How Financial Betting Works

Stocks, shares, commodities, futures, bonds, derivatives: these are all financial instruments in the market with which you can make profits… If you spend the time learning how they work, then more research getting to know what to bet on in each category. Plus, you need the capital to buy enough units so that price rise of a few cents per unit makes you serious money.

Financial betting, on the other hand, is how people without enormous amounts of capital can benefit from the endless movements of the markets. As the name implies, it is betting with a bookmaker on the future performance of any financial instrument, whether it be market stock, currency values, commodity prices or any other variable quantity.

Fixed-Odds Betting

Punters new to financial betting will recognise this type of wager from horse racing or sports betting. A fixed-odds bet wagers that a financial event will happen before a specified settlement date: for example, a currency will hit a certain value against the dollar; a commodity like oil will drop to a certain price per barrel; or even that a particular market will fluctuate, up or down, over a minimum range.

The cost of placing a bet is not related to the value of the underlying assets being bet on, and neither is the return on the stake if the bet wins. Winners are paid according to fixed odds, predetermined before the bet and multiplied by the stake.

Binary Betting

In this system, the price of a bet is listed on an index of odds from 0 to 100; if the event happens, the bet is paid at 100, but 0 if it does not. If the bookmaker decides an event is highly likely to happen, the higher this index will be; 92 or 93, say.

Punters who think this event will come off will buy the bet at that price; those who do not think the event will happen can sell it at those odds instead. If the event does not come off by the settlement date, those who sold win; if the event does happen, those who bought the bet win.

Spread Betting Gets Complex

Contracts for difference are a form of spread betting, which is the third type of financial betting you can explore online. These are still financial betting products, in that you can bet on the markets while spending only a fraction of what you’d need to play the market directly.

However, instead of fixed bets that are resolved as fixed-odds, single-event  wagers by a settlement dates, both what these bets cost you and what they pay out are affected by the performance of the underlying financial instrument on which you are betting.

So, in order to bet on them successfully, you need to know how the markets work, how your bull bets are hedging your bear bets, for instance, and when to call in either. In other words, this financial betting environment can be just as volatile and expensive as the market itself, so you need to study it well before you risk money here.