The purpose of this short article is to look at the basics of financial spread betting. It may be difficult to know where to begin when you first try financial spread betting. This post will explain the different types of bets that are available to you.
There a 4 different types of bets that you can make. If you are completely new to financial spread betting then you probably would’ve only ever heard of one… Futures. The market for Futures contracts has been around for centuries.
I don’t like to trade futures compared to the other appealing bet types within financial spread betting. Futures have specific end dates, for example the contract might state that you will take delivery of a certain asset on the 1st June 2011.
Don’t worry, you won’t have to actual take delivery of the asset/commodity. You would hope to sell the contract on closer to the time at a higher price. There are other things that you do need to think about. These are things like the current interest rates and carry costs for the holder.
I believe that Futures are a little complicated and an expensive way to trade.
A new area of financial spread betting that is increasingly being used today is the Binary Bet. The binary bet is a form of fixed odds betting like to have in sports.
It is a more transparent financial spread bet. You have two different outcomes and you place you bet knowing beforehand what you are likely to win and lose beforehand.
The more commonly associated bets with financial spread betting is the daily bet and the rolling daily bets. Both of these types of bets are very similar. The only difference between these 2 bets is the daily bet is settled at the end on each day and the bet is exited. With the rolling daily bet the bet is settled at the close of the market by your financial spread betting company but is reopened at the morning bell. You will stay in the trade until you decide to exit.
Both types of bets are easy to get to grips with. I think that the rolling daily bet allows you to trade in a similar way to Futures and at the same time is more transparent, simpler and less expensive.
