Sports Spread Betting
With sports spread betting, you bet on a variety of potential eventualities in a sporting event: the number of goals scored in a game, the distance in lengths the favourite will win by in a horse race, the number of runs in a cricket game and so on. You bet against a “spread” that covers the outcomes of an event and consists of two prices that express the spread betting firm’s prediction of what will happen in the sporting event. You “buy” if you think the prediction is too low, and “sell” if you think it’s too high.
The two prices are named bid and offer. The bid price is the price at which you can sell. The offer price is the price at which you can buy. The difference between the bid and offer prices is referred to as the spread. You may hear a price quoted in the form “sixty five seven”, which is shorthand for 65-67. If, say, you think a team will do well, you would buy them at the offer price. This is known as going long. If on the other hand, you think the team will fare poorly, you would sell them at the bid price. This is known as going short. Going long and short are also referred to as being with and against.
To illustrate how sports spread betting works, here’s an example: on the first day of an Ashes test match, a sports spread betting firm quotes England’s first innings total at 400-420. If you fancy England, and think they will exceed 420 runs, you buy. If you don’t think that England will reach 400 then you would sell. If you buy England for a pound at 400 and they make 450, you will receive £30 (450 minus 420). If they only make 370 you lose £30 (400 minus 370).
This highlights a difference between spread betting and fixed odds betting, a difference that many people find daunting. With spread betting your potential profit or loss can be many multiples of your stake. With a fixed odds bet placed at a betting exchange or a bookie, your potential profit or loss is a known quantity, determined by the odds and stake at the point at which the bet is struck. Although the potential profits relative to fixed odds betting may be appealing, the potential losses may be enough for you to steer clear of spread betting altogether. Bear in mind however spread betting firms provide a safety net by allowing you to set a stop loss. For example, if you are buying at £10 per point and set a stop loss of 10 points, your maximum potential loss is limited to £100, should the bet move against you.
Two standard pieces of advice are particularly suited the potentially volatile world of spread betting.
First, get to know this style of betting with a lengthy dry run period, to gauge whether it is for you and learn how to get your stake size right. For example, a market based on a cricket team’s total runs is going to be more volatile than one based on a football team’s number of goals. Initially at least, your stake size would smaller on the cricket market than the football market. Spread betting firms provide demo accounts that let you try out spread betting without risking your capital. Although such accounts are useful to get to grips with the mechanics of spread betting, bear in mind that the simulation is limited because you are not placing real bets and therefore the markets aren’t affected by your betting activity. When you are placing real bets, the markets will react to this.
Second, remain in control when spread markets move against you. Chasing your losses is dangerous enough in fixed odds betting markets, it has the potential to rapidly empty your account when spread betting. Ultimately, you should never risk more than you can afford to lose.
One way of ensuring that you stick to these pieces of advice is to devise a trading plan. The plan should include your profit goals, appetite for risk, methodology and how your going to measure progress. Once you created your plan, make sure each bet you consider falls within your plan’s parameters, as you are at your most rational when creating a plan and most irrational once your bet is live. Your plan will help you to maintain the consistent approach that allows you to ride out the inevitable losses along the way. Your plan’s inbuilt evaluation criteria will tell you when it’s time to change. Although you need to be consistent for long enough to judge whether your plan is working, you shouldn’t be afraid to re-evaluate your trading plan if it is not working for you.
Spread betting allows you to close your bet before the underlying event that you are betting on reaches its conclusion. You should therefore be continually assessing your position to evaluate whether you should take a profit or a loss – thereby eliminating the risk of having to absorb a far greater loss later on. For example, at the start of the football season, you buy a team at 55 who then go on to exceed expectations in their opening fixtures. The spread, which is updated after every fixture, rises to 65-67, giving you a 10 point profit (65 minus 55) if you choose to sell. Conversely, if you did not fancy this team and sold them at the start of the season at 53, then you need to make a judgement as to whether the team’s successful run will fizzle out. If it doesn’t, a loss of 14 points (67 minus 53), however painful, will be less costly than the eventual loss.
The traditional depiction of spread betting psychology is that shrewd customers sold and naive customers bought. While this is no longer as true as it once was, with the proliferation of spread betting advice on the internet and customers learning from experience, some people still trade sentimentally, backing something they hope will happen rather than what they think will happen. For example, a proportion of customers who buy in say a shirt numbers markets (the aggregate of the goal scorer’s shirt numbers) do so because they don’t want to sit through a football match hoping attacks are stifled, players go down and shots end up closer to the corner flag than they do to the goal. Additionally, there is the fear of catastrophic losses incurred by selling. Less sentiment driven punters assess the statistical probability of such a loss before placing a bet and are also mindful of the stop loss facility and that they can close out the bet before the event reaches its conclusion.
Football is by far the most popular sport on spread betting markets, followed by rugby, cricket and golf. This may provide the basis for a spread betting strategy. A spread betting firm is going to devote the bulk of its resources to pricing its most popular markets; employing teams of specialists who will spend all week analysing matches, poring over statistics and discussing various types of markets. It would be asking a lot for a punter to get the better of such a team over the long term. Spread betting firms are likely to be more vulnerable when pricing less popular markets such as speedway or cycling i.e. less popular markets, which spread betting firms do not employ a full-time specialist to price. This is where you may find prices that are wrong in your favour.
Despite its air of menace, with its attendant “health warnings” (e.g. “Please ensure you understand the risks with sports spread betting as it involves a high level of risk and you can lose more than your original deposit or credit limit.”), there’s no reason why you shouldn’t include spread betting in you armoury of betting techniques, assuming you are cautions, methodical and stake sensibly.