Financial Fixed Odds Betting

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Financial fixed odds betting can be a flexible and innovative way to trade on financial markets tax free. It is completely transparent and easy to understand. Because fixed odds bets pay out a pre-determined amount if a designated event occurs within a given timeframe, risk is mitigated, too. It is possible to wager on financial markets knowing exactly how much can be gained or lost from the point the trade is made.

What’s more, the events available for betting are more varied with financial fixed odds betting than with any other form of trading. Basic wagers include betting on the market going up or down or not going up or down, as well as on the market staying within a specified range or not, and much more. Also, fixed odds betting is offered not only on market indices, such as the FTSE 100, US 500 or European 50, but also for currency exchange rates and commodities markets.

Many online bookmakers offer financial fixed odds betting as part of their portfolio of gaming activities. They include Ladbrokes, Bet365, Betfair and Paddy Power, to name just a few. The methods of placing the fixed odds bets may differ slightly from one book to the next, but the basics are roughly the same at each.

Take as an example a bet placed on the FTSE 100 when the trading level is at 5200.0. A wager can be made on the index being higher than this level at market close at fixed odds of 4/5. That means for every £5 wagered £4 can be won, plus the amount of the original stake is returned.

In this case, a bet of £100 would require that a stake of £100 be deducted from the bettor’s account. If the FTSE 100 closes at 5220.4, the bet will win £80 and the £100 stake is returned. If the FTSE 100 closes below 5200.0, the £100 stake is lost. And if the FTSE 100 closes at exactly 5200.0, then the wager is deemed to be a “dead heat” and half the stake pays full odds, so £40 is won, £50 is returned and the net loss is £10.

With financial fixed odds betting, all of the control is in the hands of the individual making the wager: the amount to be won, when the bet ends, the bet type and the market levels. Odds are calculated and displayed on the computer screen along with the minimum stake required.

Thanks to this great flexibility, it is possible to profit in all situations, whether the market is going up, going down or trading within a range. Beyond simply picking the direction of the market, it is also possible to bet on the highest point the market will trade at during a defined period. Similarly, a wager can be made on the market reaching or not reaching a specified level. And expiry periods for bets can be as long as a day or a week and as brief as a two-minute interval.

Keep in mind that the fixed odds are always shown as a fraction. The win amount is represented by the number in the numerator and the stake required is represented by the number in the denominator. Hence, stakes of 3/1 mean that a bet will pay out triple the amount wagered. More complex odds, such as 153/27 can be best understood by dividing the numerator (153) by the denominator (27) and multiplying the result by the amount to be wagered (say £15) to determine the amount that can be won—(153/27) x £15 = £85—and add it to the original stake (£15) to obtain the total amount to be claimed, i.e. £100.

Unlike financial spread betting, no margin is required, and there is no need to put up any capital other than the initial stake to cover the bet. This makes money management quite easy, so that beginners in particular may spend time researching markets and developing trading strategies.

Published on: 14/09/2012

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