Spread betting is becoming increasingly popular with more and more people trying it out every day, you can win a lot of money with spread betting however it also comes with high risk and you can also lose a lot as well. There are two different types of spread betting, financial spread betting and also sports spread betting, financial spread betting is betting on the current financial markets such as the FTSE or currencies predicting if you think it will go up or down and acting on your predictions. Sports spread betting is betting on different sports, they are both fairly similar.
Spread betting in sporting events
You can earn a lot of money through spread betting on sporting events however it may also carry a large risk if you are not careful. in spread betting the bookmaker will predict what is going to happen so for example say in football the bookmaker predicts throughout the season of the premier League there will be 320-327 yellow cards shown
(It works so 1 yellow card = 1 point, or if it was goals 1 goal = 1 point).
If you think there will be more than 327 yellow cards you will buy. Say you want to buy at £1 a point and at the end of the season the total amount of yellow cards is 330, this means you have predicted correctly and will receive £1 for every yellow card over the bookmakers prediction (so, 330-327=3, £1 x 3=£3. However if the amount of yellow cards shown is under 327 so for example the amount of yellow cards is 325 you have predicted wrong and you are 2 points under therefore having to pay the bookies 2 x £1 = £2.
If you think the amount of yellow cards will be less than 320, you would sell, which is the same however it just works at the bottom (320 end).
Spread betting is based on how accurate your predictions are and is basically a game of higher or lower.
Spread betting in Finance
Spread betting in financial situations is very similar, take the FTSE for example, if you predict the FTSE will rise you will buy, if you have a stake of £2 and the FTSE goes up by 10 points you will then make a profit of £20. If it the FTSE drops by 10 points you will lose £20. There can sometimes be dramatic changes in the financial markets so betting on this can be very rewarding however can equally be risky.