Spread Betting Basics
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Spread Betting Defined
The underlying feature of spread betting (as it hints) is associated with the speculation that the price of a certain asset will rise or fall within a given period of time. Some areas associated with this type of trading include indices, treasuries, bonds and commodities. Even if the markets fall, a correct price prediction will garner a profit. The more the price moves in a specific direction, the higher the level of profit will be enjoyed.
Going Long and Going Short
“Long” and “short” are common terms associated with a spread bet. These are the financial equivalents of buying and selling. Each can be defined briefly as:
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- A long (buy) position will cause a profit if the price of the asset rises.
- A short (sell) position provides a profit if the price of the asset falls.
Having seen these two scenarios, it should be apparent that losses can also occur. If the price of a long position falls, the investor will lose money. On the contrary, if a short position rises, the trader will once again be “in the red”.
The Spread Itself
When trading with brokers such as CMC Markets, this type of instrument is provided with the spread itself. The spread represents the real-time value of the buy and sell (long and short) positions of a specific asset. Tighter spreads are very important.
A tight spread (as low as 0.7 pips through CMC Markets) enables traders to maximize their profits within a short period of time without becoming exposed to a considerable amount of risk. Wider spreads will naturally take longer to be realized an in turn, losses could mount. It is critical to seek the tightest spreads possible.
Mitigating Risk
While spread betting is independent of prevailing market conditions, this method is still associated with a certain amount of volatility. Thus, it may be wise to spread bet within multiple sectors. An example can be a position within indices. It could be easier to predict short- to medium-term movements within an index as opposed to wagering on an equity or stock alone. This is ultimately associated with the discretion of the investor.
To better understand the principles and advantages of spread betting, it is wise to peruse the dedicated section found within CMC Markets. An astute grasp of spread betting can add to the diversity of one’s methods and when embraced with prudence, financial rewards can be a very real possibility.
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Betting Spread Tip
Interested in online gambling, but don’t want to do something too complicated? Try sports betting! Sports betting is considered by many to be the easiest form of gambling to get started with. When betting on sports, your goal is essentially to predict the outcome of a sports event and wager money according to what you think is going to happen. When you’re right, you win money. And when you’re wrong, you lose money.
Spread Betting Basics Vs
Even those who have no real interest in betting on sports have at least a basic understanding of what’s involved. Actually, the main reason why it’s so easy to get started with sports betting is that you don’t actually NEED to know anything other than the basics.
Now, we’re not telling you this to suggest that you shouldn’t try to learn more. You are going to be putting your hard-earned money at risk, so the more you know, the better. A proper understanding of how everything works is very useful, even if you only plan to bet every now and then for fun. It’s pretty much vital if you want to take things seriously and have a chance of making long-term profits.
Spread Betting Made Easy
We’re not suggesting that you should learn everything there is to know about sports betting before even getting started. While that’s not necessary, there are definitely a few things you need to be aware of. That’s why we wrote this article. It’s essentially a summary of everything we think you should know before putting your money at risk. A lot of what we cover here is explained in more detail elsewhere in our sports betting guide. That’s because this article was created for complete beginners, and we left some of the more complicated details out.
Betting Financial Market Spread
We start by explaining what fixed odds betting is, as this is the most common form of sports betting. We look at the five main components of a sports wager and provide some examples. Then we explain how there are different types of wagers and some alternative forms of sports betting, too. We briefly cover how to actually place wagers with bookmakers, and look at the various types of bookmakers. We also explain how and why they make money. We finish by discussing the importance of defining your sports betting objectives.