Spread Betting Explained

Alan Thompson profile photo

Author: Alan Thompson

Published: 16:40 05/12/2014

Having a spread betting account is an essential part of any punters armoury these days, but it is surprising how many people don’t have one or even understand how it works.  This article has been produced to explain that it doesn’t have to be as volatile, complicated and risky as some may have you believe.  However, the FACT remains“spread betting can carry a high level of risk, with potential losses far in excess of the original amount staked”

BUT with just a little bit of education you will see it’s actually not that intimidating and providing you use that knowledge sensibly then there is no reason why you can’t get involved in what is possibly the most exciting way to bet on sports.  In a nutshell, with spread betting the more you are right the more you win, of course the more you are wrong the more you lose.

How does Spread Betting work?

Just like the bookmakers offer us a market with prices that we can back at the spread companies will create a market that consists of a Sell price and a Buy price, the margin between these two numbers is the spread.  Let’s take a look at this example of a popular spread market “Total Goals” in a football match.... 

Freebets explains the margin between the sell price and buy price is the spread

You are being offered 2.6 – 2.8 on the total goals, but what does that mean ?  Obviously, there can’t .8 or .6 of a goal so what they are saying is “if you think there will be three or more goals in the game you can Buy at 2.8 – or if you think there will be two or less goals in the game then you Sell at 2.6.

So while that may still be a little confusing let’s simplify it by knowing the end result.  Let’s say there were five goals in the game, and you have bought “Total Goals” at 2.8 for £10 – you would have WON £22!

The reason you won £22 is because of the difference between the 5 goals in the game and the price you bought at 2.8 giving a difference of 2.2 (5 - 2.8 = 2.2) – multiply that by your Stake £10 and you get £22. 

Also, the good thing about buying in this market for £10 is that you know your maximum risk in the game is £28, you know this because the minimum number of goals scored in a game is ZERO (0-0) and it’s the same equation, calculate the difference and multiply by your stake (0 - 2.8 = -2.8) - then multiply by £10 and you get -£28

As always if you are new to any type of betting activity, I would always recommend to start with small stakes but also in spread betting I would recommend when you are buying you only play in the markets where you know what the minimum points can be, that way you can calculate the difference.  That way you can stake at the correct level and know your maximum loss, to calculate your stake let’s look at this example:-

You think there will be a few goals in this game but you don’t want to risk any more than £30.  You know as a buyer of total goals that 0-0 is your worst case scenario so if you divide your max risk £30 by 2.8 (your buy price) = £10.71, lets round it down to £10.50.  You now know that if you Buy the goals for £10.50 at 2.8 the maximum you can lose is £29.40 and the upside is every goal scored above three is winning you an extra £10.50.  Which is great when you get it right and the goals are flowing.  However, as with everything in gambling there are two sides to every story....    

Now we need to talk about the scary part of spread betting “SELLING” into open ended markets like Total Goals.  Let’s assume you had gone the other way and executed a Sell of Total Goals at 2.6 – this is where people get the impression that spread betting is too risky because at the time of placing the bet you have no way of knowing what your maximum loss is. 

Prior to this game starting you don’t know what the maximum number of goals will be, there could 7, 8, 9 or the most ever scored in a Premier League game 11 (Portsmouth 7 v 4 Reading 2007) and if you were a seller in that game at 2.6 for £10 you would have just lost £84, because there were 11 goals, you sold at 2.6 giving a difference of -8.4 * £10 = £84

Protect Yourself From Over Exposure

The good news is there are a couple of ways to protect yourself from such disasters the first is that spread betting pioneered in-play betting long before the traditional bookmakers, so you can always cash out at any time during the game, to secure a profit, limit a loss or even break even.  However, if you are not confident with that but are still attracted to the spread betting excitement then I would I suggest opening an account with a built in “Stop Loss” facility.  All this means is that your account has a built in added security of limiting risk.  Spread betting with a safety net UNTIL such a time as you are more confident with the way spread betting works.  These accounts also have small minimum stakes (down to 5p) allowing you to learn and see if spread betting is for you with a much reduced downside.  Then once you are happy that you know what you are doing, you can take the “brake off” and remove the stop-loss facility normally by calling the company your account is with. 

Of course we have only touched on one of the hundreds of markets available across all sporting events, but the principles remain the same regardless.  Understand what your max loss could be and calculate the stake accordingly.

Spread Betting is definitely NOT for everyone that is for sure BUT if you haven’t tried spread betting before then why not take advantage of the sign up offer available from FREEBETS.com with Sporting Index, where they will fund your account with £100 – anything you win over that is yours to keep.  I have no doubt it will turn even the dullest sporting event into an exciting encounter, with potentially every goal, booking, corner even pass in the opposition half potentially delivering profit  – that’s what Spread Betting delivers!

Spreadex is the only firm to offer sports spread betting and sports fixed odds betting from one account. The company also offers a financial spread betting service where you can trade the world’s markets tax-free (subject to your status, tax laws may change in future).

Join Spreadex and get 2x £100 football supremacy spread bets after your 5th and 15th qualifying spread bet. Equivalent free bets also available on horse racing, cricket, rugby, golf and tennis

If you like the sound of spread betting, then rest assured over time we will be developing more articles in the education section on this type of betting helping you get the most from it.     

Read about Sporting Index welcome offer and how to claim free bets and bonuses on Sporting Index