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Spread betting explainer: What is spread betting and how does it work?
Spread betting has offered an alternative to fixed-odds sports betting for decades and remains popular among punters hoping to win big via the accuracy of their wagers.
More synonymous with wagering on the financial markets and only offered by a select few betting sites, spread betting is more than just placing a winning or losing bet.
Get a spread bet right and the profits could be huge, but get it wrong, and you could end up losing multiples of your original stake.
Below, we’ve put together a spread betting guide, including how it works, the different types available and some practical tips for those looking to get into it.
What is spread betting?
So what is spread betting exactly? This type of betting differs from traditional fixed-odds betting in that rather than betting on a fixed outcome, you are betting on a range of outcomes. This could be the number of goals in a football match, the time at which the first goal is scored or by how many lengths a horse wins.
In spread betting, you are ‘buying’ or ‘selling’ the spread set by the bookmaker. You buy when you think the spread is too low and sell when you believe it is too high.
The so-called spread covers the range of an outcome. For example, in football betting, the total goals scored in a football match. There is a ‘buy’ price and a ‘sell’ price – the punter judges what they think the final outcome will actually be, and bets accordingly.
For example, Manchester United vs Fulham may have a total goals spread of 2.9-3.1. If you think the outcome will be up higher than the range, you would ‘buy’. If you think it will end up lower than the spread – i.e you think there will be under 2.9 goals – then you would ‘sell’.
Your stake is the amount you decide to bet per point movement, so in this case, you’re betting on each goal above 3.1 or below 2.9.
In short, spread betting allows for profit or loss based on the accuracy of the bet, rather than just the outcome.
How does spread betting work?
As mentioned above, spread betting involves betting on a range outcomes, rather than a fixed outcome. For example, rather than betting on an exact number of goals or for there to be more or less than a certain number of goals, you bet on whether or not the total number of goals will fall within a certain range.
In the example above, Manchester United vs Fulham is offered with a ‘sell’ of 2.9 goals and a ‘buy’ of 3.1 goals. You would ‘buy’ if you think there will be more than 3.1 goals, and ‘sell’ if you think there will be less than 2.9. Essentially, a ‘buy’ is a bet on the outcome being above the range, and a ‘sell’ is a bet on the outcome being below the given range. A stake is the amount you are betting per point movement, in this case per goal.
So, if you ‘buy’ the 3.1 goals at £10, you are placing a wager of £10 on each goal above or below the range.
In this example, if you were to buy at £10, you would essentially be betting £10 on each goal above 3.1. So if there are three goals, you lose £1. If there were five goals in the match, you’d win £19. If there were four, you’d win £9.
Unlike with traditional football betting sites, there’s no fixed amount for wins or losses on total goals bets when it comes to spread betting.
In financial markets, spread betting is essentially speculating (or betting) on which direction a financial market may go, without actually owning said security. For example, someone may bet on the value of a stock rising or falling; say the range was £200 to £205, you are betting on whether you think the value of that stock will be higher or lower than that range. If you think higher, you ‘buy’; if you think lower, you ‘sell’.
Types of spread betting
There are two types of spread betting: financial spread betting and sports spread betting.
Financial spread betting is applied to securities such as stocks, commodities and currencies. It involves betting on the direction of a stock or currency without actually owning any; the company provides a bid and ask price, which marks the spread. This may be as above, with a bid of £200 and an ask of £205.
If you think the value of the security will go above £205 in the given timeframe, you ‘buy’. If you think it will be below the bid price of £200, then you ‘sell’.
Like in sports spread betting, you are betting on each point below or above that the security. For example, say you bet £10 on said stock falling below £200. If the stock price fell to £188, it’s fallen by 12 points, so you have ‘won’ 12 times – your bet would win, and you’d receive winnings of £10 x 12, so £120. However, this does work the other way too; if you decided to bet £10 per point and the stock rose to £212, you’d lose £70.
Sports spread betting on selected betting apps works in a similar manner. You buy if you think the outcome will be above the range, and you sell if you think it will be below.
In the goals example above, for each goal above 3.1 you’d win £10, so if there were four goals then you’d win £9 (as there were 0.9 more goals than 3.1, and you bet £10). However, if there were only two goals, you’d lose £11.
The risk in spread betting is that you can only decide the amount that you wager, and whether to sell or buy, so you run the risk of losing a lot more than you wager.
An example of a more volatile market would be betting on the number of runs a certain cricketer scores. If the spread was offered at 40-55, you’d sell if you thought he’d score under 40, and buy if you thought he’d go over 55. If you bet £10 on a buy, you’re betting £10 on each run he scores over 55, so if he scored 75 runs – 20 more than the range – you’d win £200. However, if he scored anything below 55, you’d lose £10 per run below 55. So if he scored 30, you’d lose £250.
Spread betting strategies
One of the most important things to remember when engaging in spread betting is that you need to have risk management strategies.
To begin with, work out the worst-case scenario. Some markets, such as total goals, are less volatile than others because the total amount of goals that you could reasonably see would only be six or seven, even in the rarest of matches.
However, with something like the cricket example above, even the most in-form batsman in the world could get a golden duck, so you could bet on 40 runs and he ends up getting anything from 0 to 120. In this case, your worst case scenario could be a loss of hundreds of pounds if you bet £10 on each point.
To this end, especially when starting out, it is a good idea to stake lower amounts per point, depending on the market. £10 per goal might fit your finances, but £10 per point in a rugby match could quickly get out of hand.
When starting out, many spread betting guides advise novices to stick to just buying the spread. This way, you know what your maximum losses will be.
If spread betting on financial markets, make sure you have monitored the market conditions for some time before placing your first wager.
Among the popular spread betting strategies is trend following – this simply consists of following the trend and buying or selling as the security moves. If the trend is that people are ‘buying’ that range, then buy, and vice-versa.
Another common strategy is range trading, which involves identifying the range that people buy and sell over over a short period of time, and keeping within that range over the next few weeks.
Spread betting risks and considerations
Spread betting should not be attempted until you have a good understanding of how it works. Read this spread betting guide and others thoroughly before even thinking of opening a spread betting account.
The main risk associated with spread betting is the potential to lose far more than you wager – and therefore more than you might be able to afford.
Remember that you could theoretically lose 10 or 100 times your wager, so plan accordingly and make sure you understand what you stand to lose when you make your stake.
One key consideration is the use of tools such as stop loss orders or a guaranteed stop, to minimise potential losses. A stop loss order instructs the bookmaker to close a position at the first available price at – or beyond – your chosen price. You limit potential losses by triggering a stop at a specified price.
A guaranteed stop is a similar tool, the main difference being that a premium is added to the spread when placing a guaranteed stop. Unlike a stop loss order, a guaranteed stop is guaranteed to cease trading when the value falls below the value that you have chosen. With a stop loss order, it ceases trading at the value of the next available market – this could be when trading opens the next morning, for example, so there’s more volatility.
Responsible Gambling
No matter how much you know about a sport, gambling is only a form of entertainment, not a surefire way to make money.
Spread betting may offer you the chance to win big, but it carries with it very serious risks and should not be attempted until you have a full understanding of how spread betting works.
Betting can be addictive, so please take steps to remain in control of your spending, even if you’re using free bets, and never bet more than you can afford to lose.
The same applies whether you’re using betting sites, casino sites, slot sites, poker sites or any other form of gambling. It’s particularly important not to get carried away by betting offers or casino offers, both of which are available in abundance on gambling sites, but must be approached with caution.
Make sure to use responsible gambling tools offered by betting sites, such as deposit limits, loss limits, self-exclusion and time-outs. These can often be found in dedicated tabs on established and new betting sites.
Should you wish to seek help for gambling-related issues, there are several charities and healthcare providers who offer support and information:
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