What is Spread Betting?
Have you ever seen your team concede a last minute goal when you were seconds away from winning a big bet? Would you have settled for 95% of your winnings before the goal was scored? If your answer is YES, then football spread betting could be for you!
SpreadEx are one of the best spread betting company and they are currently giving away £200 in free football bets to new customers.
If you want to see the advantages of spread betting, take a quick look at the bottom of this page.
When you place a bet normally you are placing it with fixed odds e.g. 1/2 or 1.5 to 1. You place this on a win or lose outcome and you either win or lose your bet. Your winnings are calculated from the odds and the amount you stake. So if you bet 10 for Manchester United to win at 1.5 to 1 and they do, you win 1.5 x £10. If they lose or draw, then you lose your £10 stake.
However fixed odds often create a market where most people bet for the better team. E.g. if Manchester United played Birmingham, most people would bet on United to win. The main purpose of football spread betting is to create an active market for both sides of a wager.
Simple spread betting examples
With spread betting you are betting on a range of outcomes called the spread, and you bet whether you think the outcome will fall above or below the spread. The spread is often presented like this: e.g. 65-67, and is the range of outcomes or results that the spread company predict are most likely to occur for an event. If you think that the spread is too low, then you would bet high and “BUY” the spread at 67. If you think that the spread is too high, then you would bet low and “SELL” the spread at 65. The money you win depends on your stake how right or wrong you are. The higher your stake and the more right or wrong your prediction is the more you win/lose.
An easy example to start with is if you were to guess the weight of your friend. The spread betting company might predict a range of between 70 and 75kg. To the spread betting company that is known as the spread. Usually You would then say whether you think the actual weight will be higher or lower than the spread and put a stake on every kg difference from the actual result. If you think your friend’s weight is actually higher than 75kg, then you BUY. If you think it will be lower than 70kg, then you SELL.
Buying and selling is often referred to as trading.
If you think the spread is too low and the actual result will be higher, then you want to BUY. So say you BOUGHT and decided to trade at £1 for every kg higher than 75 and it turned out that your friend was 80kg, then you would win £5. You work this out by comparing the Difference of outcome and price multiplied by the price you bought at.
80 – 75 = 5kg >> 5kg x £1/kg = £5
If however your friend was only 65kg, then you would lose £10. You bought at 75kg, so…
65 – 75 = -10kg >> -10kg x £1/kg = -£10
It is as simple as that.
The same goes for if you bet the other way. If you predicted that your friend was less than 70kg and it turned out that they were actually 65kg, then you would win £5
70-65 = 5kg >> 5kg x £1 = £5
If they turned to be the 80kg as in the first example, then you would lose £10…
70-80 = -10kg >> -10kg x £1/kg = -£10
The spread range can represent goals, time, points or just arbitrary units.
Football Spread Betting examples
A popular football bet in spread betting is the supremacy bet. This is predicting a team’s dominance over their opposition.
You might want to bet on a winning goal margin. You will see a spread like this:
Man City/Aston Villa >> SELL 0 – 0.2 BUY
The strongest team is listed first. This is basically saying that Manchester City have a 0 – 0.2 advantage in this game with their goal margin, so for every goal City score it is worth 0.2 less than every goal Villa score. It will all make sense in a minute.
WINNING GOAL MARGIN:
So say that you think the game will end 3-1 to City, you would buy at 0.2 with £10 per goal.
If the game then ends 3-1, you will win £18.
City have won by a 2 goal margin (3-1). You work out the winnings by the difference between the outcome and what you traded at, just as in the weight example. So…
2 goals – 0.2 = 1.8 >> 1.8 x £10/goal = £18.
You are effectively taking 0.2 off every goal City score and because they are considered the stronger team going into the game, they have this handicap.
If the score were to end at 0-2 to Villa then you will lose £22 The winning goal margin is -2 (0-2), so…
-2-0.2 = -2.2 >> -2.2 x £10/goal = -£22
If the game ends as a draw e.g. 3-3=0, the you will win £2…
0.2-0goals = 0.2 >> 0.2 x£10 = £2.
You have to add your original stake to all your winnings of course.
Another popular bet is total goals. Lets use the same teams as we did before. You might see a spread of 2.8-3 total goals for Man City vs Aston Villa.
TOTAL GOALS BET:
If you decide to BUY at £10 per goal and there are a total of 5 goals after 90 minutes, then you will win £20.
5 goals – 3 you traded at = 2 >> 2 x £10/goal = £20.
However if there was only 1 goal in the match you would lose £20.
1-3 = -2 >> -2 x £10/goal = -£20.
Betting on whether a which team will win in a match is not as popular as in fixed odds betting, but there are still markets for it. Usually called the Win Index for each team.
Because winning and losing aren’t results that you can make a spread with, they are assigned points. Usually a win gets 25 points, a draw gets 10 and a loss gets 0. The spread is created based on these numbers.
The nature of spread betting enables a higher range of betting opportunities. You often see markets such as shirt numbers, where you have to predict the total value of all the shirt numbers on the pitch. Other popular markets include number of corners and bookings.
About Buying & Selling Spreads
Buying is much more popular than selling because it is considered safer and also more exciting. Lets use total goals scored in a game as example.
YOU ALWAYS KNOW HOW MUCH YOU CAN LOSE WHEN BUYING:
If you BUY, then you know what you could potentially lose buy multiplying the number you buy at by your stake. So if the spread was 2-3 and you chose to bet £10 per goal, then the maximum you could possibly lose would be £30…
3 x 10 = £30 loss
This makes sense because the minimum possible goals in a match is 0 so the outcome-the result…
0-3 = -3 >> -3 x £10 = -£30
However if you SELL you don’t know how many goals there could be maximum. In theory there could be an infinite number, although very unlikely. There aren’t many games in the season where more than 10 total goals are scored.
We mentioned that Buying a spread is more exciting than selling. This is because when you buy and sell you make more money if the actual result is further away from the predicted spread, as long as it is on the correct side of course. So, because when a market starts, (for example total goals) the tally starts at 0, you are always going away from your maximum selling profit and always going towards your maximum buying profit.
If you sell and total goals stays at 0 then you make the most profit. This is perceived as less exciting because you hope no goals are scored. Whereas if you buy, you are hoping that the goals scored will keep increasing to first reach the buy spread number so your trade is on the winning side of the bet. Then you hope it keeps increasing so you win more money!
Because of this, buying is often more popular than selling. However due to this the spreads are often set to favour selling more.
Risks in spread betting
Spread betting carries a high level of risk because unlike fixed odds betting, your potential losses or gains from a bet can be far greater than the original money wagered. Big wins can be made from small stakes which makes it attractive to some customers, but you can also lose in the same way.
However if you are sensible about it, then you won’t have any problems. Just as you wouldn’t bet £3,000 for Manchester United to beat Burnley if you know that you can’t afford it if you lose the bet, you wouldn’t trade risky bets in spread betting.
If you want to give football spread betting a go, but you are at all worried, then you can use a “Stop Loss” on your account. This limits the amount that you can lose, but at the same time also limits the amount you can win. So say that you were betting on a match with a spread of 8-10 corners and you traded at 8, you could have a stop loss on 15 corners, so that you don’t lose any more money after than point. But this would also stop you winning more if there were actually only 1 or 2 corners in the game.
Taking your money early
Another great thing about spread betting is that you don’t have to wait until the end of the match, season etc… to win your bet and claim your money. Spread markets are actively changing and the number you bought at may go up or down. Say that your team was winning 2-0 and you had bet on a 2 goal margin in the game. The trade that you bought at would most likely have gone up. You think that the other team looks like they may score at any moment. If they do score then you will win less money, so you can “close your bet” early and sell at the new higher price. This way you can take an early profit.
If your team then scores another goal you won’t make any more profit, but if the other team scores you wouldn’t lose any either. This works exceptionally well for longer term bets like betting on the Golden boot. If the player you are backing starts to do well you may want to get out early while they are scoring a lot of goals just in case they have a dip in form and the spread price goes down.
Closing your bet early can also work if you are losing your bet. If your team is having a dreadful day and you want to cut your losses and not risk losing any more money, you can close your bet early and accept that you have only lost a fraction of what you could have.
When spread betting you also don’t need to have your money tied up in the bet. With fixed odds betting you bet your stake and wait for the market to finish. If this is a football match then it could be 90 minutes. If it is a season long bet, then it could be 9 months! A big advantage of spread betting is that you don’t have to pay the money for the bet up front. Bets are settled when the market is over so you don’t have your money locked up for the whole season if you are betting, for example on who may win the Premiership.
How do bookies make money from spread betting?
The money trading either way should equal out so either one can pay out for the other side depending on how the result goes. So how does the bookmaker make money? It is basically from the gap between the spread. E.g. 60-65. This is effectively a margin of error. If the actual result falls between the spread, then the bookie wins. Different markets and events have different size margins of error. Some can range up to 10%. The smaller margin is better for the punter because the actual result is more likely to fall either side of the spread.
Financial spread betting
There are also spread bets available for financial markets and they offer a number of advantages over the real thing. You can bet on whether a share value will rise or fall, but you can decide what you want to pay for each point change, so you are not restricted to paying the market value for each share. This is useful if you are learning or you see a good market, but you can’t afford the shares. Another great advantage of financial spread betting is that because it is classed as betting you don’t pay tax on your profits as you would do with real shares. This means that essentially you have tax free investing.
Spread bettting summary
- Potential of big wins from small stakes.
- The more right you are, the more you win.
- Markets are more equally balanced.
- You can bet on both sides of the market. e.g. you can bet for a player to score or not to score.
- You can take your money when you like. As soon as soon as you are in profit you can take your money and run. Even before the match or season is over.
- It is more exciting than fixed odds betting because your profit can keep going up. e.g if your team keeps scoring!
- You can cut your losses. If you bet starts to lose you can bail out at any point.
- You can minimise your risk with a stop win/loss.
Disadvantages of spread betting
- The calculations to work out profit are slightly harder. e.g. Difference of outcome and spread multiplied by bet stake.
- There can be bigger losses.