Spread betting

from Wikipedia, the free encyclopedia

Spread betting is betting on and trading in financial stocks. Spread bets are also offered by bookmakers in the sports betting area.

process

Spread betting was invented in Great Britain and has established itself there as one of the most traded financial products by private customers. Spread betting has been offered as e-spreads in German-speaking countries since 2010. This means trading in financial stocks with more or less leverage, without actually holding the financial stocks. So only the exchange rate differences are traded. The income for the spread betting provider is generated from the difference ( spread ) between the buying and selling price. The trader bets a certain amount of money, for example 10 euros, on the price change of a financial security. If he has bet on rising prices, ie goes " long " and the price rises by 10 points, for example, he makes a profit of 100 euros (10 × 10). The same thing works in the other direction - by “ going short ” when prices are falling. This means that profits can be made in both rising and falling prices on the financial markets. Due to the leverage, these are higher than in traditional stock exchange transactions. However, this also increases the potential loss. Due to the trading of price differences without holding the securities, spread betting is one of the so-called difference transactions . CFDs also fall into this group .

advantages

The advantages of spread betting are:

  • High transparency
  • Chances of winning in rising and falling markets
  • Low cost
  • No currency conversion risk

Disadvantage :

  • Betting against the broker, as a market maker occurs
  • High losses possible

Spread betting as a sports bet

Although spread betting has its origins in the financial sector, it is now also offered in a modified form by bookmakers in sports betting. The structural principle is similar: With this type of sports bet, the betting participant has the opportunity to bet on the difference between an incoming event and the corresponding forecast. Possible events can e.g. B. the number of goals, the number of corners shot or the number of explicit place references.

Spread bets can also be placed on the total number of points a team has achieved during a season. For example, a spread of 75 points is chosen for a team in the Bundesliga . A certain amount is set beforehand for each point that is above or below 75. If you choose, for example, five euros per point that is higher, you will receive a profit of 50 euros with a total number of 85 points. If, on the other hand, the team only reaches 60 points, the betting participant loses 75 euros.

So a high margin can sometimes be achieved with successful bets. However, these bets also result in the risk of high losses. Therefore bets of this type are to be classified as highly speculative.

Web links

literature

Individual evidence

  1. ↑ What can sports betting learn from finance? September 17, 2014, Retrieved May 28, 2019 (American English).
  2. ^ Spread betting. Retrieved May 28, 2019 .