Financial Binary Betting
One form of spread betting on the financial markets is known as binary betting. It is less risky that traditional forms of spread betting because the potential profits of losses are known in advance. As a result, binary betting is similar to fixed odds betting in sport. As well as having a clear idea of the financial implications of each, binary betting offers the punter further advantages over traditional share trading. Firstly, all profits made from binary betting are tax free. Secondly, any losses are limited to the original stake multiplied by the binary value. And thirdly, there are no broker’s fees, commissions or surcharges to pay.
For these reasons, anyone who is new to financial betting may want to choose binaries as a starting point. It is possible to make a profit regardless of whether the markets go up or down and many online bookmakers now offer financial betting portals where punters can place binary bets on major markets such as the FTSE 100 and also foreign currency exchanges and commodities markets.
Binary bets are settled based on a scale of 0-100, with the winning bet being settled at 100 and the losing bet settles at zero. The punter must wager on the market going up or down at a fixed price over a certain time period. So if the FTSE is at 6000 and the punter thinks it will finish higher, they could place a binary “buy” bet of 55 at £1 per point. If the market goes up, the pay-out is based on (100-55) x £1, resulting in a £45 profit. If the bet loses, the potential loss is (0-55) x £1, resulting in a £55 loss. The terms of a binary bet differ slightly from one bookmaker to another, so it is important to check the exact method before placing your bet. One slightly different method is the decimal binary. In this type of bet the punter can bet a fixed amount, say £100 that the market will rise at a binary figure of 0.55. The stake (£100) is multiplied by the binary (0.55), resulting in an initial outlay of £55. If the market goes up, the bet pays out the full £100, resulting in a £45 profit. If the market goes down, the £55 outlay is lost. If the market stays the same, half of the full stake is paid out (£50), resulting in a £5 loss.
The advantage of binary betting is that the bettor has total control over the potential pay-out, the timescale and the type of bet that is placed. Once the factors have been set, the software will calculate the binary and the minimum stake required. This prevents the need for stop-loss order that is normal associated with financial trading. Also the bet cab be determined by the amount that the punter would like to win rather than how much they want to risk.
Binary bettors can make their predictions by the hour, day or week or by triggering a pay-out if a target price is reached before the bet expires. An early expiry option is sometime available and works like a cash-out facility in fixed odds sports betting, where the punter can chose to take a profit or minimise a potential loss by closing the bet early.
