need to consider before placing a spread bet. First of all, it pays you according to your wagering direction. So, if you bet on long, the company will pay you for each point the price goes up and take money away from you for each point the price goes down.
The second is your balance. Suppose, you have lost a considerable amount from one spread bet. If your account does not have that balance, you won’t be able to pay them. That’s why online brokers have made a condition of making bets based on your balance. If your broker account has $50, you can place a bet up to $50.
Finally, you are betting on leverage. In spread betting, you do not own the share or security that you are betting on.
Final verdict
Spread betting is a great way of earning money through betting. You just need to stay careful and monitor the movement of your bet. It’s always safe to start with small bets. After gaining a little experience, you should be able to move on to huge bets.