Financial Fixed Odds betting is a simple form of binary financial trading that is increasingly growing in popularity. Both new and experienced financial traders are taking advantage of this profitable and simple to understand method of trading the financial markets and the many unique benefits it offers.
The concept behind financial fixed odds betting is in fact very similar to binary options trading. Trades are placed for a fixed payout on a predefined expiry time with an upfront trade cost which is deducted from your account when placing the trade. It is however classified as betting, which while this may prove a little off putting for some at first, also yields several benefits. This includes the need for capital gains declarations making any profits you earn tax free (UK).
Financial Fixed Odds vs Binary Options
At the core of both of these forms of financial trading is the ability to speculate on the future price movement of a financial asset. For example, if you think that the FTSE index is due to move higher over the coming week you can place a trade in your account to profit from this expected move. If by the time the trade expires the market has moved higher then you pocket the profit agreed with the broker at the outset of the trade.
Where financial fixed odds differs from standard binary options trading is in it’s flexibility. Traditional options brokers tend to offer limited ‘higher’ or ‘lower’ options. These can only call the market in one of two directions and will generally have defined expiry periods set by the options broker. Most options will expire at the end of the hour, a four hour period or the end of the trading day. Therefore you are somewhat limited in the trading opportunities that you can take on your binary account.
Create Custom Fixed Odds Trade Types
Fixed odds bets let you tailor the bet to fit exactly with your market analysis. There are a wide range of fixed odds bet types which can be used to profit from a range of expected market outcomes.
You can therefore build a ‘bet’ or trade, around the specific outcomes that you expect from the markets. You have full flexibility to set both the length of time that you want your trade to run and also the exact levels in the market that you want to place at.
In addition to the higher and lower trade types offered by binary options brokers, you will also find Touch and No Touch bets for levels that you believe that the market will or not touch. There is also the opportunity to profit not moving at all with range bets where you can set both a higher and lower barrier that must not be touched over the duration of the trade for you to profit.
This ability to run your fixed odds bets in the markets from just a few minutes to days, weeks and even months enables you to run a variety of established trading strategies from within your fixed odds account.
Fixed Odds Betting Example
One of the most popular fixed odds bet types used by traders is the Touch bet. With this bet type you can set a level in the market that you are expecting it to ‘touch’ or ‘not touch’ during the time frame you set. You receive a set payout if your bet criteria is still in place at the expiry time of the bet.
You might want to place a trade on Wall Street for example. Lets assume the Index is currently at 10,800 after a strong run. You think it looks a bit overbought and won’t reach the key 11,000 level.
You could decide to place the following trade:
Wall Street ‘Not to Touch’ 11,000 over the next 5 days
You enter the bet criteria and check the payout that the broker is prepared to offer you. On checking the return you are offered a 75% return on your stake. So provided the market does not touch 11,000 over the next 5 days you earn a 75% fixed odds return on your capital in 7 days!
This is a major advantage of trading with financial fixed odds. You could vary both the level you place at and the length of time until expiry to both suit the market conditions and the return that you want to achieve. It maybe that you would be happy giving yourself a little more margin. So you could set the level at 11,250 to earn a 40% return. Alternatively you may want to keep the same level and place of a shorter period of time, say 2-3 days.
It is this flexibility to ‘ build your own bet’ that makes fixed odds betting so attractive. It not only allows you to tailor the risk on each bet to suit your strategy it also allows you to make some very high profits over a short period of time!
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