The easiest way of describing
spread betting is to look at cricket although
spread betting can be applied to almost any type
of sporting event.
Lets say England are playing Australia, England
have won the toss and are batting first. Bookmakers
will try and guess the total of the England innings
and will apply a "spread". If the bookies think
England will score 300 then the spread will be
295-305. If the total of the first innings is
the 295-305 range, the bookies win.
What you have to decide is whether the total
will be more or less the spread. The most important
thing to remember in spread betting is that if
you think the total will be less that the spread
(295), you "buy" at 295 and stand to make your
stake multiplied by the number of runs under the
spread mark of 295.
If you think the total score will by more that
the spread of 305, then you "sell" at 305 and
stand to make your stake multiplied by the number
of runs over the spread mark. If you have bought
and the total score is more than the spread, you
lose your stake multiplied by the number of runs
more than the spread. If England score 375, you
would lose £70. The opposite is true if the runs
are not scored so freely. If England are all out
for 200 and you have sold, you will lose £95.
Winnings and loses can mount up very quickly
in spread betting unlike fixed
odds, so you should make sure you only bet
on something you understand and be ready to take
your profit or cut your loses. To cut your loses
or take your profit you can do an equal and opposite
trade to close your position.
Another benefit of spread betting is that the
spread is revised in the running. If the score
was 150 for none, the bookies could revise the
spread to 350-360
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