What is financial spread betting and how does it work?

What is Spread Betting

If you like the Colts to win but think three points is a tricky number, a moneyline bet could be made on the winning team with no points in the equation. In the above example, a Colts moneyline bet doesn’t have any other requirements other than they win the game. Even for the most seasoned handicappers, point spread betting can be a tough nut to crack. Beyond making the right call on which side will cover, you also have to factor the vig into the equation. To beat the juice at odds of -110 on a long-term basis, you would need to win at a clip of 52.4% or better.

What is Spread Betting

In the stock market trade, a deposit of as much as £193,000 may have been required to enter the trade. In spread betting, the required deposit amount varies, but for the purpose of this example, we will assume a required 5% deposit. This would have meant that a much smaller £9,650 deposit was required to take on the same amount of market exposure as in the stock market trade. However, while spread bettors do not pay commissions, they may suffer from the bid-offer spread, which may be substantially wider than the spread in other markets.

Point Spread Example

Spread betting refers to speculating on the direction of a financial market without actually owning the underlying security. Despite the risk that comes with the use of high leverage, spread betting offers effective tools to limit losses. The use of leverage works both ways, of course, and herein lies the danger of spread betting. As the market moves in your favor, higher returns will be realized; on the other hand, as the market moves against you, you will incur greater losses. While you can quickly make a large amount of money on a relatively small deposit, you can lose it just as fast. In addition to the absence of commissions and taxes, the other major benefit of spread betting is that the required capital outlay is dramatically lower.

A profitable position can go on to generate far more profits than ten small losses. As spread betting allows you to bet on whether a price is going to fall or rise you will be given a quote from your spread betting broker. Let’s look more closely at these many advantages to find out why so many people are attracted to spread betting. For example, the payouts are higher when betting on What is Spread Betting the underdog, plus betting on the favorite is a safer bet, although the odds will be lower. Spread betting, on the other hand, often makes for a more exciting betting experience, plus offers attractive odds to those who think the favorite will win by a considerable margin. Spread betting is one of the most popular ways to bet on sports, including football, soccer, and basketball.

Best Point Spread Betting Strategy

Think of the sports betting space like the stock market or any market, where it’s about identifying spots where one side is being undervalued. There might be an NFL team that is 5-11, but goes 11-5 at covering the spread. That’s known as an ‘ATS’ or ‘against the spread’ record, which is a term commonly used in betting. You’ll see a team’s ‘home ATS record,’ which means how often they cover the spread at home.

What does a 4.5 spread mean?

In basketball, you might see a point spread of -4.5/+4.5, which means the favored team will need to win the game by five points or more for your bet to cover the spread. If you bet on the underdog, they simply need to win the game or lose the game by less than four points. If they lose by five, your bet won't cash.

This is because bettors are no longer playing for their team to win the game or match, but instead betting on them to cover (or defeat) the handicap instead. In order to understand spread bets it’s important to ensure you also understand how the bets work and the terminology that comes with them. This then allows sportsbooks to open up a completely new betting market (against-the-spread bets) that can be featured alongside traditional moneyline bets. A point spread can shift in the run-up to a game for a variety of reasons. A key player getting hurt or scratched from a game can shift the line dramatically. Oddsmakers will also often shift the line in reaction to respected or ‘sharp’ money.

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Conversely, the Jaguars would be +7 in that situation and would need to lose by fewer than seven or win outright for you to win your bet. The Jaguars wouldn’t need to actually win the game, as taking them +7 just means you think they’ll keep it closer than a touchdown. If they lose by three on a last-minute field goal, you’d win the bet. The point spread function is a handicap that puts two uneven teams on equal footing. In the United Kingdom, sports spread betting became popular in the late 1980s by offering an alternative form of sports wagering to traditional fixed odds, or fixed-risk, betting. As mentioned in this article, spread betting the forex markets involves the use of leverage, also called trading on margin.

What is Spread Betting

You are just speculating on the asset’s movement, not actually purchasing the future. Your provider, however, will always ensure that the situation never occurs by closing the trade before it expires. When people refer to “the markets”, usually it is an index they are referring to. Indices measure the changes observed in a particular selection of stocks which represent a specific market (or part of it). If you trade indices, you can speculate on the overall market’s performance and due to this, usually indices reflect the sentiment of investors about a certain region, sector or economy’s state.

If the final score is team A 30, team B 31, the total is 61 and bettors who took the over will win. The total is popular because it allows gamblers to bet on their overall perception of the game (e.g., a high-scoring offensive show or a defensive https://www.bigshotrading.info/blog/how-to-become-a-amazing-at-day-trading-how-to-be-a-day-trader/ battle) without needing to pick the actual winner. So in the example above, if the cricket team ended up scoring 345 runs both buyers at 350 and sellers at 340 would have ended up with losses of five unit points multiplied by their stake.

How does spread bet work?

Bookmakers set a spread with the hopes of getting equal action on both sides of a game. For example, the Colts are a -3 point favorite against the Texans. The -3 points is the spread. If you want to bet the Colts on the spread, it would mean the Colts need to win by at least three points for you to win the bet.

Spread betting odds are much better than standard moneyline odds. This is because there is a handicap between teams, making it more difficult to win a spread bet. If a key player is suspended before a game, this will change the spread betting odds due to their team being hindered by their absence. No matter what bet is out there, the odds always change in the lead up to a game. Here are some of the reasons as to why spread betting odds can change.

Once online sportsbooks release a spread on a game or match the line on that game can move in either direction up until the game starts. This fee, known as the vigorish (often shortened to vig) or “juice,” enables the sportsbook to make a profit. Notice if the book offered an even payout with Team A +7 and Team B -7, you could bet both sides and break even. Hence, the vig exists, forcing you to pay a fee in exchange for your bet. Thus, even on the road, the 49ers rate as -7.5 favorites at DK Sportsbook. In other words, they’re expected to win by more than a touchdown.

  • This means you can speculate on events that take place out of the market’s standard trading times, when other investors miss out.
  • This is where parlays can become advantageous, as they combine odds from several games to yield better returns.
  • That means the Bengals would have needed to win the game outright or not lose the contest by 5 points or more.
  • You can bet on the favorites, who will have points deducted, or the underdogs, who will have points added to their score.
  • Trades in liquid markets take place easily and quickly and at low cost due to the large amount of ask and bid offers.
  • You can read more on what brokers offer guaranteed stop losses here.

Now, if the favorite beats the underdogs by 6 points, the result is a push instead of a loss. As for the underdogs, if they lose by exactly 7 points, the result is a push where it would have been a loss with the original +6.5 spread. Upon buying points, the spread will move in the direction that benefits you. If you’re betting the underdog, points will be added to the spread, whereas if you’re betting the favorite, points will be subtracted from the spread. Point spreads (also referred to as lines or handicaps) are also accompanied by odds.

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