What are Fixed Odds Financials

Fixed Odds financial betting is a specialist niche within the universe of speculation which presents several interesting characteristics for the would-be stock, index, FOREX and commodity trader.

In this article we will explore the benefits of trading fixed odds financial bets rather than spread betting or trading directly into the capital markets. Having read it you will be well armed to start your own fixed odds trading strategy and be on your way to keeping risk to a well defined minimum with maximum potential for capital growth.

The Idea Of Fixed Odds

At its most basic, a fixed odds financial bet is similar to a bet on a horse race or other such event.

A customer might bet that a stock will be higher tomorrow than it is now or the price of Gold will fall by at least $1 during the next hour. In making such a wager BetsForTraders will quote their clients odds for such scenarios.

Yesterday for example a client saw that GBP/USD (the number of US Dollars to each British Pound) had gone over 2 again. As it had moved up so fast and had recently failed to exceed this level for long the client felt that this sharp move would be short-lived.

Over the last 30 years there has rarely been a time at which the dollar was trading at 2 to 1 and there is a strong degree of reverting to the average in the currency markets.

The client thought that a 1 cent fall back to 1.9900 was likely over the next few days and so placed a One-Touch bet (for more information on what this bet is see the BetsForTraders website at the bottom of the page) with a strike at that level.

The terms of the bet were if the market touched 1.9900 at any time in the next 3 days the payout would be £500 for an upfront stake of £125. This would represent a 300% profit on the stake.

The following day the GBP/USD rate had fallen back and the bet was 'knocked-in' making the profit of £500 with just over two days left to run on the bet.

Note, that if the bet had lost because this is fixed odds the maximum loss was only the initial stake, in this case £125. This is unlike spread betting whereas theoretically profits are unlimited but far more importantly so are losses.

The Advantages of Fixed Odds Financials

Spread betting, dealing in stocks, futures or FX are all popular means of capitalising on market movements and many speculators use all of them as part of their overall trading plan.

Fixed Odds trading however has the unique advantage of a guaranteed limited risk as you can not lose more than your initial stake. It can also give you the largest 'bang for your buck' of any speculation method.

Simplicity is an important reason in taking a risk and the financial markets are no exception to this, such transparency is another great benefit of Fixed Odds trading. There is no need to deal with stop losses, leverage, margin calls or any of the complexity of spread betting- rather you place your bet and wait for the results.

Because Fixed Odds financial betting lets you win many times your stake you can afford to lose several bets, win just one and still make a handsome profit.

A friend of the author recently deposited £1,000 to his BetsForTraders account and had a bad run after he kept betting the CAC (French Stock Index) would fall. But it continued to move higher. After reducing his account to £650 he stuck to his guns - placed a £50 bet at 19/1 on a fall over the following three days and instantly had an account balance of £1,650 after winning £1,000 from his £50 risk money.

There are many other advantages to this trading which are beyond the scope of this article. A few of them are listed below and we hope to be able to write some more complete articles on each issue in due course. Meanwhile it is recommend that you do your own research and consider trading Fixed Odds Financial bets as it is a great way to learn about the markets without risking more money than you want to.

Key Points - Fixed Odds Financials

• Control -- A few of the best financial bookmakers quote real time prices on bets before and after they are placed. This has many implications including the ability to control your entry (and exit) points rather than relying on stale information
  
  
• Tax Free - - In many countries betting gains are tax free. Of course the law could change but in many jurisdictions, including the UK, you are better off betting on financial markets than trading directly into them. If you pay 40% capital gains tax when you do well in the stock market and nothing when betting on it every win is worth 40% more. That is a phenomenal difference
  
  
• Risk - This topic was touched on earlier in the article but it is the most important issue in market speculation so it must be stated again... control your risk! The traders who make a lot of money are those who don't lose a lot. When you bet on a market with Fixed Odds bets you can't lose any more than your stake, ever. This gives you plenty of up-side potential but a well-defined downside. Especially for the novice trader this is invaluable
  
  
• Education - Learning about technical and fundamental analysis to read charts for market direction can be a profitable skill. Like all things worth doing, it takes practise. You can read all the books you like but the best way to learn is to jump in and get started. With Fixed Odds financial betting you can do so at low cost as the minimum bet sizes are just a few pounds, often as few as £2 or £3. The education that you can get buy placing many small bets and then scaling up as you sharpen your skills is invaluable
  
  
• Rewards - The most obvious of all. The reason we speculate on markets... the thrill of winning cash, withdrawing it from your account at the bookmakers and spending it

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