The basics of novelty spread betting explained
Novelty spread betting is based on predictions made by bookmakers specifying the range of possible outcomes of an event. This form of spread betting covers non-finance and non-sporting events with popular events including election results, produce markets and reality TV shows.
A 'spread' covers the most likely outcomes of an event and consists of two prices, a higher 'buy' price and a lower 'sell' price. If you believe the bookmakers 'buy' prediction will be exceeded by the result of the event you 'go long', conversely if you believe the 'sell' position is too generous and that the outcome will be lower you 'go short'.
Novelty spread betting works on a margin basis, this means that when you place a bet you only have to hand over a deposit (usually in the region of 10%) instead of the full bet amount. Theoretically this means that you have more money to use in alternative investment opportunities or conversely allows you to stake a larger position on each point in the bet than you would have been able to otherwise (known as gearing). However you must have access to the total amount to cover costs should the bet go against you. Some brokers offer credit accounts for this reason.
As spread betting does not involve placing a fixed stake, but instead works on a pound per point basis (with you specifying the amount per point you would like to play with), the more right you are, the more you will win, consequently the potential profits are uncapped. However this also applies to loss and if the event goes against you, the more wrong you are the more you will owe the bookmaker.
Novelty spread betting is a 'live' form of gambling meaning that it is possible for you to open and close bets at anytime throughout an event. This means that if the outcome begins to place you in a loss making position, you are perfectly entitled to close your bet or change your preferences. Many brokers offer stop loss accounts which allow you to specify a limit at which the bet will be closed if the outcome moves against you. It is advisable to use this facility (although it may come at a charge) to help minimise potential losses.
The majority of online bookmakers offer a practice facility which customers can use to familiarise themselves with the techniques used and the accounts offered. By acquainting yourself with the intricacies involved, thoroughly researching the possible outcomes of an event and employing loss stop facilities, novelty spread betting can be an exciting and profitable way to wager on a huge variety of events.
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