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Fixed Odds trading allow you to trade or bet on price movements, much like those in spread betting), but the key difference is that you have a managed loss or profit. Fixed Odds Trading is safer and what's more it is easier to open an account with a Fixed Odds Trading Bookmaker and you need even less money to open an account. You can open one with just $5.
Absolutely. The only complex part of Fixed Odds Trading, is deciding the market direction. Some people prefer the fact of knowing how much they can profit from each trade, or indeed lose should that trade not go in their favour.
Trading the Spread is where you can make a possible endless profit or loss, which can be locked in with a Stop Loss order - you trade £10 per point, for each point up or down you make or loss money per point. Depending if you traded Long or Short. Spread betting is more volatile than Fixed Odds. Spread betting could be said to have gearing and leverage to its power.
Fixed Odds are different. You stipulate how much you wish to win and you are then presented with a trade/bet price based on that value. If the trade you make goes in your favour, you win that amount, if it doesn't you lose the amount it cost you to open the trade. Fixed Odds don't rely on gearing for profit. You have a FIXED profit and cost to open that trade. You decide how much you want to risk, and by how much you want to win.
Without a doubt. If you combine the knowledge you have gained from spread betting, together with the techniques you can learn from the articles on this website - not only will you understand Fixed Odds better, but also be able to profit greater from your knowledge of spread betting.
Now we have answered your questions, I'd like to explain how the trading in Fixed Odds works. The terminology is different to that of spread betting, but that is where the differences remain. From having read all about spread betting, you will fully grasp the rest - so I won't teach you to 'suck eggs'.
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You would buy a one-touch bet if you believe the market will touch a given point at least once before the bet expires. In other words, a one-touch pays out, if at any time prior to expiration, the market touches or trades through the specified barrier.
Example: [Pays £100 if the FTSE touches X between today and date T]Suppose you had bought a one-touch bet on the 16-Jun-03 (when the FTSE was quoted at 4190.4 points) for a cost of £95 with a payoff of £1000 should the FTSE index trade at or through 4087.9 at any time within the 9 days which followed. (i.e. expiring on the 25-Jun-03). You would have made more than 10 times your stake (£1000/£95) since the FTSE traded through the 4087.9 level on the 22-Jun-03.
In this specific example the FTSE hit your one-touch target barrier before the actual expiry date (payout triggered on the 22-Jun-03, but the one touch bet was due to expire on 25-Jun-03) and this is all it takes to trigger the payout. This is not always possible since there is a risk/return trade-off but this example illustrates how its possible to achieve high leverage using digital bets and that its possible to profit from bearish markets as well as from bullish market trends.
A no-touch bet is the opposite of the one-touch bet. You would buy a no-touch bet if you think the market will never reach a certain level within a specified range of time.
Example: [Pays £100 if the FTSE does not touch X between today and date T]You would buy a bull bet if you believe the underlying security/index/currency pair will be higher than a certain level (also referred to as the barrier level) on the maturity date.
Example: [Pays £100 if the FTSE closes higher than X on date T]Suppose that on the 12-Aug-03 the Dow Jones was quoted at 9271.76 points and you predicted that the level of the Dow Jones would keep rising and would reach a level higher than 9400 in the 5 days which followed.
So you would have bought this bull bet: I wish to win £500 if in 5 days time (i.e. expiring on the 17-Aug-03) the Dow Jones Index is higher than 9400.
If you would have bought this bull bet on the 12-Aug-03 you would have risked a total of £75 (stake) for a potential payout of £500 (total payout including stake) if the level of the Dow Jones index turned out to be higher than 9400 on the 17-Aug-03. Had you bought at £75 you would have won more than 6 times your stake since the Dow Jones closed at 9412.45 on 17-Aug-03.
You would buy a bear bet if you believe the underlying security/index/currency pair will be lower than a certain level (also referred to as the barrier level) on the maturity date.
Example: [Pays £100 if the FTSE closes lower than X on date T]You believe that the market will be between two distinct levels (high and low) on the expiry date.
Example: [Pays £100 if the FTSE closes between X and Y on date T]You believe that the market will never touch two pre-determined barrier levels (high and low) before or on the date the bet expires. In other words, when you buy a barrier range you will win only if the market never touches the two barrier levels you have chosen.
Example: [Pays £100 if the FTSE never touches X and Y between today and date T]A Barrier Range Bet can be used as a hedging tool against low volatility and range trading. You can specify an upper AND lower market level and as long as the market does not touch ANY of these barriers prior to expiration, you will be paid your predetermined payout.
Example:
You think that Microsoft stock will breakout of its trading range of 26 or 32 in the next twenty days, but I want to hedge against low volatility and range trading. You buy a twenty day (20 days) Microsoft Barrier Range bet with 26 and 32 barrier levels with a £5,000 payout for a £750 stake.
Suppose that Microsoft is currently trading at 29. Fifteen days from now:
Microsoft does not breakout and does not touch 26 OR 32 = Earn £4250
Microsoft breaks out and touches either 26 OR 32 = Bet Expires Worthless, lose £750 stake.
In this example, if Microsoft breakouts, you will benefit from trading profits. If it range trades, you will at least receive your predetermined payoff.
You believe that the market will touch two pre-determined barrier levels (high and low) before or on the date the bet expires. In other words, when you buy a barrier range you will win only if the market touches both of the two barrier levels you have chosen.
Example: [Pays £100 if the FTSE touches both X and Y between today and date T]You win if the market touches either of two pre-determined barriers before or on the date the bet expires.
Example: [Pays £100 if the FTSE touches either X or Y between today and date T]An up or down bet can also be used as a hedging tool against a breakout in any direction. You can specify an upper AND lower market level and as long as the market touches ONE of these barriers prior to expiration, you will be paid your predetermined payout.
Example:
You think that the British Pound/USD will range trade between 1.520 and 1.680, but I want to hedge against a break of either 1.510 OR 1.690 in the next two months. You buy a two month (60 days) Up or Down bet with 1.510 and 1.690 barrier levels with a £10,000 payout for a £2,000 stake.
Suppose that the British Pound/USD is currently trading at 1.600. A month and a half from now (45 days) from now:
British Pound/USD breaks out and touches either 1.510 OR 1.690; Returns = £8,000
British Pound/USD continues to range trade and does not touch either 1.510 OR 1.690 = Bet Expires Worthless, lose £2,000
In this example, if GBP/USD continues to range trade, you will continue to benefit from range trading profits. If it breaks out, you will receive your predetermined payout.
A Double Up bet pays two times the premium if the market rises above a given level between the time of purchase and the close of trading. It expires at the close of business on the day of purchase of the bet.
Example: [Pays £100 if the FTSE closes above X between now and the close of trading today]A Double Down Bet pays two times the premium if the market drops below a given level between the time of purchase and the close of trading. It expires at the close of business on the day of purchase of the bet.
Example: [Pays £100 if the FTSE closes below X between now and the close of trading today]Buy this bet to play a market rise between two given hourly market times today. You will have the possibility to set the starting hour of the bet and the ending hour of the bet, and you will win double your stake if the market follows your prediction.
Example: [Pays £100 if the FTSE rises between the starting time hour and the expiry hour]Buy this bet to play a market drop between two given hourly market times today. You will have the possibility to set the starting hour of the bet and the ending hour of the bet, and you will win double your stake if the market follows your prediction.
Example: [Pays £100 if the FTSE declines between the starting time hour and the expiry hour]The Super Double contract is a bet on the movement of a market between three given times in the trading day. For example, you might bet that the market rises between 9h00 and 10h00, and then falls between 10h00 and 11h00. If you are correct, the bet will return a total payout of approximately 4 times your money.
You also have the option of reversing the bet by selecting 'unless' instead of 'if' in the bet wording, and in such case you would win if the market follows any path except the one selected. The total returned payout (including stake) in this case would amount to approximately 1.33 times your stake.
Example: [Pays £100 if the FTSE rises between 9h50 GMT and 10h00 GMT and then rises again between 10h00 GMT and 10h10 GMT]Flash bets are currently offered on major currency pairs and the oil price with most of the interest revolving around the two minute trades (although bets can be taken for a life-span of up to 15 min). No spread or commission is charged and some people try to use technical analysis to predict the moves.
Take for instance the case of a £50 Flash Up bet to win £100 on the USD/JPY with a duration of 7 minutes. Suppose you buy the bet at 15:00:26 GMT, which is the Start time. The next tick after the Start is received at 15:00:28 and is valued at 121.26. This is the Entry time and value. 7 minutes elapse and the End time is 15:07:26. Binary.com uses the next tick after this (the Exit) to calculate the price of the contract. In this case, the next tick occurs at 15:07:27 with value 121.32. Since the market has risen, you receive the full payout. So you would get a 100% return on the stake - as long as the first tick after the end of the bet is higher than the first tick after the start.
No market predictions skills are involved here whatsoever. These fun bets are over in the space of less than a minute; so you can make money in seconds. Here, you have to guess the last decimal digit of say, the USD/JPY (predict 3rd decimal place) after 5 ticks.
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