The Basics of Binary Betting

The Tutorials section introduces the basics of a Binary Bet and assumes that you understand the concept of short selling - Click here for an introduction to short selling. All Binary Bets work on the same principle, however there are three different types of Binary markets, although the different markets can differ from spread betting broker to broker.

• Standard: e.g FTSE closes up for the day. These types of bets have been covered in the introduction
• One Touch: If a market touches or goes through a certain level then the bet is automatically settled at 100. Discussed in more detail below
• Range Bets: A price is quoted as to whether a market will close higher or lower than a certain level. For example the FTSE 100 will close greater than 40 points up. These bets are discussed in more detail below.

Binary Bet Examples

Standard - Winning Bet Example

• It is 6pm London time, the Dow Jones Index is down 33 points
• The market for Wall Street closing UP on the day is quoted at 24-27
• You believe there will be a turn around towards the close with the index likely to close slightly higher, you therefore go long the Binary Bet at 27, risking £5 a point
• Your maximum loss is £135, maximum profit potential is £365
• Commissions are built into the spread
• A few hours later the Dow Jones has crept back up and is now only 5 points down
• The Binary market is now quoted at 47-50
• You decide to take a profit on 60% of your position by selling or covering £3 of your bet at 47
• Profit earned is 47-27 = 20 x £3 = £60
• The market continues to improve towards the close with the Dow Jones closing up 14 points
• The Binary market therefore settles at 100 giving you a profit of your remaining bet of 100-27 = 73 x £2 = £146
• Total profit on the trade is £146 + £60 = £206

Standard Binary Bet - Losing Bet Example

• It's 9am the FTSE 100 index is up 27 points but you are bearish expecting prices to fall by the end of the day
• The Binary Bet for the FTSE closing DOWN at the close is quoted at 35-38
• You buy it (go long) risking £5 a point
• The market sells off around 15 points by lunchtime but then Wall Street opens firm and goes stronger
• This in turn causes London to rise and the FTSE ends up 40 points by the close of business
• The Binary bet therefore settles at zero translating to a loss of 38 x £5 = £190
• Note that the minimum stake on a Binary bet is £1 a point so much smaller sums can be won and lost