What is Financial Fixed Odds Trading?

Trading with Financial Fixed Odds provides a simple trading approach which can be used to profit from financial markets. It is a form of trading or ‘betting’ that is rapidly growing in popularity. It makes it simple to trade on financial markets and offers many unique benefits for the trader. As a result both new and experienced financial traders are starting to take advantage of this method to make money from speculating on financial assets.

The concept behind financial fixed odds contracts is in fact very similar to those found in binary options. Trading contracts are purchase for an upfront cost and will be set to run until a predefined expiry time. If the conditions set are in place when the contract terminates, then the agreed then pay out is made.

With fixed odds trades you are essentially speculating on the future price movement of a financial asset. This could a market Index, currency pair, commodity or individual stock. 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 is in the level of flexibility that it provides. Traditional options brokers tend to offer limited ‘higher’ or ‘lower’ options contracts. These can only call the market in one of two directions and normally have fixed expiry times. Most binary options sold 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. However with fixed odds you are able to tailor the contracts that you place to fit in directly with your analysis.

Create Custom Trade Types

There are a wide range of fixed odds trading contracts. These make it easy to find opportunities to profit from a range of anticipated market outcomes. This makes it possible to construct your trade to profit from expectations of how the market will move. You have full flexibility to set both the length of time that you want your contract 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 contracts. These can be set to profit from levels that you don’t think the price of the asset will (or won’t touch) over the contract time specified. There is also the opportunity to profit from range bound markets through the use of boundary contracts. Here you specify a higher and lower barrier that must not be touched over the duration of the contract.

Each contract that is placed is configurable in terms of the time that it is set to run and the levels set within the contract. You can set your fixed odds contracts to last from just a few minutes to days, weeks and even months. This enables you to run a variety of established trading strategies from within your fixed odds account and also trade in line with your preferred level of risk.

Fixed Odds Trade Example

One of the most popular fixed odds trade types is the Touch bet. With this contract you can set a level in the market that you are expecting the asset price to ‘touch’ or ‘not touch’ over the life of the contract. You receive a set payout if the criteria set is still in place at the expiry time specified.

You might want to place a trade on Wall Street for example. Let’s 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 over the next few days. You might decide to place the following contract in your account:

Wall Street ‘Not to Touch’ 11,000 over the next 5 days

You enter the criteria and check the payout that you fixed odds 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% return on your capital in 7 days!

This highlights one of the major advantages of trading with financial fixed odds. You could vary both the level you place in the contract and the length of time you set until its expiry. This can be done to both suite the market conditions and the level of risk you are prepared to take.  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.

This flexibility to ‘ construct your own contracts’ makes this method of trading so attractive. It not only allows you to tailor the risk on each position you take to suit your strategy, it also allows you to make some very high profits over a short period of time!

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