A NO B. S. Explanation of Spread Betting For Newbies
Note: The goal of this article is to give you the basic idea and an overview of what index betting. It is not meant to be a comprehensive and detailed explanation of the game.
Index betting, otherwise referred as Spread Betting is a bet type, where you are rewarded by the degree, in which you are correct in selecting a winner of a sporting event. The amount you stand to either win or lose is not fixed, and therefore, with index betting, you never really know just how much money you will win (or lose), until after the event is over, or until you have 'closed out' your bet.
Now straight up, I must say, that this form of betting appeals only to certain types of punters, because this can be a volatile type of investment. If the game or match doesn't go as planned, you can be exposed to fairly hefty losses, because your downside can be, to an extent, unlimited. Anyone, who has traded options on the share market, should grasp this concept without too much trouble.
The concept is similar to that of the stock market, where if you like a team/player you 'buy', but if you think that the team/player will perform below market (or the bookmaker's) expectations, you would 'sell'.
Spread companies offer a number of different markets on the one game/match. In some cases, it is staggering as to the number of index markets that they offer on the one event. The more common of these are the total point markets (where you bet on the total of the outcome scores), match margin (predicting the winning margin), and the performance indices (examples would be betting the finishing position of a player in a golf tournament, or the finishing position of a driver in a Formula One race).
Best Explained With an Example.
A Rugby Union match between Australia and England. The total points market is 44 - 47. This means that if you fancy that the game will be a high scoring game, and that both teams will score more than 47, you buy at 47. If the end total for the game were 57 points, then you would be correct, and you win ten times your stake. In this example your stake is $10 per point, and $10 x 10 equals a profit of $100.
However, if the game total were only 37 points, you would be wrong to the tune of ten points, thus losing $100 (the difference between the buy price at 47 and the actual score).
The difference between the buy and sell prices is how the bookmaker makes his money.
Let's look at a cricket game between Australia and England. Australia is batting first, and the quote reads 220 - 230 for Australian runs. If you believe that Australia will make more than 230 runs, you buy. If you believe that Australia will make less than 220 runs, you sell.
Australia goes on to make 290 runs after a brilliant knock by Matthew Hayden. If you had bought Australian runs, you would be correct by 60 runs (290 - 230). You would collect 60 times your stake.
However, if Australia finds it difficult to score runs, and makes just 170, you will be wrong by 60 runs (230 - 170), thus losing 60 times your stake or $600 if you are using $10 as a unit.
Be aware, that the bookmaker naturally biases the spread in favour of the buy price. That is to say, we have an inherent built-in disadvantage betting the buy price, because of the way the bookmaker structures his spreads. He attempts to make the buy price less appealing, because of the disproportional number of punters who bet on buy prices.
There is much more demand for the buy price than for the sell. After all, the nature of a punter is to find a team or player who will perform well, as opposed to seeking teams/players who the punter believes will perform poorly. So keep this in mind, if you think that index betting is for you. You will find it much easier targeting the sell prices. Of course, this is not to say, that you can't find good bets buying, but just, that they are a little more difficult to find.
You may make a play at how many points a team will score over the regular season. For example, you believe that NZ Warriors are set for an ordinary year, so you sell at the spread of 31 - 33. This means, that you are betting, that the Warriors will score less than 31 points over the course of the season.
Starting off, it can be quite confusing getting your head around the concept. (I know, because it took me some time to understand fully and to grasp what was going on, and how I could make money from this type of betting.)
This article has been just a very short overview of spread betting. If you are interested in the concept, and would like further information, go to www. puntingace. com and we have links to firms that deal in exactly this.
Spread betting is certainly not for everyone, and if you are not 100% confident in understanding the spread betting market, then I would seriously suggest that you stay out of it, until you gain more knowledge. You certainly can make a lot of money from successful spread betting, but the opposite is also true, you can lose a lot of money, if it all goes pear shape.