Financial betting has become increasingly popular in the last years and online gambling sites that offer this type of wagers continue to appear. Financial betting resembles normal sports betting because players still place their gambles on the outcome of an event, using luck, skill or experience to win.
Since financial markets are on a constant move and companies’ shares go up and down all the time, players can choose to place bets on exactly this rise or fall of their values. Anticipating, predicting and betting on the price development is the main part that needs to be respected by bettors.
The connection with real financial markets
It is quite obvious that financial betting is inspired by real stock investment on financial markets, and the financial betting odds should be consistent with the real prices displayed on the exchange markets offered by a bookmaker.
Same way as in sports, it is important to note that 60% of investors consider that understanding what you invest in is a good advice for future generations.
Therefore, to actually be successful in financial betting, a player should have some general knowledge and basic understanding of the underlying principles that animate and support markets’ movements and the additional risks involved.
By using financial betting, one can learn how to trade virtual stocks of products mirroring the real life experience of actually possessing a genuine share in a company.
Differences between financial betting and market investment
There is quite a difference between predicting a financial market’s evolution and actually purchasing trading stocks or shares in a company.
First, when buying shares in a company, you are normally making a long term investment, which is backed up by a previous documentation on the company’s evolution, its strong points and finally by investigating the overall economic context of the market. It goes without saying that when buying shares in a company, every individual hopes for a positive evolution of the company.
As for financial betting, there is the obvious difference that one does not need to purchase any company shares and become a small or large owner in the company. Those participating in such gambling activities do not really possess the assets or commodities they are betting on.
Finally, there seems to be a certain objectivity involved in the fact that one simply needs to anticipate (and make money) by betting on the market rising or fall throughout a given period of time.
Advantages of financial betting
As we mentioned earlier, by analyzing the market evolution, one can take advantage of the main changes that occur, so that positive and negative developments can be used by bettors to their advantage.
To complicate things, those who actually invested in a certain company and bought shares, hoping for them to rise over time, could use the company’s fall to their advantage by using financial betting. Nevertheless, those who are not prepared and do not understand very well the internal dynamics of a market should not move into such activities from the start.
Still, financial betting can be useful for novice traders and long term investors that want to access a financial market and invest large sums of money. It is therefore a good way to teach the necessary techniques to succeed later on when accessing and buying shares on a market.
Additionally, betting on financial markets is tax-efficient and the bettor is not subject to tax laws that apply to investors and traders who need to pay taxes for holding shares. In the end, financial betting is simple and easy to learn for everybody, without all the fuzz and hustle implied by real investment on financial markets.
Types of financial betting
1. Fixed odds betting
This type of financial betting allows players to bet on the movement of a financial market by predicting a share’s (or a trading stock’s) movement – “above” or “below” a certain level – by the end of day (or any other fixed period).
In fixed odds bets, losses are bound to the stake you enter for the selected bet. So, if you have placed $10 on a bet, the money you lose will be $10.
2. Spread betting
Unlike fixed odds betting, in spread betting, players are able to win or lose unlimited sums of money, since there is no single stake to limit losses.
Though spread betting brings more risk, it does contain a high potential for greater returns. By having no fixed odds, spread betting is based only on how much a financial instrument (trading stock or share) goes up or down, so the higher it gets, the more you win and the lower it goes, the more you lose.
Let’s see an example:
The trader or the bookmaker can set a price for the penny increase or decrease.
We have a company’s share price starting at 100p and the spread can be set at 94-95p. If the bettor places a bet on an increase, he could buy at 95p for $100 per penny. So, if the company ends the day at 100p, the 5-point increase reaches $500. On the other hand, if the day ends for the company shares at 90p, the 4-point decrease means a loss of $400 for the player.
If we continue our example without any limit fixed on the possible total win or loss, we can see that only sky is the limit for this type of financial betting. Still, there exists the option to set a limit (agreed with the bookmaker) at a specified amount and limit the virtually unlimited loss or profit.
3. Binary betting
Binary betting is closer to spread betting and the risk of losing more than you have placed as a stake is removed. This happens by offering odds in an index from 0 to 100, where the bet settles at 100 if the event reaches that point and 0 if it does not.
A sum of money is wagered per point on the index. In such a bet type, there are two possible outcomes: to Win or to Lose and you can Buy or Sell a binary set.
Therefore, if one chooses to Buy a binary bet, the selected market level is set to Above at the end of the betting period. If you Sell a binary bet, the selected market level is set to Below at the end of the betting period. But, let’s try to see an example:
To buy a binary bet is to choose to finish above. The spread is: Buy 50 / Sell 40
You choose to buy at 50 for $1/point predicting the price will be higher. In case the price is higher than 50, you win and the market makes up to 100. Total return of the bet is: 100 – 50 = 50 x $1/point = $50 profit.
If the price doesn’t go over 50 that day, the bet makes up at 0. So, your losses are: (0-50) x $1 = -$50.
To sell a binary bet is to choose to finish below: Prices: Buy 50 / Sell 40
You choose to sell at 40 for $1/point predicting the price will fall. In case the price is lower than 40, you win. So, your winnings are: (40-0) x $1 = $40.
Placing a financial bet on a gambling website
There are a number of ways one can place a bet on a financial gambling website. To offer players a taste of this thrilling gaming experience, we have recently integrated BetOnFinance on the EveryMatrix platform. Our client built its own financial game – displaying stock markets from Denmark and USA – and its own gaming website that employs a mix of Server APIs and CMS iFrames hosted on our software platform.
You can notice quite fast that betting on stocks is like betting on horses and you simply have to guess (anticipate, predict, discover, etc) which one will come first or last in the “race”.
Additionally, one needs to understand that this betting type is similar to a live sports betting session: the more people choose to bet on an event’s outcome, the lower its odd will be. To improve the gaming experience, players can bet Live while the market is open.
As we have displayed in our examples above, the player needs to choose between 2 values, one corresponding to Sell (in case the share’s value drops) and one to Buy (in case the share’s value rises). The difference between Sell and Buy is named Spread, that’s why we find Spread Betting as a common buzzword in this type of betting.
Betting online by anticipating the direction of stock prices is a relatively easy way to earn money by analyzing the rise and fall of shares or trading stock. The main advantage in this type of betting is that you can choose to profit from the shares’ move with a rather small investment.
If you are serious about financial betting and want to play for fun or maybe for money, it’s important to learn the basic details about the financial markets’ evolution and the necessary techniques that should be controlled in order to succeed.
At this moment, there are a number of trustworthy gaming websites that can offer a vast array of choices for most players and, as a general rule, we advise participants to start from there and avoid unknown or not so familiar websites. To better understand this game concept, check our client’s How to Play section.