Markets rarely stand still and, regardless of whether they move up or down, one of the best ways to make money from them is with a binary bet (also sometimes referred to as fixed odds financial betting). If you think that the FTSE 100 index of leading UK shares will rise over the next hour, you can use a binary bet to profit from the increase. Of course, you could alternatively create a binary bet to benefit from an expected fall in the market.
The first stage is to select the market that you want to bet on. By default the Market Type at Betonmarkets is set to FOREX and the Market to USD/JPY. Say you want to change this to place a bet on the FTSE 100 index of leading UK shares. To do so select ‘Indices’ from the top menu and choose the FTSE 100 index (i.e. UK 100 index). If you wanted to bet on another stock market, simply click on the drop-down menu and make your selection.
If you want to place a real fixed odds financial bet, make sure that the Currency box matches the currency that you used to deposit the funds in your account. The alternative is to have a practice run without risking any real money by selecting virtual dollars represented by the $ symbol.
Having chosen the market you want to bet on, the next stage is to decide how you think the market will move. Some people decide by looking at the price charts to identify an important trend, whereas others prefer to check the financial news and then decide. To help you, the Indicative Market Price is shown on the right of the page, and a chart of its recent performance is displayed at the bottom.
Placing Your Bet at Betonmarkets
Say that you look at the hourly chart of the FTSE 100 Index and see that it’s entered a strong down-trend.
You decide that this is likely to continue for at least the next few hours and that you want to use a Binary Bet to make money from it.
Binary Betting: How much?
First, you need to decide how much money you want to win. Remember that the more money you want to win, the more expensive your bet will be. You can experiment by using the drop-down menus to change the winnings and see what effect this has on the cost, as shown on the pricing page. You have no commission, fees, or other charges to worry about so this amount represents the full price that you have to pay.
Say you opt to win £100. Having identified that the market is declining, the next stage is to specify that you want to win if it falls below (rather than rises above) a certain level when the bet expires. Use the drop-down menu to select ‘lower’ and enter your target market level. This is known as the strike price. By default it’s set close to the current value of the market, but the more you put the strike level input away the bigger the fall necessary for the bet to succeed and the cheaper the strike price becomes.
You identify a strong down-trend so you decide to move the strike price 50 points lower and set the market level accordingly.
How long?
The final stage of the process is to specify how long you want the binary bet to last. You can use the drop-down box at Betonmarkets to switch between minutes, hours, and days and use the sliding bar to set the precise duration. This combination enables you to create bets from as little as a few minutes right up to 180 days. In view of the nature of the trend you decide to set the time limit to 7 days.
The FTSE Index is trading at 4900 and you decide to bet that it will be trading below 4850 over the next 7 days. You choose to win £100 safe in the knowledge that this only costs you £29.19.
You can never lose more than the amount that you decide to bet at Betonmarkets, which is why binary betting sites offer a limited risk way to trade the markets. The cost of £29.19 is immediately deducted from the funds in your account. If at the end of the 7 days the market does close below 54850, you win £100 and your winnings are automatically credited into your account. This means you’ve gained £70.81, which represents a return of over 243 per cent in just two hours. Nice!
(By the way, the return of a binary bet is a standardised measure of how profitable the bet would be if it succeeds. It’s calculated as the winnings less the cost of the bet expressed as a percentage of the cost.)
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