Financial betting is a type of betting that involves placing wagers on the fluctuations of a financial entity with odds provided by a bookmaker. One of the most common questions that arises with financial betting is this: if you are essentially wagering on things such as the stock market, why not purchase stocks and participate first hand?
The answer involves the fact that, unlike buying stocks, there is no need to actually own a portion of the financial item upon which you are wagering. Instead, financial betting sites work exactly like other types of sports betting options. You are wagering on an event that could occur but upon which you have no direct influence.
Financial Betting vs. Financial Trading
When comparing financial betting websites to trading, financial betting presents some clear advantages. While the relative limit of your losses is essentially set by the lowest possible value of your stocks in financial trading, there is a fixed limit to how much you can lose on any specific financial betting wager when using fixed odds betting.
Of course, another clear advantage of online financial betting over financial trading is that you can immediately access your funds when your bet is resolved. With financial trading, you would need to actually trade those assets in order to liquidate, or turn your assets into cash.
While you cannot lose more money than your initial wager, it is also important to remember that you cannot continue to reap the benefits of a growing asset. Imagine if you placed a wager on a stock that it would rise by at least $3.00 by a certain time.
When the time hits, it turns out that the stock actually rose $15.00 and is continuing to rise. If you owned the assets, you would be looking at a huge potential gain. Unfortunately, with financial betting, you would only receive the previously agreed upon payout. An exception to this is, of course, spread betting.
Different Types Of Financial Betting Markets
Financial betting is not limited to the stock market. In fact, there are a wide variety of markets that you can place wagers on depending on the financial betting site that you choose.
The easiest type of financial betting market to understand involves wagering on individual shares. For the most part, this type of wagering requires that you bet whether a share will rise or fall in value during a specific period of time. A variety of different stock indices are available at financial betting sites online. At the very minimum, you can expect to have access to the major stock indices such as:
- S&P 500
- FTSE 250
- DJ 30
- European Shares
At the best online financial betting sites, you will also have access to less known markets in countries like Greece and Ireland. Sometimes, smaller markets can include some very lucrative wagers. Rather than focusing solely on larger indices, smart financial bettors will pay attention to all potential markets when deciding on wagers.
Stock Market Betting Online
Just like placing a wager on individual shares, you can place a wager on a specific stock market regarding whether it will rise or fall in value as a whole. It is important to understand that, when betting on a stock market, the study of that market’s history and current events is much more important. While an individual share might not be influenced by an important development in government or business, the stock market as a whole would likely fluctuate.
Remember that, with entire markets, the potential for gain or loss is much greater with a given wager. Some financial bettors prefer to stick to smaller markets in order to secure stable and safe bets.
Commodities are items such as gold and oil. The major difference between stock market betting and commodity betting is that commodity wagers tend to be more long term wagers, just like with trading. Of course, this isn’t to say that commodities cannot fluctuate significantly within a short period of time.
Historically, commodities are regarded as being very volatile. Severe weather, outbreaks of war and blackouts are just a few situations that can quickly impact the price of commodities. Consider the price of oil before and after the Second Gulf War in 2003.
Commodities betting online in volatile markets is perfect for aggressive day trader types willing to risk a great deal of money for a possible large gain. However, financial bettors looking for more stability may wish to stick to smaller markets that have a less volatile history.
Just like other financial instruments, world currencies can increase or decrease in value, inspiring bettors to have some interest in financial betting on currencies. One of the advantages of betting on currencies is that, unlike other markets, you can place wagers on currency values 24 hours a day (with exception to weekends).
Very seldom are currency fluctuations very dramatic – typically mere fractions of a penny. Because of this, profit margins for financial bettors are also lower. This type of financial betting requires careful attention to the market over a long period of time in order to turn a profit.
Bond/Interest Rate Online Betting
Of all the financial betting options, government bonds have the greatest reputation for being very stable wagers. However, bonds can change in value very quickly depending on the circumstances. Interest rate betting can be performed over both the short and long term.
One important consideration with bond betting is that you are not locked into betting only on the government bonds issued by the government under which you live. While buying foreign bonds can be a nightmare of currency conversion, making spread bets on the same bonds does not require a currency conversion when settling wagers.
Different Types Of Online Financial Bets
Understanding the different types of online financial bets is important before placing your first wager. While a fixed odds financial bet is very stable, a spread bet can break your bank if you’re not careful.
Fixed Odds Financial Betting
Also referred to as binary betting, fixed odds betting is considered to be one of the most stable ways to bet on financial markets online. Bettors simply make a wager on whether a financial instrument will increase or decrease in value. If it moves in the direction that you choose during your initial wager, your bet is won.
Just like with other popular online betting options, bookmakers will establish odds for the likelihood that a financial instrument will go up or down. These odds determine how much money you must wager to win a certain amount. There is no risk of losing more money than you intended – you either win a set amount or lose that set amount. Fixed odds financial betting is perfect for new online financial bettors, especially those familiar with sports betting.
Financial Spread Betting Online
Financial spread betting is one way that you can overcome the limitations of financial betting when compared to financial trading. In general, financial spread betting requires the bettor to make a wager on a point of movement of an item. This means that, depending on how much motion the item experiences, you could win an unlimited amount of money (just like with financial trading). Of course, this means that you could also lose an unlimited amount of money unless you reach your predetermined “stop loss order.”
As an example, suppose that you picked a stock market share and placed a $5.00 wager on each point that the share would increase. The next day, the share had increased by 20 points. This would net you a total of $100.00 on your wager. Of course, if the opposite were true, you would lose $100.00.
Financial spread betting can be very exciting if the market is showing signs of extreme volatility. However, financial spread betting is usually reserved for those who are confident with their skills as an online bettor.
Touch Financial Betting
The one touch financial market bet is an open wager where the bettor chooses the condition, timeframe and payout of a wager. The bookmaker then calculates how much money you must wager to place such a bet. For example:
You make a wager that a share will rise by $1.00 in 24 hours and the payout will be $5.00. The betting site will then establish the cost of that wager based on the odds of your wager.
A double touch bet is common with volatile markets such as commodities, and it predicts that a financial instrument will both increase to a price above its current level and decrease to a price below its level during a set period of time.
A no touch financial bet is a wager that a financial bet will not increase or decrease to a certain price point within a specified period of time.
Break out financial bets are for very volatile markets where you predict a major movement is going to occur but do not know in which direction it will happen. When making the wager, you choose a price level above and below the current level of the item. If the item touches either of these points, you win the wager.